ITEM 1. Business
Mirage Energy Corporation (the “Company”) was incorporated in the State of Nevada on May 6, 2014 as Bridgewater Platforms, Inc. On November 7, 2016, the Company filed Articles of Merger with the Nevada Secretary of State whereby it entered into a statutory merger with its wholly owned subsidiary, Mirage Energy Corporation, pursuant to Nevada Revised Statutes. The effect of the merger was that the Company is the surviving entity and changed its name to “Mirage Energy Corporation”.
On January 24, 2017, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Michael R. Ward, the sole director of the Company, whereby on the same date the Company issued 10,000,000 shares of its Common Stock and 10,000,000 shares of Series A Preferred Stock in exchange for 100% of the issued and outstanding equity interests of 4Ward Resources. The acquisition was completed on January 24, 2017.
The purpose of acquiring 4Ward Resources was for the Company to enter into the natural gas sale, pipeline, and storage business. The Company intends to develop an integrated pipeline and natural gas storage facility in Mexico and the United States.
The Company is in the process of preparing to obtain the necessary permits in Mexico and the United States.
Mirage, through its wholly owned subsidiaries, intends to develop an integrated pipeline and natural gas storage facility in Mexico and the United States. During 2019, Mirage has continued working to address the two main impediments affecting private sector companies attempting to enter the Mexico gas market. Presently, Mirage acknowledges a lack of private sector cross-border pipeline access to the Mexico gas markets and a national shortage of Mexico-based natural gas storage facilities and capacity.
Mirage is proposing to develop the Concho-Progreso Pipeline connecting South Texas and Mexico via it proposed Progreso International crossing under the Rio Grande River. All of the pipelines are being revised upward from 36 to 42 inch diameter pipe. The total length of the Concho-Progreso pipeline is estimated to be 250 miles.
This proposed pipeline includes the following components:
(a) a 7.1 mile 42” bi-directional U.S. pipeline termed the Concho Connector which proposes to tie into the Banquete and Agua Dulce headers;
(b) a 39.1 mile 42” bi-directional U.S. pipeline known as the Concho Extension linking the Concho Connector and its tie-ins to the Company’s Concho line;
(c) a 93.9 mile 42” bi-directional U.S. pipeline known as the Concho Line connecting the Company’s proposed international crossing at Progreso to Transcos’ South Texas mainline near Falfurrias, Texas;
(d) a proposed international crossing termed the Progreso Crossing between Texas and Mexico beneath the Rio Grande River near Progreso, Texas in Hidalgo County to connect to the Concho and Progreso lines;
(e) a 36 mile 42” bi-directional Mexico pipeline termed the Progreso Line connecting to the Company’s proposed Progreso international crossing to Station 19 on Sistrangas; and
(f) a 67 mile 42” bi-directional Mexico pipeline termed the Progreso Extension connecting the Progreso Line to the Los Ramones interconnect on Sistrangas.
MEXICO UNDER GROUND NATURAL GAS STORAGE:
In addition to the proposed pipelines and international crossing, the Company proposes to develop the Campo Brasil natural gas storage reservoir. Presently, the Campo Brasil is a depleted natural gas reservoir field. Mirage nominated this field in the inaugural tender for Mexico’s strategic reserve on July 25, 2018. This field is located approximately 14 miles from the proposed Progreso Line. This field was not selected by Cenegas during the first selection process. Cenegas has indicated that Mexico intends to develop natural gas storage in the North, Central and Southern regions of Mexico. The Company believes that the Brasil field is the most suitable candidate for development in Northern Mexico.
Mirage believes that the proposed Brasil Storage reservoir will give Mexico the ability to (1) balance peak loads by consumers, (2) implement price arbitrage on natural gas, (3) enable Mexico to create a Mexican natural gas hub for gas pricing thereby giving Mexico an alternative natural gas supply rather than limiting its choice to the natural gas spot market. The Company believes that the planned natural gas storage facility, when fully developed, will give Mexico a secure natural gas supply for approximately one year in the event all gas supplies were shut off from outside sources. We anticipate that the reservoir will have a capacity to store approximately 786 BCF (Billion Cubic Feet) of natural gas.
INTERNATIONAL PIPELINE CROSSING:
PROGRESO CROSSING: The planned Progresso crossing will be subject to a Presidential Permit for boring underneath the Rio Grande River. An approximate 46” bore hole under the river will provide the channel through which the 42” pipe will be pulled. The proposed ownership on US side of river will be held by WPF TRANSMISSION, INC. and on the MEXICO side of the river will be held by WPF MEXICO PIPELINES S. de R.L. de C.V.
On January 28, 2017, 4Ward Resources, Inc., Mirage Energy Corporation’s wholly owned subsidiary, acquired Michael Ward’s ninety (90%) percent interest in two Mexican companies. The remaining ten (10%) percent interest was acquired by Mirage Energy Corporation from Patrick Dosser. Patrick Dosser is Michael Ward’s son.
Together, Mirage Energy and 4Ward Resources own 100% of the two Mexican corporations. The two Mexican corporations are WPF MEXICO PIPELINES, S. de R.L. de C.V., and CENOTE ENERGY S. de R.L. de C.V. Additionally, 4Ward Resources acquired all of Michael Ward’s interest in WPF TRANSMISSION, INC., a Texas corporation.
During 2017, the Company decided to focus all of its efforts on its planned gas pipeline and storage enterprises and therefore sold its subsidiary, Bridgewater Construction, Ltd., to Emanuel Oliveira in exchange for the satisfaction of a debt obligation owed to Mr. Oliveira. The effective date of the transaction was February 1, 2017.
Current Update
In addition to Mirage’s proposed pipeline and storage projects (the “Projects”), the company is evaluating several other oil and gas opportunities in Southern Mexico which would synergistically integrate with our proposed Projects in Mexico.
Competition
Proposed Pipeline Operations
Our proposed pipelines face competition from a number of sources, including major oil companies and other common carrier pipelines. Generally, pipelines are the lowest-cost method for long-haul commodity movements. Therefore, the most significant competitors for large volume shipments are other pipelines.
Competition among pipelines is based primarily on access to commodity supply, market demand, and transportation charges offered for commodity movements. In addition, in areas where additional infrastructure is needed to accommodate production needs, we will compete with other pipeline providers to offer the necessary transportation services to meet market demand.
In addition to competition from other pipelines, we face competition from trucks and rail that deliver products in a number of areas that we propose to serve. While their costs may not be competitive for longer hauls or large volume shipments, these sources of transportation compete effectively for incremental and marginal volume in many areas where such means of transportation are prevalent.
U.S. GOVERNMENT REGULATION
Safety Regulation
Our planned U.S. pipelines will be subject to United States Department of Transportation (“DOT”) regulations and to regulations under comparable state statutes relating to the design, installation, testing, construction, operation, replacement and management of pipeline facilities.
DOT regulations require operators of hazardous liquid interstate pipelines to develop and follow a program to assess the integrity of all pipeline segments that could affect designated “high consequence areas,” including: high population areas, drinking water and ecological resource areas that are unusually sensitive to environmental damage from a pipeline release, and commercially navigable waterways. We have prepared our own written Integrity Management Program, identified the line segments that could impact high consequence areas, and completed a full assessment of these segments as prescribed by the regulations.
Environmental Regulation
General
Our planned operations will be subject to complex federal, state, and local laws and regulations relating to the protection of health and the environment, including laws and regulations which govern the handling and release of hydrocarbon materials, some of which are discussed below. Violations of environmental laws or regulations can result in the imposition of significant administrative, civil and criminal fines and penalties and, in some instances, injunctions banning or delaying certain activities.
There are will also be risks of accidental hydrocarbon releases into the environment associated with our planned future operations, such as potential releases of hazardous substances from our planned pipelines or storage facility. To the extent an event were not covered by insurance policies, such accidental releases could subject us to substantial liabilities arising from emergency response, environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage, and fines or penalties for any related violations of environmental laws or regulations.
Rate Regulation
General Interstate Regulation
Interstate common carrier pipeline operations are subject to rate regulation by the Federal Energy Regulatory Commission (FERC) under the Interstate Commerce Act, the Energy Policy Act of 1992, and related rules and orders. The Interstate Commerce Act requires that tariff rates for petroleum pipelines be “just and reasonable” and not unduly discriminatory.
Intrastate Regulation
Some of our planned pipeline operations will be subject to regulation by the Railroad Commission of Texas (“Texas RRC”). The applicable state statute will require that our planned pipeline rates be nondiscriminatory and provide no more than a fair return on the aggregate value of the pipeline property used to render services. State commissions generally have not initiated an investigation of rates or practices of petroleum pipelines in the absence of shipper complaints. Complaints to state agencies have been infrequent and are usually resolved informally. Although management cannot be certain that our intrastate rates ultimately would be upheld if challenged, we believe that, given this history, the tariffs now in effect are not likely to be challenged or, if challenged, are not likely to be ordered to be reduced.
MEXICO GOVERNMENT REGULATION
In 2013 Mexico commenced its initiative on energy reform. A new legal regulatory framework was instituted by amending Mexico’s Federal Constitution. Mexico’s underlying regulatory laws and administrative regulations continue to be developed in regard to the oil and gas industry. The public policy behind this energy reform is to increase Mexico’s oil and gas production through exploration and extraction contracts, as well as by increasing midstream and downstream infrastructure.
Prior to this reform, all of Mexico’s hydrocarbon activities were reserved to the state-owned company PEMEX. This reform will now permit private companies to participate in the exploration and extraction of gas resources through bidding procedures. All underground hydrocarbons remain the property of Mexico. There is no private ownership of hydrocarbons in Mexico.
Mexico’s domestic production of natural gas does not meet the national demand. Mexico must import additional natural gas to meets its growing national demand.
Mirage has proposed to focus its core business development of the midstream infrastructure with its proposed pipelines and storage facility.
Hydrocarbon Regulation
In Mexico, four regulatory bodies are responsible for regulation of hydrocarbon activities. These are (1) the Energy Ministry (SENER), (2) the National Hydrocarbon Commission (CNH), (3) the Energy Regulatory Commission (CRE), and (4) the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector (ASEA).
Natural Gas Regulation
Natural gas activities are supervised and regulated by the CRE and the National Center for Natural Gas Control (CENAGAS). The CRE is the regulatory governmental body that issues permits related to gas activities. Additionally, the CRE supervises and oversees compliance with applicable laws, regulations and official Mexican standards, which includes, but is not limited to tariffs, pipelines and storage operations. CENAGAS was established to manage, administer and operate the National Natural Gas Transportation and Storage System with the view to ensure continuity and safety in natural gas activities throughout Mexico. ASEA supervises the health, safety and environmental protection of all natural gas activities throughout Mexico.
