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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended April 30,October 31, 2017
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 000-55690
MIRAGE ENERGY CORPORATION |
(Exact name of registrant as specified in its charter) |
NEVADA |
| |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
900 Isom Rd., Ste. 306, San Antonio, TX | 78216 | |
(Address of principal executive offices) | (Zip Code) |
(210) 858-3970
(Issuer’sIssuer's telephone number, including area code)
(Former name, former address and former fiscal year if changed since last report)
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange:
Large accelerated filer | o | Accelerated filer | o | ||
Non-accelerated filer | o | Smaller reporting company | o | ||
Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.) Yes o No x
Indicate the number of shares outstanding of each of the issuer’sissuer's classes of common equity, as of the latest practicable date: June 16,December 20, 2017, there were 310,190,456 shares of the Company’s common stock $0.001 par value,were issued and outstanding.
(FORMERLY 4WARD RESOURCES, INC.)
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 30,OCTOBER 31, 2017
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Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Unregistered Sales of Equity Securities and Use of Proceeds. |
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2 |
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”("SEC"), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’sCompany's 10-K for the year ending July 31, 2017 filed with the Securities and Exchange Commission on October 31, 2016 and the financial statements contained in the Company’s Current Report on Form 8-K filed on January 27, 2017.Commission. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending July 31, 2017.2018.
3 |
(FORMERLY 4WARD RESOURCES, INC.)
INDEX TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
April 30,October 31, 2017
Page | |||
Consolidated Balance Sheets as of | 5 | ||
6 | |||
7 | |||
Notes to the Consolidated Interim Financial Statements (Unaudited) | 8 |
4 |
(FORMERLY 4WARD RESOURCES, INC.)
|
| April 30, |
| July 31, |
|
| October 31, |
| July 31, |
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|
| 2017 |
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| 2016 |
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| 2017 |
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| 2017 |
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| (Unaudited) |
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| (Unaudited) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
| $ | 477 |
| $ | 76,165 |
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| $ | 748 |
| $ | 11,776 |
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Loans receivable and salary advances, related parties |
| - |
| 20,000 |
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Prepaid expenses |
|
| 6,943 |
|
|
| 2,859 |
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|
| 1,313 |
|
|
| 1,559 |
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Total Current Assets |
|
| 7,420 |
|
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| 99,024 |
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| 2,061 |
|
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| 13,335 |
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Property, plant and equipment, net |
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| 6,588 |
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| 7,774 |
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| 5,797 |
|
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| 6,192 |
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Other Assets |
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Deposits |
| 6,920 |
| 6,920 |
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| 6,921 |
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| 6,921 |
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U.S. & Mexican projects |
|
| 112,495 |
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| 78,445 |
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Total Other Assets |
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| 119,415 |
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| 85,365 |
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| 6,921 |
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| 6,921 |
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TOTAL ASSETS |
| $ | 133,423 |
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| $ | 192,163 |
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| $ | 14,779 |
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| $ | 26,448 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities |
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Loans payable, related parties |
| $ | 219,744 |
| $ | 50,000 |
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| $ | 214,694 |
| $ | 208,678 |
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Accounts payable and accrued liabilities |
| 274,709 |
| 142,896 |
|
| 369,627 |
| 337,384 |
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Convertible debentures |
| 71,000 |
| 33,000 |
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Accrued salaries and payroll taxes, related parties |
|
| 691,326 |
|
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| 303,750 |
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| 1,030,127 |
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| 854,553 |
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Total Current Liabilities |
|
| 1,185,779 |
|
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| 496,646 |
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| 1,685,448 |
| 1,433,615 |
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Long-Term Liabilities |
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Loan payable |
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| 50,000 |
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| 50,000 |
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TOTAL LIABILITIES |
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| 1,185,779 |
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| 496,646 |
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| 1,735,448 |
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| 1,483,615 |
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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Common stock, par value $0.001, 900,000,000 shares authorized, 310,190,456 shares issued and outstanding as of April 30, 2017; 127,864,000 shares issued and outstanding as of July 31, 2016 |
| 310,190 |
| 127,864 |
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Preferred stock, par value $0.001, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding as of April 30, 2017 and July 31, 2016 |
| 10,000 |
| 10,000 |
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Preferred stock, par value $0.001, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding as of October 31, 2017 and July 31, 2017 |
| 10,000 |
| 10,000 |
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Common stock, par value $0.001, 900,000,000 shares authorized, 310,190,456 shares issued and outstanding as of October 31, 2017; 310,190,456 shares issued and outstanding as of July 31, 2017 |
| 310,190 |
| 310,190 |
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Additional paid-in capital |
| 66,101 |
| 6,215 |
|
| 66,101 |
| 66,101 |
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Accumulated deficit |
| (1,438,547 | ) |
| (448,551 | ) |
| (2,106,860 | ) |
| (1,843,358 | ) | ||||
Accumulated other comprehensive loss |
|
| (100 | ) |
|
| (11 | ) |
|
| (100 | ) |
|
| (100 | ) |
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
|
| (1,052,356 | ) |
|
| (304,483 | ) |
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| (1,720,669 | ) |
|
| (1,457,167 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
| $ | 133,423 |
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| $ | 192,163 |
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| $ | 14,779 |
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| $ | 26,448 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
5 |
Table of Contents |
(FORMERLY 4WARD RESOURCES, INC.)