Lease, License, Concession Term
According to the hydrocarbon legal framework rights to oil and gas depend on the particular contractual plan applicable to the particular activities. We expect that our proposed natural gas storage field, if permitted, would be subject to a license contract.
Taxes and Fees
Taxes and fees payable to Mexico will be governed by the license contract.
Liability
The license contract will provide for performing all environmental obligations, commitments and conditions as may be required by applicable law, best industry practices and environmental permits. The contractor will be responsible for all environmental damage.
Restrictions
License contracts may contain restrictions concerning the creation of liens or other ownership encumbrances arising from contracts or materials, the selling or assigning, transferring, conveying or otherwise disposing of any rights or participation interests or other contractual obligations. There may also be restrictions on changes in control of the contracting entity. In many cases, the prior written consent of the CNH may be required.
Title to Properties
None.
Employees
During 2019, the Company had six employees comprised of its three named executive officers, one administrative and two accounting employees. As of July 31, 2019, John W. Dosser, Vice President resigned.
Access to Company Reports
We file periodic reports, information statements and other information with the SEC in accordance with the requirements of the Securities Exchange Act of 1934, as amended. We link our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to such reports free of charge through our corporate website at www.mirageenergycorp.com to the SEC’s EDGAR repository. Within the time period required by the SEC, we will post on our website, any modifications to the code of ethics for our CEO and senior financial officers and any waivers applicable to senior officers as defined in the applicable code, as required by the Sarbanes-Oxley Act of 2002. You may also read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. One may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, our reports and information statements, and our other filings are also available to the public over the Internet at the SEC’s website at www.sec.gov. Unless specifically incorporated by reference in this Annual Report on Form 10-K, information that you may find on our website is not part of this report.
ITEM 1A.
ITEM 1A. Risk Factors
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT BEFORE PURCHASING OR INVESTING IN THE COMPANY. INVESTING IN OUR CAPITAL STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING EVENTS OR OUTCOMES ACTUALLY OCCURS, OUR BUSINESS OPERATING RESULTS AND FINANCIAL CONDITION WOULD LIKELY SUFFER. AS A RESULT, THE TRADING PRICE OF OUR CAPITAL STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF THE MONEY YOU PAID TO PURCHASE OUR CAPITAL STOCK.
Risks Related to Operating our Planned Business
Our planned business is dependent on the supply of and demand for the commodity that we plan to handle.
Our planned pipelines and other planned assets and facilities depend in part on continued production of natural gas in the geographic areas that they are expected to serve. Our business also depends in part on the level of demand for natural gas in the geographic areas to which our planned pipelines are expected to service, and the ability and willingness other parties to supply such demand.
Implementation of new regulations or changes to existing regulations affecting the energy industry could reduce production of and/or demand for natural gas, increase our costs and have a material adverse effect on our results of operations and financial condition. We cannot predict the impact of future economic conditions, fuel conservation measures, alternative fuel requirements, governmental regulation or technological advances in fuel economy and energy generation devices, all of which could reduce the production of and/or demand for natural gas.
We are subject to startup company risks.
The Company has a limited operating history and has primarily engaged in operations relating to the development of its proposed natural gas pipeline and storage facility plans. We are subject to many of the risks common to such enterprises, including the ability of the Company to implement its business plan, market acceptance of its proposed business, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, and uncertainty of the Company’s ability to generate revenues. There can be no assurance that the Company’s activities will be successful or result in significant revenues or profit for the Company, and the likelihood of the Company’s success must be considered in the light of the stage in its development. The Company believes it has engaged professionals and consultants experienced in the type of business contemplated by the Company; however, there can be no assurance that the predictions, opinions, analyses, or conclusions of such professionals will prove to be accurate. In addition, no assurance can be given that the Company will be able to consummate its business strategy and plans or that financial or other limitations may not force the Company to modify, alter, significantly delay, or significantly impede the implementation of such plans or the Company’s ability to continue operations. If the Company is unable to successfully implement its business strategy and plans, investors may lose their entire investment in the Company.
Potential investors should also be aware of the difficulties normally encountered developing a gas pipeline and storage enterprise. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the inception of the enterprise that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to product development, manufacturing, operations and distribution, and additional costs and expenses that may exceed current estimates.
Financial distress experienced by our future customers or other counterparties could have an adverse impact on us in the event they are unable to pay us for the products or services we provide or otherwise fulfill their obligations to us.
We may be exposed to the risk of loss in the event of nonperformance by our future customers or other counterparties. Some of these counterparties may be highly leveraged and subject to their own operating, market and regulatory risks, and some are experiencing, or may experience in the future, severe financial problems that have had or may have a significant impact on their creditworthiness.
Counterparties to any agreements with us may default on their obligations to us or file for bankruptcy protection. If a counterparty files for bankruptcy protection, we likely would be unable to collect all, or even a significant portion, of amounts that they owe to us. Counterparty defaults and bankruptcy filings could have a material adverse effect on our business, financial position, results of operations or cash flows. Furthermore, in the case of financially distressed customers, such events might force such customers to reduce or curtail their future use of our products and services, which could have a material adverse effect on our results of operations, financial condition, and cash flows.
We anticipate significant future capital needs and the availability of future capital is uncertain.
The Company has experienced negative cash flows from operations since its inception. The Company will be required to spend substantial funds to develop its business plans. The Company will need to raise additional capital. The Company’s capital requirements will depend on many factors, primarily relating to the problems, delays, expenses and complications frequently encountered by development stage companies; the progress of the Company’s permitting and development programs; the costs and timing of seeking regulatory approvals of the Company’s planned activities; and changes in economic, regulatory, or competitive conditions or the Company’s planned business. To satisfy its capital requirements, the Company may seek to raise funds in the public or private capital markets. The Company may seek additional funding through corporate collaborations and other financing vehicles. There can be no assurance that any such funding will be available to the Company, or if available, that it will be available on acceptable terms. If adequate funds are not available, the Company may be required to curtail significantly one or more of its planned pipeline and storage facility development programs or it may be required to obtain funds through arrangements with future collaborative partners. If the Company is successful in obtaining additional financing, the terms of the financing may have the effect of diluting or adversely affecting the holdings or the rights of the holders of Common Stock.
There is substantial doubt as to our ability to continue as a going concern.
Our financial results for the fiscal year ending July 31, 2019 show substantial losses. As of July 31, 2019, the Company had an Accumulated Deficit of ($6,552,748). For the fiscal years ending July 31, 2018 and July 31, 2019, the Company had losses of $1,495,687 and, $3,213,703, respectively. The accompanying financial statements have been prepared in conformity with the generally accepted accounting principles in the United States of America which contemplates the Company as a going concern. The Company has sought out additional investment to raise additional funds. However, there are no assurances that the Company will continue as a going concern without obtaining additional funding. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Our independent auditors, MaloneBailey, LLP, have expressed substantial doubt about our ability to continue as a going concern given our recurring losses from operations and net stockholder’s deficit. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. We may be subject to product liability or breach of contract claims if our products do not work as represented.
Our operating results may be adversely affected by unfavorable economic and market conditions.
Economic conditions worldwide have from time to time contributed to slowdowns in several industries, including the oil and gas industry, resulting in reduced demand and increased price competition for our planned products and services. Volatility in commodity prices or changes in markets for a given commodity might also have a negative impact on many of our future customers, which in turn could have a negative impact on their ability to meet their obligations to us. In addition, decreases in the price of natural gas may have a negative impact on our future operating results and cash flow.
Our ability to begin and complete construction on our planned project may be inhibited by difficulties in obtaining permits and rights-of-way, public opposition, cost overruns, inclement weather and other delays.
A variety of factors outside of our control, such as difficulties in obtaining permits and rights-of-way or other regulatory approvals that can be exacerbated by public opposition to our planned project may cause delays in our ability to begin construction of our planned project. Inclement weather, natural disasters and delays in performance by third-party contractors, may result in increased costs or delays in construction. Significant cost overruns or delays could have a material adverse effect on our return on investment, results of operations and cash flows and could result in cancellation of the planned project or limit our ability to pursue other opportunities.
Additionally, we must obtain and maintain the required permits and rights to construct and operate pipelines on other owners’ land. We may not be able to obtain the required permits or rights at all, or obtaining the required permits and rights may take longer than anticipated, which could cause us to not be able to complete the planned project.
We face competition from other pipelines and other forms of transportation into the area we intend to serve as well as with respect to the supply for our pipeline systems.
Any future pipeline system or other form of transportation that delivers natural gas into the area that our planned pipelines would serve could offer transportation services that are more desirable than those we intend to provide because of price, location, facilities or other factors. We also could experience competition for the supply of natural gas from both existing and proposed pipeline systems.
Commodity transportation and storage activities involve numerous risks that may result in accidents or otherwise adversely affect our operations.
There are a variety of hazards and operating risks inherent to transportation and storage of natural gas and other products, such as leaks, releases, explosions, mechanical problems and damage caused by third parties. These risks could result in serious injury and loss of human life, significant damage to property and natural resources, environmental pollution and impairment of operations, any of which also could result in substantial financial losses. For pipeline and storage assets located near populated areas, including residential areas, commercial business centers, industrial sites and other public gathering areas, the level of damage resulting from these risks may be greater. Incidents that cause an interruption of service, such as when unrelated third-party construction damages a pipeline or a newly completed expansion experiences a weld failure, may negatively impact our revenues and cash flows while the affected asset is temporarily out of service.
Terrorist attacks or “cyber security” events, or the threat of them, may adversely affect our business.
The U.S. government has issued public warnings that indicate that pipelines and other infrastructure assets might be specific targets of terrorist organizations or “cyber security” events. These potential targets might include our planned pipeline or operating systems. A cyber security event could affect our ability to operate or control our facilities or disrupt our operations; also, customer information could be stolen. The occurrence of one of these events could cause a substantial decrease in revenues and cash flows, increased costs to respond or other financial loss, damage to our reputation, increased regulation or litigation or inaccurate information reported from our operations. There is no assurance that adequate cyber sabotage and terrorism insurance will be available at rates we believe are reasonable in the near future. These developments may subject our planned operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, results of operations and financial condition.
Hurricanes and other natural disasters could have an adverse effect on our planned business, financial condition and results of operations.
Our planned pipelines and other assets may be located in areas that are susceptible to hurricanes and other natural disasters. These natural disasters could potentially damage or destroy our planned assets and disrupt the supply of the product we expect to transport. Natural disasters can similarly affect the facilities of our potential customers. In either case, losses could exceed our insurance coverage, if any, and our business, financial condition and results of operations could be adversely affected, perhaps materially.
Our planned business requires the retention and recruitment of a skilled workforce, and the loss of such workforce could result in the failure to implement our business plans.
Our planned operations and management require the recruitment and retention of a skilled workforce, including engineers, technical personnel and other professionals. We expect to compete with other companies in the energy industry for this skilled workforce. If we are unable to recruit new employees with the required knowledge and experience, our business could be negatively impacted. In addition, we would experience increased allocated costs to retain and recruit these professionals.
If we are unable to retain our President and Chief Executive Officer, our ability to execute our business strategy, including our growth strategy, may be hindered.
Our success depends in part on the performance of and our ability to retain our President/Chief Executive Officer, Michael Ward. Mr. Ward has been responsible for developing our strategy and executing our plans. If we are not successful in retaining Mr. Ward, or replacing him, our business, financial condition or results of operations will be adversely affected. We do not maintain key personnel insurance.
Risks Related to Regulation
New regulations, rulemaking and oversight, as well as changes in regulations, by regulatory agencies having jurisdiction over our planned operations could adversely impact our earnings, cash flows and operations.
Our planned assets and operations are subject to regulation and oversight by federal, state, and local regulatory authorities. Regulatory actions taken by these agencies have the potential to adversely affect our future profitability. Regulation affects almost every part of our planned business and extends to such matters as (i) the contracts for service we expect to enter into with customers; (ii) the certification and construction of new facilities; (iii) the integrity, safety and security of facilities and operations; (iv) the acquisition, extension, disposition or abandonment of services or facilities; (v) reporting and information posting requirements; (vi) the maintenance of accounts and records; and (vii) relationships with companies involved in various aspects of the natural gas and energy businesses.
Should we fail to comply with any applicable statutes, rules, regulations, and orders of such regulatory authorities, we could be subject to substantial penalties and fines. Furthermore, new laws or regulations sometimes arise from unexpected sources. New laws or regulations, or different interpretations of existing laws or regulations, including unexpected policy changes, applicable to us or our planned assets could have a material adverse impact on our business, financial condition and results of operations.
Environmental, health and safety laws and regulations could expose us to significant costs and liabilities.
Our planned operations are subject to federal, state, and local laws, regulations and potential liabilities arising under or relating to the protection or preservation of the environment, natural resources and human health and safety. Such laws and regulations affect many aspects of our planned operations, and generally require us to obtain and comply with various environmental registrations, licenses, permits, inspections and other approvals. Liability under such laws and regulations may be incurred without regard to fault under CERCLA, the Resource Conservation and Recovery Act, the Federal Clean Water Act or analogous state or other laws for the remediation of contaminated areas. Private parties also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with such laws and regulations or for personal injury or property damage. Our insurance may not cover all environmental risks and costs and/or may not provide sufficient coverage in the event an environmental claim is made against us.
Failure to comply with these laws and regulations also may expose us to civil, criminal and administrative fines, penalties and/or interruptions in our operations that could influence our business, financial position, results of operations and prospects.
Further, we cannot ensure that such existing laws and regulations will not be revised or that new laws or regulations will not be adopted or become applicable to us. There can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate. Revised or additional regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, could have a material adverse effect on our business, financial position, results of operations and prospects.
Risks Relating to an Investment in our Securities
If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.
We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.
In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting, or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. For example, on January 30, 2009, the SEC adopted rules requiring companies to provide their financial statements in interactive data format using the eXtensible Business Reporting Language, or XBRL. We currently have to comply with these rules. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
Because of the early stage of development and the nature of our business, our securities are considered highly speculative.
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We have not generated any revenues nor have we realized a profit from our planned operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon our ability to build our planned pipelines and other related facilities and enter into contracts for the purchase and sale of natural gas. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.
We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.
The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.
Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks and are subject to the penny stock rules; thereby, potentially limiting the liquidity of our shares.
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on NASD broker-dealers who make a market in “penny stocks”. A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Our shares are quoted on the OTC PINK. NASD broker-dealers who act as market makers for our shares generally facilitate purchases and sales of our shares. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.
In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.
Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.
Our Common Stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to): (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-trading and particularly, microcap companies.
Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTC Pink and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.
Our officers, directors and principal stockholders can exert significant influence over us and may make decisions which may not be in the best interests of all stockholders.
Our officers, directors and principal stockholders (greater than 5% stockholders) collectively own a majority of our outstanding Common Stock. As a result of such ownership, these stockholders will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our Common Stock could have the effect of delaying or preventing a change of control of us or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our Common Stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of Common Stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders, and accordingly, they could cause us to enter into transactions or agreements that we would not otherwise consider.
INTERNATIONAL BUSINESS RISK
International regulation may adversely affect our planned revenues.
We plan to market operate a segment of our business in Mexico. In addition to regulation by the U.S. government, our operations will be subject to environmental and safety regulations in Mexico. Regulations will vary from country to country and will vary from those of the United States. The difference in regulations under U.S. law and the laws of foreign countries may be significant and, in order to comply with the laws of these foreign countries. Any changes in our business practices or plans will require response to the laws of foreign countries and will result in additional expense to the Company and delay our proposed business plans.
Additionally, we may be required to obtain certifications or approvals by foreign governments to market and sell the products. We may also be required to obtain approval from the U.S. government to export the products. If we are delayed in receiving, or are unable to obtain import or export clearances, or if we are unable to comply with foreign regulatory requirements, we will be unable to execute our complete marketing strategy.
Currency Fluctuations May Make Our Products Uncompetitive In Some Important Geographies
If the local currency of our products becomes too strong, it may not be possible to sell our products at a profit in regions where significant potential purchasers exist.
ITEM 1B.
ITEM 1B. Unresolved Staff Comments
Not Applicable to Smaller Reporting Companies.
ITEM 2.
ITEM 2. Properties
Our executive and administrative offices are located at 900 Isom Rd, Suite 306, San Antonio, Texas. These offices consist of a total of 4,051 square feet and are rented by 4Ward Resources for a three (3) year term from July 1, 2019 through June 30, 2022, presently at a cost of $7,033 per month. The lease rate increases in each succeeding year of the term. We believe that our office spaces are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.
ITEM 3.
ITEM 3. Legal Proceedings
There are no material legal proceedings pending against the Company to the knowledge of management.
ITEM 4.
ITEM 4. Mine Safety Disclosures
Not Applicable.
PART II
ITEM 5.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
(a) Market Information
. Our common stock is currently quoted on the OTC Markets. Our trading symbol is “MRGE”.
OTC Markets securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Market securities transactions are conducted through a telephone and computer network connecting dealers. OTC Market issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
The quarterly high and low reported sale prices for our common stock as quoted on the OTC Markets for the periods indicated are as follows:
(b)Holders
. The Company has approximately 44 shareholders of record holding common stock.
(c) Dividends.
The Company has not paid any cash dividends to date, and has no intention of paying any cash dividends on the Common Stock in the foreseeable future. The declaration and payment of dividends is subject to the discretion of the Company’s Board of Directors and to certain limitations imposed under Nevada law. The timing, amount and form of dividends, if any, will depend upon, among other things, the Company’s results of operations, financial condition, cash requirements, and other factors deemed relevant by the Board of Directors. The Company intends to retain any future earnings for use in its business.
(d) Securities authorized for issuance under equity compensation plans
: None.
(e) Recent Sales of unregistered securities:
For the period ended July 31, 2019, the Company sold 13,598,999 shares of common stock to seventeen (17) accredited investors for cash proceeds of $325,978. For the period ended July 31, 2019, the Company issued 6,000,000 shares of common stock as compensation to three (3) consultants in the amount of $466,800.
The Company believes the offer and sale of the shares of common stock above were made in reliance upon the exemptions from registration under Section 4(a)(2) and Regulation D Rule 506 of the Securities Act of 1933, as amended (the “Securities Act”). The offers and sales represented private transactions not involving a public offering. As such, the shares may not be offered or sold in the United States unless they are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.
ITEM 6.
ITEM 6. Selected Financial Data
Not applicable to small reporting company.
ITEM 7.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read together with our financial statements audited by MaloneBailey, LLP, our independent registered public accounting firm and the related notes that are included elsewhere in this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the caption “Risk Factors” or in other parts of this report. See “Cautionary Note Regarding Forward-Looking Statements.”
Forward Looking Statements
Some of the statements contained in this Annual Report that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Annual Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:
·
our ability to raise capital when needed and on acceptable terms and conditions;
·
our ability to attract and retain management, and to integrate and maintain technical information and management information systems;
·
the intensity of competition;
·
general economic conditions; and
·
other factors discussed in Risk Factors.
All forward-looking statements made in connection with this Annual Report which are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
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 be to transport and store natural gas in a proposed 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
Twelve month period ended July 31, 2019
For the twelve (12) month period ended July 31, 2019, we generated no revenue and incurred a net loss of $3,213,703.
Our net loss of $3,213,703 for the twelve (12) month period ended July 31, 2019 was the result of operating expenses of $1,482,736 and other expense (comprised of interest expense) of $1,730,967. Our operating expenses consisted of $1,376,055 in general and administrative expenses, and $106,681 in professional fees.
Twelve month period ended July 31, 2018
For the twelve (12) month period ended July 31, 2018, we generated no revenue and incurred a net loss of $1,495,687.
Our net loss of $1,495,687 for the twelve (12) month period ended July 31, 2018 was the result of operating expenses of $1,065,035 and other expense (comprised of interest expense) of $430,652. Our operating expenses consisted of $970,090 in general and administrative expenses, and $94,945 in professional fees.
Costs and Expenses
Our primary costs going forward are related to engineering, travel, professional fees, and legal fees associated with our proposed pipeline and natural gas storage activities in Mexico.
For the years ended July 31, 2018 and July 31, 2019, total general and administrative expenses were $970,090 and $1,376,055, respectively.
For the year ended July 31, 2018, we had $970,090 in general and administrative expenses compared to $1,376,055, in general and administrative expense for the year ended July 31, 2019. The $405,965 increase in general and administrative expenses was primarily the result of reductions of spending related to directors fees, filing fees, conferences, non-executive payroll and payroll tax expenses, travel expenses and utilities, net of increases in consulting and public relations fees, financing fees, and rent expense.
The professional fees for the years ending July 31, 2018 and July 31, 2019 were $94,945 and $106,681, respectively. The $11,736 increase was primarily result of reductions of spending related to audit fees, net of increases in tax preparation and audit fees.
The executive compensation for the years ending July 31, 2018 and July 31, 2019 was $466,000 and $466,000, respectively. No change was due to the same executives on the payroll during both years with no change in compensation amounts.
Liquidity and Capital Resources
Cash Flows
Operating Activities
For the twelve (12) month period ended July 31, 2019, net cash used in operating activities was $335,249. The negative cash flow for the twelve (12) months ended July 31, 2019 related to our net loss of $3,213,703, adjusted for depreciation of $1,581, an increase in financing fees of $30,500, a change of $1,392,576 in convertible debt due to fair market value, an increase of $288,250 in convertible debt due to default, an increase of $466,800 in issuance of stock compensation for services and fees, prepaid expenses of $546, an increase of $249,441 in accounts payable and accrued expenses and an increase of $448,760 in accrued salaries and payroll taxes - related parties.