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
|
| Three Months Ended |
| Nine Months Ended |
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| Three Months Ended |
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| April 30, |
| April 30, |
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| October 31, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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REVENUES |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
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COST OF GOODS SOLD |
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| - |
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| - |
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| - |
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| - |
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GROSS LOSS |
| - |
| - |
| - |
| - |
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OPERATING EXPENSES |
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General and administrative expenses |
| 467,278 |
| 82,370 |
| 913,129 |
| 239,944 |
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| 227,882 |
| 190,926 |
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Professional fees |
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| 38,510 |
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| 6,793 |
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| 70,734 |
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| 8,190 |
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| 30,482 |
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| 14,488 |
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Total Operating Expenses |
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| 505,788 |
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| 89,163 |
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| 983,863 |
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| 248,134 |
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| 258,364 |
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| 205,414 |
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LOSS FROM OPERATIONS |
| (505,788 | ) |
| (89,163 | ) |
| (983,863 | ) |
| (248,134 | ) |
| (258,364 | ) |
| (205,414 | ) | ||||||
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OTHER EXPENSE |
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Interest expense |
|
| 3,014 |
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| 17 |
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| 6,122 |
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| 25 |
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| 5,138 |
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|
| 1,029 |
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Total Other Expense |
| 3,014 |
| 17 |
| 6,122 |
| 25 |
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| 5,138 |
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| 1,029 |
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LOSS BEFORE INCOME TAXES |
| (508,802 | ) |
| (89,180 | ) |
| (989,985 | ) |
| (248,159 | ) |
|
| (263,502 | ) |
|
| (206,443 | ) | ||||
Income tax recovery |
| - |
| - |
| - |
| - |
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Income tax expense |
|
| - |
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| - |
|
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| - |
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| - |
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NET LOSS |
|
| (508,802 | ) |
|
| (89,180 | ) |
|
| (989,985 | ) |
|
| (248,159 | ) |
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| (263,502 | ) |
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| (206,443 | ) |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Foreign currency translation adjustments |
|
| (100 | ) |
|
| - |
|
|
| (100 | ) |
|
| - |
| ||||||||
TOTAL COMPREHENSIVE LOSS |
| $ | (508,902 | ) |
| $ | (89,180 | ) |
| $ | (990,085 | ) |
| $ | (248,159 | ) |
| $ | (263,502 | ) |
| $ | (206,443 | ) |
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Basic and Diluted Loss per Common Share |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.02 | ) |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
Basic and Diluted Weighted Average Common Shares Outstanding |
|
| 310,152,928 |
|
|
| 38,910,915 |
|
|
| 191,961,783 |
|
|
| 14,087,479 |
|
|
| 310,190,456 |
|
|
| 127,864,141 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6 |
Table of Contents |
(FORMERLY 4WARD RESOURCES, INC.)
Consolidated Statement of Cash Flows
(Unaudited)
|
| Nine Months Ended |
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| Three Months Ended |
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|
| April 30, |
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| October 31, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net (loss) |
| $ | (990,085 | ) |
| $ | (248,159 | ) |
| $ | (263,502 | ) |
| $ | (206,443 | ) |
Adjustments to reconcile net (loss) to net cash used in operating activities: |
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Depreciation expense |
| 1,186 |
| - |
|
| 395 |
| 396 |
| ||||||
Stock-Based compensation |
| 262,500 |
| - |
| |||||||||||
Changes in operating assets and liabilities |
|
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|
|
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Salary Advances |
| - |
| (10,000 | ) | |||||||||||
Prepaid expenses |
| (4,084 | ) |
| (136 | ) |
| 246 |
| (8,378 | ) | |||||
Accounts payable |
| 46,991 |
| 7,520 |
|
| 36,416 |
| (45,015 | ) | ||||||
Accrued expenses |
|
| 32,399 |
|
|
| 1,560 |
|
| 14,247 |
| 15,004 |
| |||
Accrued salaries and payroll taxes, related parties |
|
| 429,576 |
|
|
| 202,500 |
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| 161,327 |
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| 153.750 |
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Net cash (used) in operating activities |
|
| (221,517 | ) |
|
| (36,715 | ) |
|
| (50,871 | ) |
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| (100,686 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Loans receivable, related parties |
| (11,000 | ) |
| (3,000 | ) |
| - |
| (22,409 | ) | |||||
U.S. and Mexican project development costs |
|
| (33,941 | ) |
|
| (1,426 | ) |
|
| - |
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| (22,099 | ) |
Net cash (used) in investing activities |
|
| (44,941 | ) |
|
| (4,426 | ) |
|
| - |
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| (44,508 | ) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from sale of common stock |
|
| 20,000 |
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| 41,341 |
| ||||||||
Loans payable, related parties |
|
| 169,744 |
|
|
| - |
| ||||||||
Proceeds from sale of convertible debentures |
| 38,000 |
| - |
| |||||||||||
Proceeds from related parties loan payable |
| 14,200 |
| 85,000 |
| |||||||||||
Repayments of related parties debt |
|
| (12,357 | ) |
|
| - |
| ||||||||
Net cash provided by financing activities |
|
| 189,744 |
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|
| 41,341 |
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| 39,843 |
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| 85,000 |
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Effects on changes in foreign exchange rate |
|
| 1,026 |
|
|
| - |
|
|
| - |
|
|
| - |
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Net increase (decrease) in cash |
| (75,688 | ) |
| 200 |
| ||||||||||
Net (decrease) in cash |
| (11,028 | ) |
| (60,194 | ) | ||||||||||
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Cash and cash equivalents - beginning of period |
|
| 76,165 |
|
|
| - |
|
|
| 11,776 |
|
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| 76,165 |
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Cash and cash equivalents - end of period |
| $ | 477 |
|
| $ | 200 |
|
| $ | 748 |
|
| $ | 15,971 |
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Supplemental Cash Flow Disclosures |
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NON-CASH TRANSACTIONS: |
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Net assets assumed in reverse merger |
| $ | 40,288 |
|
| $ | - |
| ||||||||
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Cash paid for interest |
| $ | 6,122 |
|
| $ | 25 |
|
| $ | 641 |
|
| $ | 1,029 |
|
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|
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| ||||||
Cash payments for income taxes |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
| |||||||||||
Non-Cash Transactions |
|
|
|
|
| |||||||||||
Expenses paid by shareholder |
| $ | 4,173 |
|
|
| - |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
7 |
Table of Contents |
(FORMERLY 4WARD RESOURCES, INC.)
Notes to the Consolidated Interim Financial Statements
April 30,October 31, 2017
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Mirage Energy Corporation (formerly Bridgewater Platforms Inc.) (the “Company”) is a Nevada corporation incorporated on May 6, 2014. On May 20, 2014, the Company incorporated a Canadian subsidiary known as Bridgewater Construction Ltd. in Ontario in association with its construction business. Mirage Energy Corporation is based at 900 Isom Rd Suite 306, San Antonio, TX 78216. The Company’s fiscal year end is July 31.