For the twelve (12) month period ended July 31, 2018, net cash used in operating activities was $221,998. The negative cash flow for the twelve (12) months ended July 31, 2018 related to our net loss of $1,495,687, adjusted for depreciation of $1,581, a change of $308,180 in convertible debt due to fair market value, an increase of $83,500 in convertible debt due to default, an increase of $48,110 in issuance of stock compensation for services and fees, a decrease of prepaid expenses of $747, an increase of $288,315 in accounts payable and accrued expenses and an increase of $544,750 in accrued salaries and payroll taxes - related parties.
Investing Activities
For the twelve (12) months ended July 31, 2019 net cash used in investing activities was nil.
For the twelve (12) months ended July 31, 2018 net cash used in investing activities was nil.
Financing Activities
For the twelve (12) months ended July 31, 2019, net cash provided from financing activities was $392,225. The positive cash flow from financing activities for such period was comprised of a decrease in loans payable from related parties, proceeds from sale of common stock and proceeds from sale of convertible debentures, net of loan repayments to a related party and convertible notes.
For the twelve (12) months ended July 31, 2018, net cash provided from financing activities was $223,702. The positive cash flow from financing activities for such period was comprised of loans payable from related party and proceeds from sales of convertible debentures, net of loan repayments to a related party.
Liquidity
To date, we have funded our operations primarily with capital provided and loans provided by related parties, accruing of salaries and accounts payable, sales of common stock and convertible debentures.
As of July 31, 2019, Mirage Energy Corporation had $70,456 in cash on hand and prepaid expenses of $1,760. Since Mirage Energy Corporation is 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.
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenues when earned which shall be as products are shipped and services are delivered to customers or distributors. The Company shall also record accounts receivable for revenue earned but not yet collected.
Income Taxes
Income taxes are provided based upon the liability method of accounting pursuant to FASB ASC 740-10-25 Income Taxes - Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by FASB ASC 740-10-25-5.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.
At July 31, 2019, the Company had net operating loss carry forwards of approximately $4,105,783, which will expire in 2038 and are calculated at an expected tax rate of approximately 21%.
FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has not taken any tax positions that would require disclosure under FASB ASC 740.
Pursuant to FASB ASC 740, income taxes are provided for based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by FASB ASC 740 to allow recognition of such assets.
Earnings (Loss) Per Share (“EPS”)
FASB ASC 260, Earnings Per Share provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted losses per share were the same at the reporting dates as there were no common stock equivalents considered dilutive and outstanding.
Derivative Instruments
FASB ASC 815, Derivatives and Hedging establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk; or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
Impairment of Long-Lived Assets
Long-lived assets of the Company, including the Technology Rights, are reviewed for impairment when changes in circumstances indicate their carrying value has become impaired, pursuant to guidance established in the FASB ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Management considers assets to be impaired if the carrying amount of an asset exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the asset will be written down to fair value, and a loss is recorded as the difference between the carrying value and the fair value. Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.
Fair Value of Financial Instruments
The Company’s financial instruments as defined by FASB ASC 825-10-50 include cash, trade accounts receivable, and accounts payable and accrued expenses.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Inflation
It is our opinion that inflation has not had a material effect on our operations.
ITEM 7A.
ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk
Not applicable.
ITEM 8.
ITEM 8. Financial Statements and Supplementary Data
MIRAGE ENERGY CORPORATION
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2019 AND 2018
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Mirage Energy Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Mirage Energy Corporation and its subsidiaries (collectively, the “Company”) as of July 31, 2019 and 2018, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2019 and 2018, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2017.
Houston, Texas
February 21, 2020
MIRAGE ENERGY CORPORATION
Consolidated Balance Sheets
The accompanying notes are an integral part of these consolidated financial statements
.
MIRAGE ENERGY CORPORATION
Consolidated Statements of Operations
The accompanying notes are an integral part of these consolidated financial statements.
MIRAGE ENERGY CORPORATION
Statements of Stockholders’ (Deficit)
The accompanying notes are an integral part of these consolidated financial statements.
MIRAGE ENERGY CORPORATION
Consolidated Statement of Cash Flows
The accompanying notes are an integral part of these consolidated financial statements.
MIRAGE ENERGY CORPORATION
Notes to the Unaudited Consolidated Financial Statements
July 31, 2019 and 2018
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.
Leases
In February 2016, the FASB issued guidance regarding the accounting for leases on “Leases” (ASC 842). The guidance requires recognition of most leases on the balance sheet and to disclose key information about leasing arrangements. The Company has assessed the impact of the office rental lease as immaterial. The term of the existing lease on the office premises ends June 30, 2022.
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 July 31, 2019 and July 31, 2018, the Company has convertible notes with a total base principal of $53,000 and $206,000, respectively, which become convertible in 180 days. There is a potential for 5,054,533 shares if the principal of $53,000 were converted at July 31, 2019. These notes will have a dilutive effect on common stock for the year ended July 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 July 31, 2019, there were 328,124 warrants issued and outstanding which are equal to 328,124 shares which have not been exercised.
Basis of Consolidation
These financial statements include the accounts of the Company and its wholly owned subsidiaries, 4Ward Resources, Inc., Cenote Energy, S. de R.L. de C.V., WPF Transmission, Inc., and WPF Mexico Pipelines, S. de R.L. de C.V. All material intercompany balances and transactions have been eliminated.
Long Lived Assets
In accordance with ASC 360 “Property Plant and Equipment,” the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets are amortized over their estimated useful lives. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $70,456 and $13,480 in cash at July 31, 2019 and 2018, respectively.
Convertible Debt
The Company follows ASC 480-10, Distinguishing Liabilities from Equity
(“ASC 480-10”) in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives, and are carried as a liability at fair value at each balance sheet date with remeasurements reported in interest expense in the accompanying Consolidated Statements of Operations.
Financial Instruments
The Company follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents, accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company evaluates the collectability of its accounts receivable on an on-going basis and request deposits whenever it is necessary. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Share-based Expenses
ASC 718 “Compensation - Stock Compensation” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Consultant share-based compensation was paid in the amount of $48,110 in 2018 and $466,800 in 2019.
Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of July 31, 2019 and 2018.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no contingencies as of July 31, 2019.
Future obligations for the rent of the office lease as of July 31, 2019 and 2018 were $247,432 and $83,045, respectively.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has reviewed these provisions and will apply our next fiscal year which begins August 1, 2019.
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 $3,213,703 and had net cash used in operations of $335,249 for the year ended July 31, 2019 and had an accumulated deficit and working capital deficit of $6,552,748 and $3,158,670 at that date. The Company has not established an ongoing source of revenues sufficient to cover its operating cost, and requires additional capital to commence its operating plan. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company may include, but not be limited to: sales of equity instruments; traditional financing, such as loans; sale of participation interests and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - DEBT
As of July 31, 2019, the number of shares of common stock that can be issued for convertible debt as per Note 10 - Subsequent Events are 4,830,016. The other notes were not convertible at July 31, 2019.
For the year ended July 31, 2019, the Company received proceeds of $329,500 from convertible notes, which was net of $30,500 in fees deducted and $20,000 paid directly to the vendor, and converted $1,663,929 of convertible notes and interest. There was a $1,381,885 loss due to change in fair value of convertible debt and a $13,191 loss due to change in fair value of warrants. For the year ended July 31, 2018, the Company received $279,000 from convertible notes, which was net of $16,000 in fees deducted and $18,500 paid directly to the vendor, and converted $473,767 of convertible notes and interest. There was a $308,180 loss due to change in fair value of convertible debt.
A summary of debt at July 31, 2019 and July 31, 2018 is as follows:
NOTE 5 - EQUITY
Authorized Stock
The Company has authorized 900,000,000 common shares with a par value of $0.001 per share. The Company also designated 10,000,000 shares of Series A Preferred Stock with a par value of $0.001 per share which were issued to Mr. Michael Ward on January 23, 2017. There are 10,000,000 shares of preferred stock that are convertible into 200,000,000 shares of common stock.
Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. Each share of Series A Preferred Stock has the right to be converted into twenty (20) shares of our Common Stock. Holders of Series A Preferred Stock have the right to vote such shares on an “as converted” basis, unless and until such shares are converted into shares of Common Stock.
Common Shares
For the year ended July 31, 2019, the Company issued 44,658,950 shares of common stock for conversion of convertible notes, totaling $1,663,929. For the period ended July 31, 2019, the Company sold 13,598,999 shares of common stock to investors for cash proceeds of $325,978. For the period ended July 31, 2019, the Company issued 6,000,000 shares of common stock as compensation to consultants in the amount of $460,800. For the year ended July 31, 2018, the Company issued 31,088,084 shares of common stock for conversion of convertible notes, totaling $473,767. For the period ended July 31, 2018, the Company sold 50,000 shares of common stock to investors for cash proceeds of $25,000. For the period ended July 31, 2018, the Company issued 1,300,000 shares of common stock as compensation to consultants and directors in the amount of $48,110. Below you will find the individual transactions for the year ended July 31, 2019:
On August 28, 2018, Power Up Lending Group Ltd converted principal in the amount of $20,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 2,702,703 shares of common stock.
On August 31, 2018, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 2,000,000 shares of common stock.
On September 5, 2018, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 1,948,052 shares of common stock.
On September 10, 2018, Power Up Lending Group Ltd converted the remaining principal in the amount of $14,500 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 1,542,553 shares of common stock along with $2,580 of accrued interest for 274,468 shares of common stock.
On September 11, 2018, JSJ Investments, Inc. converted principal in the amount of $25,000 of the $75,000 note issued January 5, 2018 for 3,223,726 shares of common stock.
On January 7, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Robert Soer valued at $0.0250 per share for $20,000.
On January 9, 2019, the Company offered and sold One Million (1,000,000) shares of common stock to David Damerjian valued at $0.0250 per share for $25,000.
On January 14, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to David Damerjian valued at $0.0250 per share for $20,000.
On January 14, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Henry Lackner valued at $0.0250 per share for $20,000.
On January 15, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Christine Maly valued at $0.0250 per share for $20,000.
On January 18, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Henry Lackner valued at $0.0250 per share for $20,000.
On February 11, 2019, Power Up Lending Group Ltd converted principal in the amount of $20,000 of the $32,000 note issued June 12, 2018 that was defaulted to $48,000 for 1,234,568 shares of common stock.
On February 12, 2019, JSJ Investments Inc converted the remaining principal in the amount of $30,000 of the $75,000 note issued January 5, 2018 that defaulted to $174,000 along with $6,148 of accrued interest for 4,694,538 shares of common stock.