On August 11, 2016, a change in Company control occurred whereby Company affiliate shareholder, Eric Davies, sold 2,500,000 (90,000,000 post split shares) of his Company shares to Michael R. Ward. The sale represented 30% of the Company’s total issued and outstanding common shares. Additionally, Emanuel Oliveira, an affiliate shareholder, sold 774,000 common shares (27,864,033 post split shares) to Mr. Ward and 1,726,000 shares (62,136,075 post split shares) to Choice Consulting, LLC, a Wyoming limited liability company.
On November 7, 2016, the Company increased the authorized shares from 75,000,000 to 900,000,000 shares of $0.001 par value. It also designated 10,000,000 shares of Series A Preferred Stock. On November 7, 2016, the Company implemented a forward stock split of its common shares on a 36:1 basis. The issued and outstanding common shares increased from 8,333,336 to 300,000,456 shares. All share and per share amounts have been restated from the first day of the first period presented to reflect the split.
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. The Series A shares possess 20 votes per share and are convertible into 200,000,000 common shares. Through this acquisition, the Company’s scope of business was expanded to include 4Ward Resource’s development of an integrated Texas/Mexico natural gas pipeline transportation and storage facility in Northeastern Mexico. This transaction was combined with the August 11, 2016 transaction and treated as a reverse merger and recapitalization whereby 4Ward Resources was determined to be the accounting acquirer under ASC 805 and assumed $40,288 of net assets of Mirage.
Total ownership of a majority of the Company’s issued and outstanding common shares as a result of these transactions is as follows:
Michael R. Ward Choice Consulting, LLC 127,864,000 41.3 % 62,136,000 20.1 %
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s 8-K10-K filed with the Securities and Exchange Commission on January 27,November 30, 2017.
Earnings or Loss per Share:
The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to convertible debt, stock options and warrants for each year.
As of October 31, 2017. and 2016, there were no stock equivalents so basic and diluted losses per share in each of the period presented are the same.
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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.
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 $990,085$263,502 and had net cash used in operations of $221,517$50,871 for the ninethree months ended April 30,October 31, 2017 and had an accumulated deficit and working capital deficit of $1,438,547$2,106,860 and $1,178,359$1,683,387 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.
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NOTE 4 - DEBT
A summary of debt at October 31, 2017 and July 31, 2017 is as follows:
October 31, July 31, 2017 2017 Notes payables related party, unsecured, interest bearing at 5% rate per annum, on demand Note, unsecured interest bearing at 2% per annum, due 07/09/2020 Convertible debenture, unsecured, interest bearing at 12% per annum,, convertible at 12/25/2017 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of 03/30/2018 Convertible debenture, unsecured, interest bearing at 12% per annum,, convertible at 02/18/2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of 05/30/2018 Loan payable related party, unsecured, non-interest bearing, on demand Total Debt Less: Current Maturities Total Long-Term Debt $ 182,600 $ 187,600 50,000 50,000 33,000 33,000 38,000 - 32,094 21,078 335,694 291,678 285,694 241,678 $ 50,000 $ 50,000
The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting.
NOTE 45 - 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.
The CEO of the Company and two other members of management were advanced a total $22,000, during the nine months ending April 30, 2017. These advances increased the total advances to $42,000. As of April 30,October 31, 2017 and 2016, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $702,250, from June 24, 2015 until April 30,$987,750, as of October 31, 2017. Accrued salaries of $702,250$987,750 combined with accrued payroll taxes of $31,076 is netted with advances of $42,000$42,377 for a total accrued related party salaries and payroll tax of $691,326$1,030,127 for the nine monthsyear ended.
Also, Mr. Michael Ward, President, is owed $21,078 at July 31, 2017 which has increased to $32,094 as of October 31, 2017 resulting from $14,200 of cash proceeds, expenses paid of $4,173, and repayments of $7,357. Additionally, a company owned by the spouse of the CEO provided an additionala loan of $137,600$187,600 to 4Ward Resources, Inc. Due to a $5,000 payment made during the nine months. This additional loan increasedquarter ended, the balance was decreased to a total loan amount to $187,600. Additionally $32,144 is owed to Mr. Michael Ward for monies outlaid on behalf of the Company.$182,600.
NOTE 5 - EQUITY6 – LEASES
On February 2, 2017,June 9, 2016, the Company offeredentered into a Lease Agreement for its San Antonio, Texas office lease location. The Lease Period is for three (3) years beginning July 1, 2016. The Company shall pay as additional rent all other sums of money as shall become due and sold 40,000 sharespayable by them under this Lease. To date after sixteen (16) months of common stock to accredited investorthis thirty-six (36) month lease, no such additional charges have been made. Below is the schedule of rent for $20,000.the remaining Lease term as of October 31, 2017.
On March 8, 2017, the Company authorized a stock grant of 50,000 common shares to each of three members of the board of directors totaling 150,000 shares of common stock valued at $1.75 per share as director compensation.
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Year Amount 2018 2019 Total Remaining Base Rent $ 67,854.28 $ 69,204.60 $ 137,058.88
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company has committed to Marcos y Asociados for services as of October 31, 2017, two (2) months of Acquisition of Pipeline Rights of Way remaining of the original eighteen (18) months commitment at $5,000 per month which leaves remaining balance of $10,000.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 8 - SUBSEQUENT EVENTS
On December 4, 2017, Mirage Energy Corporation entered into Securities Purchase Agreement with PowerUp Lending Group, Ltd. to issue an additional amount of convertible debenture in the amount of $53,000. Convertible debenture, unsecured, interest bearing at 12% per annum, convertible at 06/2/2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of 09/15/2018.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for historical information, this report contains certain forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Current Business” and “Risk Factors”"Risk Factors" sections in our Form 8-K,10-K, as filed on January 27, 2017.November 30, 2017 . You should carefully review the risks described in our documents we file from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Mirage Energy,” “we,” “us,” or “our” are to Mirage Energy Corporation (formerly Bridgewater Platforms Inc.)
Corporate Overview
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 92A.200 et. seq. The effect of such merger is 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 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. 4Ward Resources, Inc. is a wholly owned subsidiary of Mirage Energy Corporation. 4Ward Resources was incorporated in the State of Texas on June 24, 2015.Company’s Plans
The purpose of acquiring 4Ward Resources, Inc., a Texas corporation, was for the Company to enter into the natural gas sale, pipeline, and storage business. The Company intendshas 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 an underground natural gas storage facility, which the Company proposes to permit and develop in Mexico and the United States.northern Mexico. The Company throughbelieves that it has made substantial progress toward these goals with its subsidiary, is in the processpreliminary project engineering designs and high level meetings with representatives of preparing to file the necessary permits in Mexicovarious Mexican regulatory agencies.
Discussion and the United States.Analysis of Financial Condition and Results of Operations
Results of Operations
The following table provides selected financial data about our Company as of April 30, 2017 and July 31, 2016.
April 30, July 31, Cash and cash equivalents Total assets 133,423 Total liabilities 1,185,779 Stockholders’ deficit
2017
2016$ 477 $ 76,165 $ $ 192,163 $ $ 496,646 $ (1,052,356 ) $ (304,483 )
Three Months ended April 30,October 31, 2017 and 2016
The following table provides the results of operations for the three months ended April 30, 2017 and 2016:Revenues
Three Months Ended April 30, 2017 2016 REVENUES COST OF GOODS SOLD GROSS LOSS OPERATING EXPENSES General and administrative expenses Professional fees Total Operating Expenses LOSS FROM OPERATIONS OTHER EXPENSE Interest expense Total Other Expense LOSS BEFORE INCOME TAXES Income tax recovery Income tax expense NET LOSS OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments TOTAL COMPREHENSIVE LOSS Three month period ended October 31, 2017$ - $ - - - - - 467,278 82,370 38,510 6,793 505,788 89,163 (505,788 ) (89,163 ) 3,014 17 3,014 17 (508,802 ) (89,180 ) - - - - (508,802 ) (89,180 ) (100 ) - $ (508,902 ) $ (89,180 )
For the three months(3) month period ended April 30,October 31, 2017, we generated no revenue and 2016, our revenues were $nil, our costincurred a net loss of goods sold was $nil, and our gross loss was $nil.