On February 13, 2019, the Company offered and sold Four Hundred Thousand (400,000) shares of common stock to John Drobecker valued at $0.0250 per share for $10,000.
On February 13, 2019, the Company offered and sold Four Hundred Thousand (400,000) shares of common stock to Robert P Soer valued at $0.0250 per share for $10,000.
On February 13, 2019, the Company offered and sold Two Hundred Thousand (200,000) shares of common stock to Henry Lackner, Jr valued at $0.0250 per share for $5,000.
On February 13, 2019, the Company offered and sold Two Hundred Thousand (200,000) shares of common stock to Dylan Lackner valued at $0.0250 per share for $5,000.
On February 11, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $32,000 note issued June 12, 2018 that was defaulted to $48,000 for 925,926 shares of common stock.
On February 14, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Richard A. Lewis valued at $0.0250 per share for $20,000.
On February 14, 2019, Power Up Lending Group Ltd converted the remaining principal in the amount of $13,000 of the $32,000 note issued June 12, 2018 that was defaulted to $48,000 along with $1,920 of accrued interest for 920,988 shares of common stock.
On February 15, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $38,000 note issued July 10, 2018 that was defaulted to $57,000 for 887,574 shares of common stock.
On February 19, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $38,000 note issued July 10, 2018 that was defaulted to $57,000 for 681,818 shares of common stock.
On February 21, 2019, Power Up Lending Group Ltd converted principal in the amount of $18,000 of the $38,000 note issued July 10, 2018 that was defaulted to $57,000 for 978,261 shares of common stock.
On February 22, 2019, the Company offered and sold One Million Five Hundred Thousand (1,500,000) shares of common stock to David Damerjian valued at $0.0200 per share for $30,000.
On February 22, 2019, the Company offered and sold One Million Thousand (1,000,000) shares of common stock to Christine M Bulva valued at $0.0200 per share for $20,000.
On February 22, 2019, the Company offered and sold Two Hundred Fifty Thousand (250,000) shares of common stock to Henry J Lackner valued at $0.0200 per share for $5,000.
On February 22, 2019, the Company offered and sold Two Hundred Fifty Thousand (250,000) shares of common stock to Lisa Rooney valued at $0.0200 per share for $5,000.
On February 22, 2019, the Company offered and sold Two Hundred Fifty Thousand (250,000) shares of common stock to Danielle Lackner valued at $0.0200 per share for $5,000.
On February 22, 2019, Power Up Lending Group Ltd converted the remaining principal in the amount of $9,000 of the $38,000 note issued July 10, 2018 that was defaulted to $57,000 along with $2,280 of accrued interest for 659,649 shares of common stock.
On February 25, 2019, the Company offered and sold Five Hundred Thousand (500,000) shares of common stock to William Grimms valued at $0.0200 per share for $10,000.
On February 25, 2019, the Company offered and sold Five Hundred Thousand (500,000) shares of common stock to John Drobecker valued at $0.0200 per share for $10,000.
On February 25, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $35,000 note issued August 6, 2018 that was defaulted to $52,500 for 1,013,514 shares of common stock.
On February 25, 2019, Power Up Lending Group Ltd converted principal in the amount of $17,000 of the $35,000 note issued August 6, 2018 that was defaulted to $52,500 for 1,148,649 shares of common stock.
On February 26, 2019, Power Up Lending Group Ltd converted the remaining principal in the amount of $20,500 of the $35,000 note issued August 6, 2018 that was defaulted to $52,500 along with $2,100 of accrued interest for 1,527,027 shares of common stock.
On February 27, 2019, JSJ Investments, Inc. converted principal in the amount of $45,000 of the $144,000 penalty on note issued January 5, 2018 for 2,727,272 shares of common stock.
On February 28, 2019, the Company offered and sold Five Hundred Thousand (500,000) shares of common stock to Christopher Thompson valued at $0.0200 per share for $10,000.
On March 1, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $33,000 note issued August 27, 2018 that was defaulted to $49,500 for 1,013,514 shares of common stock.
On March 4, 2019, Power Up Lending Group Ltd converted principal in the amount of $14,500 of the $33,000 note issued August 27, 2018 that was defaulted to $49,500 for 979,730 shares of common stock.
On March 4, 2019, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $33,000 note issued August 27, 2018 that was defaulted to $49,500 for 1,013,514 shares of common stock.
On March 6, 2019, the Company offered and sold Two Hundred Forty-Nine Thousand (249,000) shares of common stock to Cameron Douglas McDonald valued at $0.0200 per share for $4,980.
On March 6, 2019, Power Up Lending Group Ltd converted the remaining principal in the amount of $5,000 of the $33,000 note issued August 27, 2018 that was defaulted to $49,500 along with $1,980 of accrued interest for 471,622 shares of common stock.
On March 6, 2019, JSJ Investments, Inc. converted principal in the amount of $99,000 of the $144,000 penalty on note issued January 5, 2018 for 6,545,454 shares of common stock.
On April 16, 2019, the Company offered and sold Six Hundred Sixty-Six Thousand Six Hundred Sixty-Seven (666,667) shares of common stock to 321gold Ltd valued at $0.0300 per share for $20,000.
On May 24, 2019, Crown Bridge Partners, LLC converted principal in the amount of $9,750 (including $500 deposit fee) of the $35,000 note issued November 13, 2018 that was defaulted to $53,500 for 500,000 shares of common stock.
On June 10, 2019, Crown Bridge Partners, LLC converted principal in the amount of $14,940 (including $500 deposit fee) of the $35,000 note issued November 13, 2018 that was defaulted to $53,500 for 830,000 shares of common stock.
On June 26, 2019, the Company offered and sold Two Hundred Thousand (200,000) shares of common stock to accredited investor valued at $0.0300 per share for $6,000. These shares were subsequently issued as 333,333 shares and 133,333 were cancelled in August 2019.
On June 27, 2019, the Company offered and sold Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three (333,333) shares of common stock to accredited investor valued at $0.0300 per share for $10,000.
On June 27, 2019, the Company offered and sold Three Hundred Thirty-Three Thousand Three Hundred and Thirty-Three (333,333) shares of common stock to accredited investor valued at $0.0300 per share for $10,000.
On June 28, 2019, Crown Bridge Partners, LLC converted principal in the amount of $12,045 (including $500 deposit fee) of the $35,000 note issued November 13, 2018 that was defaulted to $53,500 for 730,000 shares of common stock.
On June 29, 2019, the Company entered into consulting agreement with Candice Rene with total consideration of 4,000,000 shares of common stock valued at $311,200.
On June 29, 2019, the Company entered into consulting agreement with Mark Sands with total consideration of 1,000,000 shares of common stock valued at $77,800.
On June 29, 2019, the Company entered into consulting agreement with Robert Oram with total consideration of 1,000,000 shares of common stock valued at $77,800.
On July 15, 2019, the Company offered and sold Six Hundred Sixty-Six Thousand Six Hundred and Sixty-Six (66,666) shares of common stock to accredited investor valued at $0.0750 per share for $5,000.
On July 15, 2019, Crown Bridge Partners, LLC converted principal in the amount of $14,954 (including $500 deposit fee) of the $35,000 note issued November 13, 2018 that was defaulted to $54,000 for 1,240,000 shares of common stock.
On July 31, 2019, Crown Bridge Partners, LLC converted the remaining principal in the amount of $21,811 (including $500 deposit fee) of the $35,000 note issued November 13, 2018 that was defaulted to $54,000 along with $5,250 of accrued interest for 2,243,830 shares of common stock.
Warrants
On November 13, 2018, the Company entered into Securities Purchase Agreement with Crown Bridge Partners, LLC (Crown) to issue a convertible note in the aggregate principal amount of $105,000 to be funded in three (3) tranches, of which (2) tranches have been received, and in addition for each tranche the Company will have to provide 164,062 warrant shares for holder to purchase at any time on or after the issuance with the exercise price of $0.32 and with a term of five years commencing on the Issuance Date and ending on the five-year anniversary.
We have received two Common Stock Purchase Warrants through July 31, 2019 equal to a total of 328,124 shares which has a fair value of $13,191.
NOTE 6 - PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Certain tax attributes are subject to an annual limitation as a result of the acquisition of our subsidiaries, which constitute a change of ownership as defined under Internal Revenue Code Section 382.
The Company is subject to taxation in the United States and certain state jurisdictions.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:
Net deferred tax assets consist of the following components as of:
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $977,833, which expire commencing in fiscal 2039, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years. The tax years still left open are 2014, 2015, 2016, 2017, 2018 and 2019.
NOTE 7 - RELATED PARTY TRANSACTIONS
On January 24, 2017, Mirage Energy Corporation, a Nevada corporation (“Mirage” or the “Company”) entered into an agreement with Mirage’s President and CEO, Mr. Michael Ward, whereby Mirage acquired all of the issued and outstanding shares of 4Ward Resources Inc., a Texas corporation (“4Ward Resources”) from Mr. Ward in exchange for 10,000,000 shares of Mirage’s Common Stock and 10,000,000 shares of Mirage’s Series A Preferred Stock. The acquisition of 4Ward Resources was completed on January 24, 2017.
On January 28, 2017, 4Ward Resources, Inc., Mirage Energy Corporation’s wholly owned subsidiary, acquired Michael Ward’s ninety (90%) percent interest in two Mexican companies. The remaining ten (10%) percent interest was acquired by Mirage Energy Corporation from Patrick Dosser. Patrick Dosser is Michael Ward’s son.
Together, Mirage Energy and 4Ward Resources own 100% of the two Mexican corporations. The two Mexican corporations are WPF MEXICO PIPELINES, S. de R.L. de C.V., and CENOTE ENERGY S. de R.L. de C.V. Additionally, 4Ward Resources acquired all of Michael Ward’s interest in WPF TRANSMISSION, INC., a Texas corporation. These transactions were valued at their carry over basis of $140,286, representing $99,821 expended on behalf of these companies by 4Ward Resources, $1,500 expended by Mr. Michael Ward to be reimbursed by 4Ward Resources and $38,965 whose vendor payments will be assumed or paid by 4Ward Resources. These transactions were accounted for as a merger of entities under common control under ASC 805-50 whereby the financial information has been combined from the first day of the first period presented similar to a pooling of interest.
As of July 31, 2019, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,801,989. Accrued salaries of $1,801,989 combined with accrued payroll taxes of $59,947 for a total accrued related party salaries and payroll tax of $1,861,936 for the period from June 2015 until July 31, 2019.
Also, Mr. Michael Ward provided $40,100 directly to the company with an additional $26,725 owed to Mr. Ward for monies outlaid on behalf of the Company for a total loan amount of $87,903 which was netted for $85,674 payments received leaving a net due Mr. Ward $2,229 at July 31, 2018 which has decreased to $0 as of July 31, 2019. This resulted from additional $24,898 of expenses paid which increased the total amount due to $27,127 less repayments of $27,127 during the year ended July 31, 2019.