For the three months ended April 30, 2017 and 2016, our operating expenses were $505,788 and $89,163, respectively; our net losses were $508,802 and $89,180, respectively; other comprehensive loss were $100 and $nil, respectively; and our total comprehensive loss was $508,902 and $89,180, respectively.$263,502.
Our net loss of $263,502 for the three (3) month period ended October 31, 2017 was the result of operating expenses were primarily composed of salaries$258,364 and wages and directors fees.
Nine Months ended April 30, 2017 and 2016
The following table provides the resultsother expense (comprised of operations for the nine months ended April 30, 2017 and 2016:
Nine Months Ended April 30, 2017 2016 REVENUES COST OF GOODS SOLD GROSS LOSS OPERATING EXPENSES General and administrative expenses Professional fees Total Operating Expenses LOSS FROM OPERATIONS OTHER EXPENSE Interest expense Total Other Expense LOSS BEFORE INCOME TAXES Income tax recovery Income tax expense NET LOSS OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments TOTAL COMPREHENSIVE LOSS $ - $ - - - - - 913,129 239,944 70,734 8,190 983,863 248,134 (983,863 ) (248,134 ) 6,122 25 6,122 25 (989,985 ) (248,159 ) - - - - (989,985 ) (248,159 ) (100 ) - $ (990,085 ) $ (248,159 )
For the nine months ended April 30, 2017 and 2016, our revenues were $nil; our costinterest expense) of goods sold was $nil; and our gross loss was $nil.
For the nine months ended April 30, 2017 and 2016, our operating expenses were $983,863 and $248,134, respectively; our net operating loss was $983,863 and $248,134, respectively.$5,138. Our operating expenses were primarily composedconsisted of salaries$227,882 in general and wagesadministrative expenses, and director$30,482 in professional fees.
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Three month period ended October 31, 2016
For the ninethree (3) month period ended October 31, 2016, we generated no revenue and incurred a net loss of $206,443.
Our net loss of $206,443 for the three (3) month period ended October 31, 2016 was the result of operating expenses of $205,414 and other expense (comprised of interest expense) of $1,029. Our operating expenses consisted of $190,926 in general and administrative expenses, and $14,488 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 three (3) months ended April 30,October 31, 2017 and October 31, 2016, other comprehensive loss was $100total general and $nil, respectively;administrative expenses were $227,882 and our total comprehensive loss was $990,085 and $248,159,$190,926, respectively.
Limited Operating History; NeedFor the three (3) months ended October 31, 2017, we had $227,882 in general and administrative expenses compared to $190,926 in general and administrative expenses for Additional Capitalthe three (3) months ended October 31, 2016. The $36,956 increase in general and administrative expenses was primarily the result of spending related to executive compensation, office rental, travel and entertainment, public relations fees and other general and administrative expenses.
There is no historical financial information about us on whichThe professional fees for the three (3) months ending October 31, 2017 and October 31, 2016 were $30,482 and $14,488, respectively. The $15,994 increase was primarily related to base an evaluation of our performance. We cannot guarantee we will be successfulincreases in our business operations. Our business is subject to risks inherent inlegal fees, auditing fees and other professional fees.
The executive compensation for the establishment of a new business enterprise, including limited capital resources, possible delays in developing our website,three (3) months ending October 31, 2017 and possible cost overrunsOctober 31, 2016 was $116,500 and $116,500, respectively. No change was due to same executives on the price and cost increases in supplies and services.payroll during this quarter ended.
While the officers and directors have generally indicated a willingness to provide services and financial contributions if necessary, there are presently no agreements, arrangements, commitments, or specific understandings, either verbally or in writing, between the officers and directors and Mirage Energy Corporation.
If we are unable to meet our needs for cash from either the stockholders and / or the money that we raise from future financings, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.
We have no plans to undertake any product research and development during the next twelve months.