Additionally, White Boy Partnership, LLC, a company owned by the spouse of the CEO, provided an additional loan of $187,600 to 4Ward Resources, Inc. Repayments of $34,724 were made during the year ended July 31, 2018, which reduced the balance due to $152,876 as of July 31, 2018. Repayments of $152,876 were made during the year ended July 31, 2019, which reduced the balance due to $0 as of July 31, 2019.
NOTE 8 - LEASES
On June 9, 2016, the Company entered into a Lease Agreement for its San Antonio, Texas office lease location. The Lease Period 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 one (1) 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 $83,974 and $82,178 for the year ended July 31, 2019 and July 31, 2018 respectively. Below is the schedule of rent for the remaining Lease term as of July 31, 2019.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company committed to eighteen (18) months of Acquisition of Pipeline Rights of Way to Marcos y Asociados with a total amount of $77,844 which was due April 15, 2018 and not paid as of July 31, 2019. Interest will continue accruing after July 31, 2019 until it is paid.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 10 - SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to July 31, 2019, identifying those that are required to be disclosed as follows:
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.
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.
In October 2019, the Company offered and sold 2,000,000 shares of common stock at $0.040 per share for $80,000.
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.
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 Common Stock Warrant, adjusted for dilution, that was issued with November 13, 2018 note.
ITEM 9.
ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of July 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
During the evaluation of disclosure controls and procedures as of July 31, 2019, management identified material weaknesses in internal control over financial reporting, which management considers an integral component of disclosure controls and procedures. Material weaknesses identified include the lack of any segregation of duties, lack of appropriate accounting policies and management’s assessment of internal control over financial reporting. As a result of the material weaknesses identified, management concluded that Company’s disclosure controls and procedures were not effective.
Notwithstanding the existence of these material weaknesses, management believes that the consolidated financial statements in this annual report on Form 10-K fairly present, in all material respects, Company’s financial condition as of July 31, 2019 and 2018, and results of its operations and cash flows for the years ended July 31, 2019 and 2018, in conformity with United States generally accepted accounting principles (GAAP).
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the chief executive officer and the chief financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
*
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;
*
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and
*
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of July 31, 2019, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified material weaknesses in internal control over financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified are disclosed below.
Ineffective Oversight of Financial Reporting
. The Company has not provided an appropriate level of oversight of the financial reporting process and has not appropriately monitored the Company’s system of internal control. The Company’s monitoring of management’s assessment of internal control over financial reporting did not result in appropriate actions taken by management to remedy the deficiencies in the process to assess internal control over financial reporting. The Company has no independent audit committee overseeing the financial reporting process.
Failure to Segregate Duties
. Management has not maintained any segregation of duties within the Company due to its reliance on individuals to fill multiple roles and responsibilities. Our failure to segregate duties has been a material weakness since inception through this annual report.
Sufficiency of Accounting Resources
. The Company has limited accounting personnel to prepare its financial statements. The insufficiency of our accounting resources has been a material weakness since inception.
As a result of the material weaknesses in internal control over financial reporting described above, the Company’s management has concluded that, as of July 31, 2019, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged the Company’s independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
During the period ended July 31, 2019, there have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
ITEM 9B.
ITEM 9B. Other Information
Debt Financing
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.
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.
On February 10, 2020, Crown Bridge Partners, LLC exercised the right to purchase 4,109,828 shares of common stock per Common Stock Warrant, adjusted for dilution, that was issued with November 13, 2018 note.
Equity Financing
In October 2019, the Company offered and sold 2,000,000 shares of common stock at $0.040 per share for $80,000.
In January 2020, the Company offered and sold 4,200,000 shares of common stock at $0.035 per share for $147,000.
The Company believes the offer and sale of the shares of common stock above were made in reliance upon the exemptions from registration under Section 4(a)(2) and Regulation D Rule 506 of the Securities Act of 1933, as amended (the “Securities Act“). The offers and sales represented private transactions not involving a public offering. As such, the shares may not be offered or sold in the United States unless they are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.
PART III
ITEM 10.
ITEM 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the names of the Company’s directors, executive officers, and key employees, and their positions with the Company, as of the date of this Annual Report:
Except as set forth in the brief account of business experience below, none of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years and that is material to the evaluation of the ability or integrity of any of the Company’s directors, director nominees or executive officers.
Business Experience of Directors and Executive Officers
Michael Ward - CEO, CFO, Director
Mr. Ward has been the President, CEO and a director of Mirage Energy Corporation since August 11, 2016. He has also been the President, CEO, CFO and director of 4 Ward Resources, Inc. since June 2015. In May of 2015, Mr. Ward founded 4Ward Resources, Inc. to develop an international pipeline crossing from Texas into Mexico interconnecting to a proposed natural gas storage reservoir. The proposed reservoir would be the first underground natural gas storage facility in the country of Mexico. 4Ward Resources, Inc. was acquired by Mirage Energy Corporation in January 2017. In February 2017, three additional subsidiaries associated with the pipelines and storage facility were acquired.
From August 2010 until December 2013, Mr. Ward was the President and CEO of Gambit Energy Corporation, formerly Gulfmark Energy Group, Inc., including its subsidiaries Gulfmark Resources, Inc. and Blanco Drilling, Inc. The companies were formed to focus on oil and gas acquisition, exploration, drilling, development, production with the view to sell natural gas, crude oil, and natural gas liquids, primarily from conventional reservoirs within the State of Texas. The Company drilled two Eagleford shale oil horizontal wells.
From May 2007 through July 2010, Mr. Ward was the President and CEO of Bentley Energy Corporation. Bentley Energy Corporation in association with its subsidiaries, Sonterra Energy Corporation and Lone Star Propane, engaged in distribution of propane in Central and South Texas.
From 1997 through December 6, 2006, Mr. Ward served as President and CEO of Tidelands Oil and Gas Corporation, then, a publicly held corporation quoted on the OTC Bulletin Board. Tidelands was involved in production and exploration, drilling, gas processing and pipeline transmission. The company was instrumental in creating an expedited process for a cross border gas transmission pipeline from Eagle Pass, Texas to Piedras Negras, Mexico. This international pipeline crossing process was coordinated between Tidelands, the Texas Railroad Commission, FERC and PEMEX. Additionally, Tidelands began work on a proposed underground natural gas storage project in the Brasil field in Mexico. This originally proposed natural gas storage facility in Mexico is the same project which 4Ward Resources and Mirage Energy are presently advancing through the Mexican energy regulatory authorities.
Mr. Ward has more than 40 years of diversified experience as an oil and gas professional.
Patrick C. Dosser - Vice President
Mr. Patrick Dosser has been a Vice President of 4Ward Resources, located in San Antonio Texas, since August 1, 2015. He continues to contribute his 10 years of expertise in the fields of exploration and production, midstream transmission, and propane services.
After graduating from Southwestern University with his Bachelor’s degree in 2005, Patrick Dosser worked at Tidelands Oil & Gas in IT and Human Resource departments. Mr. Dosser worked on all aspects of installation and maintenance of computers before he was promoted to the liaison between Tidelands, the Texas Railroad Commission and their Mexican Sub-contractors. Tidelands successfully permitted and constructed the first international pipeline between Eagle Pass, Texas and Piedras Negras, Coahuila. Tidelands began work on an underground storage project in the Brasil field in Mexico. Mr. Dosser is regarded as an integral part of the original team.
Starting in 2006, he worked as the Regulatory Compliance Officer at Sonterra Energy Corporation (“Sonterra”), which provides commercial and residential propane service in South Texas. During his time at Sonterra, he supervised the satellite company’s day to day operations, including scheduling all field and office personal. He also handled Sonterra’s public awareness programs, operator qualification programs and reported to all State and Federal agencies.
In 2010, Mr. Dosser began work at Blanco Drilling, Inc. (“Blanco Drilling”), an oil and gas exploration company. He scheduled all drilling crews and managed all drill site preparations. When he became the drilling supervisor, Mr. Dosser permitted and prepared drilling locations while managing the day-to-day activities of drilling personnel and third-party contractors. Mr. Dosser left Blanco Drilling in September 2013.
Mr. Patrick Dosser has not held a directorship in any companies which had a class of securities registered pursuant to section 12 of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) or subject to the requirements of section 15(d) of the Exchange Act.
John W. Dosser - Vice President
Mr. John Dosser has over 10 years of experience in the oil and gas sector of the energy industry. He has worked in all facets of the trade including upstream exploration and production, pipeline transport systems, and downstream propane delivery companies.
After graduating from Southwestern University with a Business Degree in 2005, Mr. Dosser became a Marketing Associate for Tidelands Oil & Gas Corporation. The Company had operations across North America with its corporate headquarters in San Antonio. Mr. Dosser worked on many pipeline projects including international crossings into Mexico. He was part of the original team pursuing the Burgos Hub project while working for Tidelands.
In December 2006, he was offered the Director of Marketing position at Bentley Energy Corporation (“Bentley”), an upstart energy company where he successfully developed the company’s identity through designing and implementation. Bentley wholly owned two (2) propane subsidiary companies that serviced customers throughout Central and South Texas. Mr. Dosser was responsible for maintaining propane inventory levels, purchasing inventory, and all marketing activity and promotions.
In July 2010, Mr. Dosser took a Marketing and Operations position at Gambit Energy, Inc., an oil and gas exploration company which drilled oil wells in South Texas in the Eagle Ford shale. He was responsible for building the company’s identity through branding as well as business development and mineral rights acquisitions.
Mr. John Dosser has not held a directorship in any companies which had a class of securities registered pursuant to section 12 of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) or subject to the requirements of section 15(d) of the Exchange Act.
Mr. Dosser resigned as Vice-President on July 31, 2019.
David J. Cibrian - Director
Mr. Cibrian has been a Managing Director with Brevet Capital, a New York City-based hedge fund (www.brevetcapital.com). He has served in a variety of roles during his career - lawyer, accountant, corporate executive and investment banker. David was formerly a CPA with Ernst & Young, Los Angeles and was a practicing international and corporate attorney for 25 years. Mr. Cibrian was also President of an energy efficiency technology company.
In addition to his work with Brevet, Mr. Cibrian has been on the Board of Onko Solutions, LLC, a medical device start-up company located in Austin, Texas, and has served as a Senior Advisor to Civitas Capital Group - Dallas, Texas. He has appeared on FOX Business Network
and been quoted in international business and legal media including The Wall Street Journal, Investor’s Business Daily, Newsweek and Mexico’s EI Financiero. Mr. Cibrian is a former member of the Texas Finance Commission and the Texas Credit Union Commission having been appointed by then Texas Governor Rick Perry.
The Company believes that Mr. Cibrian’s business experience and skill in business, both domestically and in Mexico, qualifies him as a valuable member of our Board of Directors.
Mr. Cibrian resigned as member of the board of directors on May 27, 2019.
Soll Sussman - Member Board of Directors
2012-Present
During the last five years, Mr. Sussman has been Managing Director of S Cubed Studio, an Austin based consulting firm which he founded after his retirement from the Texas General Land Office in 2012. S Cubed is a consulting firm that specializes in developing U.S and Mexico cross-border relationships and partnerships related to the oil and gas industry.
Additionally, between 2011 and 2015 Mr. Sussman was a consultant for the Border Environment Cooperation Commission. During this period, he assisted with the coordination of the annual U.S.-Mexico Border Energy Forum.
Prior to founding S Cubed Studio, he was employed for 21 years with the Texas General Land Office, a state government agency, working with a variety of energy marketing, renewable energy, alternative fuels and border energy programs.
Prior to 1991, Mr. Sussman worked outside the United States as an international news correspondent for The Associated Press (AP). His last post was as A.P. bureau chief for Canada, based in Toronto. He spent five years based in Mexico City as A.P. news editor for Mexico and Central America. His domestic assignments for The Associated Press included Dallas, Austin, Washington and New York.
Mr. Sussman holds a Master’s Degree from the University of Texas’ Institute of Latin American Studies and is a graduate of Johns Hopkins University in Baltimore, Maryland. He also continues to work as a writer, contributing freelance articles on business and cultural topics to a variety of weekly and monthly publications.
The Company believes that Mr. Sussman’s business experience and skill in the energy business, both domestically and in Mexico, qualifies him as a valuable member of our Board of Directors.
Alejandro Amelio
- Member Board of Directors
2003-Present
Mr. Amelio founded Technology Marketing Concepts (TMC) in 2003. TMC is an oil and gas industry sales, marketing and consulting firm focused on promoting financial and technical products cross-border between the U.S. and Mexico. In addition to owning and operating TMC, he is also an Operating Partner of PROM/TEC S.A. de C.V., a Mexico City-based company dedicated to marketing, promotion and sale of liquid custody transfer equipment and services focused primarily in the midstream and downstream energy sector.
The partnership with PROM/TEC S.A. de C.V. enhances Mr. Amelio’s cross-border effectiveness. Some of his current clients include PEMEX Logística, PEMEX Tranformación Industrial (previously PEMEX Refinación, PGPB and Petroquímica), Aeropuertos y Servicios Auxiliares (ASA), CFE, Celanese, BASF, Foster Wheeler, Grupo Avanzia, and ICA-Fluor Daniel, Grupo México.
Throughout his career, Mr. Amelio has built high level relations with PEMEX and other government regulating entities enabling him to participate at the forefront of Mexico’s Energy Reform initiatives. His current work includes large scale projects related to the midstream energy sector, as well as working foreign companies interested in investing and participating in the opportunities created by Mexico’s constitutional energy sector transformation.
Mr. Amelio’s business background has been substantially strengthened as a result of his bicultural business development and marketing experience which includes no less than 10 years of living and working in both the U.S. and Mexico.
Mr. Amelio holds a B.A. Degree in Marketing from Southern Methodist University, Dallas, Texas. He began his career in the oil and gas industry as an Associate at PTUSA Corporation, a Texas-based specialist in marketing and sales of heavy equipment for the oil and gas industry heavily focused on the Mexico market. Following his employment with PTUSA, he became an employee with several highly respected Hispanic Advertising Agencies, including Ornelas & Associates and Lopez Negrete Communications, where he worked as Copywriter, Broadcast Director and Account Executive. As an Account Director, he managed firm account clients such as Walmart, Budweiser, PepsiCo, and Cervecería Moctezuma.
The Company believes that Mr. Amelio’s oil and gas business experience in the energy marketing business, both domestically and in Mexico, qualifies him as a valuable member of our Board of Directors.
(c)Identification of certain significant employees
. The Company currently does not have any significant employees, other than Michael Ward.
(d) Family relationships
. John W. Dosser and Patrick C. Dosser are Michael R. Ward’s sons.
(f) Involvement in certain legal proceedings
.
Other than as disclosed below, none of the Company’s executive officers or directors has been involved in any legal proceedings during the past ten (10) years:
Mr. Ward founded Gulfmark Energy, Inc. (which became Gambit Energy, Inc.), Gulfmark Resources, Inc. and Blanco Drilling, Inc. in August 2010 together with his father, and served as their President, CEO, CFO and Director. The companies were formed to focus their considerable oil and gas experience on acquisition, exploration, drilling, development, production and sale of natural gas, crude oil, and natural gas liquids, primarily from conventional reservoirs within the State of Texas. Gambit Energy, Inc. acquired several oil & gas leases in Dimmit County Texas for the development of Eagleford Shale utilizing foreign partners to fund the leases and drilling costs in which Gambit Energy, Inc. received a carried interest of 12.50% on the entire project including leases and wells drilled. Gambit Energy, Inc. drilled two Eagleford Shale wells at a cost of $6,000,000 each and on the second well the foreign partners didn’t pay $4,000,000 of the bills owed. Since Gambit Energy, Inc. was the official operator of the wells, all bills were billed to Gambit Energy, Inc. Gambit Energy, Inc. filed a Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court, Western District of Texas on November 26, 2014. Mr. Ward resigned as an officer and director of Gambit Energy, Inc. in December 2014. Gulfmark Resources, Inc. and Blanco Drilling, Inc. were wholly owned subsidiaries of Gambit Energy, Inc.
From May 2007 through July 2010, Mr. Ward was the President and CEO of Bentley Energy Corporation (“Bentley”). Bentley engaged in distribution of propane in Central and South Texas. Bentley owned and operated various propane distribution companies. Bentley voluntarily filed for reorganization under Chapter 11 of the federal bankruptcy laws. The case was filed in the U.S. Bankruptcy Court, Western District of Texas on January 7, 2010. The court accepted the Company’s reorganization plan on, or about July 21, 2010 resulting in the Company’s sale to J.P. Energy Holdings, LLC. The Bentley bankruptcy petition was necessary in order to provide protection and continuity for its propane delivery to more than 8,000 customers. Bentley financed it business with a bank line of credit. Bentley had planned the line of credit would be converted to a 10-year term loan with a 5-year balloon at maturity one year later. At loan maturity, the bank only offered Bentley a straight 3-year loan term. Bentley’s propane business revenue was subject to seasonal fluctuations because it sold the majority of its propane in the winter months. Seasonal revenue fluctuations made it impossible for Bentley to meet bank payment obligations on a three-year term loan. Additionally, Bentley’s propane suppliers tightened credit and payment terms. This credit squeeze from the bank and suppliers coupled with the unprecedented financial crisis of 2008/2009 precipitated the bankruptcy. While under bankruptcy protection, Mr. Ward was able to sell the business, which operates today under a different name.
(g) Promoters and control persons
.
Mr. Michael Ward, CEO and a member of the Board of Directors of the Company, owns 165,862,562 shares of our common stock which represents 41% of the total shares issued and outstanding. Additionally, Mr. Ward owns 10,000,000 Series A preferred shares which are convertible into 200,000,000 common shares. Therefore, Mr. Ward is the Company’s controlling shareholder. Except as disclosed above in paragraph (f), Mr. Ward has not been a party to any legal proceedings at any time during the past ten (10) years.
Shareholder Communications
Company shareholders who wish to communicate with the Board of Directors or an individual director may write to Mirage Energy Corporation’s offices located at 900 Isom Rd., Ste. 306, San Antonio, TX 78216. Your letter should indicate that you are a shareholder and whether you own your shares in street name. Letters received will be retained until the next Board meeting when they will be available to the addressed director. Such communications may receive an initial evaluation to determine, based on the substance and nature of the communication, a suitable process for internal distribution, review and response or other appropriate treatment. There is no assurance that all communications will receive a response.
Reports to Shareholders
We are a reporting company and file reports with the Securities and Exchange Commission (SEC), including this Form 10-K as well as other reports on Form 8-K and quarterly reports on Form 10-Q. The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F St., NE., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically and the SEC maintains an Internet site that contains reports, proxy and information statements and other information filed by the company with the SEC electronically. The address of that site is http://www.sec.gov.
Conflict of Interest Policy
Our policy was established to guard against any potential conflicts of interest. As the Company grows it will be the job of the audit committee to decide if additional controls need to be put in place.
Code of Ethics
On November 13, 2017, the Board of Directors adopted the Company’s Code of Ethical Conduct.
Meetings and Committees of the Board of Directors
We presently have no formal independent Board committees. Until further determination, the full Board of Directors will undertake the duties of the audit committee, compensation committee and nominating and governance committee. The members of the Board of Directors performing these functions as of July 31, 2019 are Michael R. Ward, Soll Sussman and Alejandro Amelio.
Compensation Committee
The Board of Directors, in its Compensation Committee role, will be responsible for recommendations to the Board of Directors respecting the compensation of our named executive officers.
Audit Committee
The Board of Directors, in its Audit Committee role, will be responsible for selecting the Company’s independent auditors, approve the scope of audit and related fees, and review financial reports, audit results, internal accounting procedures, related-party transactions, when appropriate, and programs to comply with applicable requirements relating to financial accountability. The Audit Committees function will include the development of policies and procedures for compliance by the Company and its officers and directors with applicable laws and regulations. The audit committee has reviewed and discussed the attached audited financial statements with management. The audit committee has received written disclosures from the independent accountant required by Independence Standard Board Standard No. 1, as amended, as adopted by the PCAOB in Rule 3600T and has discussed the independence of the company’s certifying accountant. Based on this review and discussion, the Board of Directors, in its audit committee role, recommended that the audited financial statements be included in this Annual Report.
Nomination and Governance Committee
The Board of Directors, in its Nomination and Governance Committee role, will be responsible for recommendations to the Board of Directors respecting corporate governance principles; prospective nominees for Director; Board member performance and composition; function, composition and performance of Board committees; succession planning; Director and Officer liability insurance coverage; and Director’s responsibilities.
Certain Provisions of the Company’s Articles of Incorporation and Nevada Law Relating to Indemnification of Directors and Officers
Nevada Law provides that each existing or former director and officer of a corporation may be indemnified in certain instances against certain liabilities which he or she may incur, inclusive of fees, costs and other expenses incurred in connection with such defense, by virtue of his or her relationship with the corporation or with another entity to the extent that such latter relationship shall have been undertaken at the request of the corporation; and may have advanced such expenses incurred in defending against such liabilities upon undertaking to repay the same in the event an ultimate determination is made denying entitlement to indemnification. The Company’s bylaws incorporate the statutory form of indemnification by specific reference.
Insofar as indemnification for liabilities may be invoked to disclaim liability for damages arising under the Securities Act of 1933, as amended, or the Securities Act of 1934 (collectively, the “Acts”), as amended, it is the position of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Acts and are therefore, unenforceable.
Section 16(A) Beneficial Ownership Reporting Compliance.
On September 1, 2016, the Company filed a Form 8-A registration statement registering its common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the Commission initial reports of ownership and reports of changes in ownership of our equity securities. To the Company’s knowledge there were no reportable events under Section 16(b).
ITEM 11.
ITEM 11. Executive Compensation
The following table set forth the compensation information on named executive officers Michael R. Ward, John Dosser and Patrick Dosser for the fiscal years ending July 31, 2019 and 2018.
(1) As of July 31, 2019, accrued and unpaid executive compensation totaled $1,687,490
(2) During the fourth quarter Michael Ward was paid $62,510 toward accrued compensation.
Compensatory Arrangements of Certain Officers
Each of our named executive officers have employment agreements. Copies of these agreements were filed as Exhibits 10.1, 10.2, 10.3 with our annual report for the year ending July 31, 2018.
Stock Grants to Named Executive Officers
There are no stock grants to named executive officers.
Discussion, Analysis and Overview of Compensation Program
Compensation Philosophy
: Our general compensation philosophy will be designed to link an employee’s total cash compensation with our performance, the employee’s department goals and individual performance. Given our limited operations and limited capital resources, we are subject to various financial restraints in our compensation practices. As an employee’s level of responsibility increases, there will be a more significant level of variability and compensation at risk. By linking incentive compensation to the performance of the Company, we believe that it will create an environment in which our employees will be stakeholders in our success and, thus, benefit all shareholders. As the Company moves from a development stage company to a revenue generating company, we plan to bring on employees and develop written employee compensation guidelines.
Executive Compensation Philosophy
: Our executive compensation philosophy will be designed to establish an appropriate relationship between executive pay and our annual performance, our long-term growth objectives, individual performance of the executive officer and our ability to attract and retain qualified executive officers. We will attempt to achieve these goals by integrating competitive annual base salaries with (a) bonuses based on corporate performance and on the achievement of specified performance objectives, and stock awards through some form of long term incentive plan. We believe that cash compensation in the form of salary and bonus provides our executives with short-term rewards for success in operations and stock awards will provide long-term incentives.
In making compensation decisions, the board of directors, in its compensation committee role, will compare each element of total compensation against companies referred to as a “compensation peer group.” The compensation peer group will be a group of companies that the compensation committee will select from readily available information about small companies engaged in similar businesses and with similar resources. As the Company moves from a development stage company to a revenue generating company, we plan to bring develop written executive compensation guidelines.
Outstanding Equity Awards at Fiscal Year End
Grants of Plan-Based Awards
There are no outstanding capital stock grants.
Director Compensation
On March 8, 2017, the Company authorized a stock grant of 50,000 common shares each to David Cibrian, Soll Sussman and Alejandro Amelio for annual service on the board of directors. These directors will be granted 50,000 shares for each year of director service. On July 31, 2018, the Company granted these directors 100,000 common shares each for a total granted of 300,000 common shares. The shares were valued at $5,610. These granted shares represented director compensation for their board earned during fiscal years 2018 and 2019.
Employment Agreements
The Company currently has employment agreements with its three named executive officers.
ITEM 12.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the U.S. Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.
This table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned; except as set forth above, applicable percentages are based upon 406,886,489 shares of common stock outstanding as of July 31, 2019. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to conversion of warrants and options held by that person that are currently exercisable or exercisable within 60 days of July 31, 2019. We did not deem those shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
(a) Name of Beneficial Owner of Certain Beneficial Owners
Table 1.
(1)
Address of each beneficial owner is 900 Isom Rd., Ste. 306, San Antonio, TX 78216
(2)
Address of Choice Consulting, LLC is 44120 Hunter Terrace, Freemont, CA 94539. The Company believes that Sadru Karim has dispositive and voting authority over Choice Consulting, LLC.
(3)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on July 31, 2019. As of July 31, 2019, there were 406,886,489 shares of our Company’s Common Stock issued and outstanding and 10,000,000 Series A Preferred shares.
(4)
Includes 1,035,000 common shares owned by White Boy Partnership, LLC, a Texas limited liability company owned and controlled by Chris Ward, Michael R. Ward’s spouse. Mr. Ward disclaims beneficial ownership of White Boy Partnership’s equity securities.
(5)
The Series A Preferred shares are immediately convertible into 200,000,000 shares of the Company’s Common Stock and possess voting rights for 200,000,000 shares on an “as converted basis”. Combining Mr. Ward’s direct ownership of 165,862,562 common shares with the 200,000,000 “as converted” preferred share votes gives Mr. Ward the ability to vote 60.29% of the Company’s common stock at any shareholder meeting.
(6)
Includes 200,000,000 votes by virtue of the Series A preferred shares (See Note 5). The total percentage is calculated using 606,886,489 as the inferred total issued and outstanding voting stock utilizing the Series A preferred on an “as converted” basis.
(b) Security Ownership of Management
Table 2.
(1)
Address of each beneficial owner is 900 Isom Rd., Ste. 306, San Antonio, TX 78216
(2)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on July 31, 2019. As of July 31, 2019, there were 406,886,489 shares of our Company’s Common Stock issued and outstanding and 10,000,000 Series A Preferred shares which vote as 200,000,000 common shares.
(3)
Includes 1,035,000 common shares owned by White Boy Partnership, LLC, a Texas limited liability company owned and controlled by Chris Ward, Michael R. Ward’s spouse. Mr. Ward disclaims beneficial ownership of White Boy Partnership’s equity securities. Mr. Ward’s direct ownership is 165,862,562 common shares.
(4)
The Series A Preferred shares are immediately convertible into 200,000,000 shares of the Company’s Common Stock and possess voting rights for 200,000,000 shares on an “as converted basis”. Combining Mr. Ward’s direct ownership of 165,862,562 common shares with the 200,000,000 “as converted” preferred share votes gives Mr. Ward the ability to vote 60.29% of the Company’s common stock at any shareholder meeting.
(5)
Includes 200,000,000 votes by virtue of the Series A preferred shares. The total percentage is calculated using 606,886,489 as the inferred total issued and outstanding voting stock utilizing the Series A preferred on an “as converted” basis.
(c) Changes in control.
Except as otherwise set forth in this Report, there are no arrangements, known to the Company, the operation of which may at a subsequent date result in a change in control of the Company.
ITEM 13.
ITEM 13. Certain Relationships and Related Transactions and Director Independence
Certain Transactions
Except as described below, during the past two years, there have been no transactions, whether directly or indirectly, between us and any of our respective officers, directors, beneficial owners of more than 5% of our outstanding common stock or their family members, that exceeded $120,000.
On January 24, 2017, Mirage Energy Corporation, a Nevada corporation (“Mirage” or the “Company”) entered into an agreement with Mirage’s President and CEO, Mr. Michael Ward, whereby Mirage acquired all of the issued and outstanding shares of 4Ward Resources Inc., a Texas corporation (“4Ward Resources”) from Mr. Ward in exchange for 10,000,000 shares of Mirage’s Common Stock and 10,000,000 shares of Mirage’s Series A Preferred Stock. The acquisition of 4Ward Resources was completed on January 24, 2017.
On January 28, 2017, 4Ward Resources, Inc., Mirage Energy Corporation’s wholly owned subsidiary, acquired Michael Ward’s ninety (90%) percent interest in two Mexican companies. The remaining ten (10%) percent interest was acquired by Mirage Energy Corporation from Patrick Dosser. Together, Mirage Energy and 4Ward Resources own 100% of the two Mexican corporations. The two Mexican corporations are WPF MEXICO PIPELINES, S. de R.L. de C.V., and CENOTE ENERGY S. de R.L. de C.V. Additionally, 4Ward Resources, Inc. acquired all of Michael Ward’s interest in WPF TRANSMISSION, INC., a Texas corporation. These transactions were valued at $140,286. These transactions constitute related party transactions. Patrick Dosser is Michael Ward’s son. As of July 31, 2019, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,801,989. Accrued salaries of $1,801,989 combined with accrued payroll taxes of $59,947 for a total accrued related party salaries and payroll tax of $1,861,936 for the period from June 2015 until July 31, 2019.
Also, Mr. Michael Ward provided $40,100 directly to the company with an additional $26,725 owed to Mr. Ward for monies outlaid on behalf of the Company for a total loan amount of $87,903 which was netted for $85,674 payments received leaving a net due Mr. Ward $2,229 at July 31, 2018 which has decreased to $0 as of July 31, 2019. This resulted from additional $24,898 of expenses paid which increased the total amount due to $27,127 less repayments of $27,127 during the year ended July 31, 2019.
Additionally, White Boy Partnership, LLC, a company owned by the spouse of the CEO, provided an additional loan of $187,600 to 4Ward Resources, Inc. Repayments of $34,724 were made during the year ended July 31, 2018, which reduced the balance due to $152,876 as of July 31, 2018. Repayments of $152,876 were made during the year ended July 31, 2019, which reduced the balance due to $0 as of July 31, 2019.
Director Independence
As of July 31, 2019, the Company had three individuals serving on the Board of Directors. The Company is not currently a listed issuer and, as such, is not subject to any director independence standards using the definition of independence set forth in the Nasdaq Marketplace Rule 4200(a)(15).
ITEM 14.
ITEM 14. Principal Accountants Fees and Services
Audit Fees
The aggregate fees billed for professional services rendered by the Company’s public accounting firm, MaloneBailey, LLP, for the audit and the reviews of the Company’s financial statements for the years ended July 31, 2018 and July 31, 2019, were $41,183 and $32,500 (subject to final adjustment), respectively.
Audit Related Fees
The Company incurred no fees during the last two fiscal years for assurance and related services by the Company’s principal accountant that were reasonably related to the performance of the audit or review of the Company’s financial statements, and not reported under “Audit Fees” above.
Tax Fees
During fiscal years 2018 and 2019, the Company incurred $3,500 and $3,500 (estimated subject to final adjustment), respectively, in fees for professional services rendered by the Company’s principal accountant for tax compliance, tax advice or tax planning.
All Other Fees
The Company incurred no other fees during the last two fiscal years for products and services rendered by the Company’s principal accountant.
Our pre-approval policies and procedures for the board, acting in lieu of a separately designated, independent audit committee, described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
The Company’s principal auditor and its affiliated firm completed all of the audit without the assistance of any other firms.
PART IV
ITEM 15.
ITEM 15. Exhibits
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: February 21, 2020
/s/ Michael R. Ward
By:
Michael R. Ward
Title: Director
Date: February 21, 2020
/s/ Soll Sussman
By:
Soll Sussman
Title:
Director
/s/ Alejandro Amelio
By:
Alejandro Amelio
Title:
Director