Liquidity and Capital Resources
Working CapitalCash Flows
April 30, July 31, 2017 2016 Current Assets 7,420 Current Liabilities 1,185,779 Working Capital (Deficit) Operating Activities$ $ 99,024 496,646 $ (1,178,359 ) $ (397,622 )
For the three (3) month period ended October 31, 2017, net cash used in operating activities was $50,871. The negative cash flow for the three (3) months ended October 31, 2017 related to our net loss of $263,502, an increase in prepaid expenses of $246, adjusted for depreciation of $395, an increase of $36,416 in accounts payable, an increase of $14,247 in accrued expenses and an increase of $161,327 in accrued salaries and payroll taxes – related parties.
For the three (3) month period ended October 31, 2016, net cash used in operating activities was $100,686. The negative cash flow for the three (3) months ended October 31, 2016 related to our net loss of $206,443, plus salary advances of $10,000, prepaid expenses of $8,378, adjusted for depreciation of $396, a decrease of $45,015 in accounts payable, an increase of $15,004 in accrued expenses and an increase of $153,750 in accrued salaries – related parties.
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Cash Flows
Nine Months Ended April 30, 2017 2016 Cash (used) in operating activities (221,517 (36,715 Cash (used) in investing activities (44,941 ) (4,426 Cash provided by financing activities 189,744 41,341 Cash and cash equivalents on hand $ ) $ ) $ $ ) $ $ $ 477 $ 200
As at April 30, 2017, our Company’s cash balance was $477 compared to $76,165 as at July 31, 2016. The decrease in cash was primarily due to cash used in operating expenses and expenditures for our Mexican and U.S. projects.
As at April 30, 2017, our Company had total current liabilities of $1,185,779 compared with total current liabilities of $496,646 as at July 31, 2016. The increase in total liabilities was due to increase of accrued salaries and wages and director fees.
As at April 30, 2017, our Company had working capital deficit of $1,178,359 compared with working capital deficit of $397,622 as at July 31, 2016. The decrease in working capital was primarily attributed to increase of accrued salaries and wages and accumulated costs for our Mexican and U.S. projects.
Cash Flow from Operating Activities
During the nine months ended April 30, 2017 and 2016, the Company used $221,517 and $36,715 in cash from operating activities, respectively.
Cash Flow from Investing Activities
DuringFor the ninethree (3) months ended April 30,October 31, 2017 net cash used in investing activities was nil.
For the three (3) months ended October 31, 2016 net cash used in investing activities was $44,508. The negative cash flow from investing activities for such period was comprised of loans receivable – officer in the amount of $22,409 and project development costs of $22,099.
Financing Activities
For the three (3) months ended October 31, 2017, net cash used from financing activities was $39,843. The negative cash flow from financing activities for such period was comprised of an increase in loans payable from related parties and proceeds from a long-term loan and convertible debenture.
For the three (3) months ended October 31, 2016, net cash provided from financing activities was $85,000. The positive cash flow from financing activities for such period was comprised of an increase in loans payable from related parties.
Liquidity
To date, we have funded our operations primarily with capital provided and loans provided by related parties, accruable of salaries and accounts payable along with sale of convertible debentures and a loan both from unrelated parties.
As of October 31, 2017, Mirage Energy Corporation had $748 in cash on hand and prepaid expenses of $1,313. Since Mirage Energy Corporation was unable to reasonably project its future revenue, it must presume that it will not generate any revenue during the next twelve (12) to twenty-four (24) months. We therefore will need to obtain additional debt or equity funding in the next two (2) – three (3) months, but there can be no assurances that such funding will be available to us in sufficient amounts or on reasonable terms.
The Company’s audited financial statements for the year ended July 31, 2017 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 three months ended October 31, 2017, the Company has funded operations $39,843 through loan proceeds of $38,000, proceeds from related parties’ loan payable of $14,200 less repayments of related parties’ debt of $12,357. The $38,000 loan proceeds are from a sale of a convertible debenture. The Company plans to raise additional funds through various sources to support ongoing operations during 2017 and 2016,2018.
While no assurances can be given regarding the Company used $44,941achievement 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 $4,426 inexisting cash for investing activities, respectively.reserves.
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Cash Flow from Financing Activities
During the nine months ended April 30, 2017 and 2016, the Company was provided with cash of $189,744 and $41,341 by financing activities, respectively.
Going ConcernCritical Accounting Policies
Our auditors have issued a going concern opinion on our year-end consolidated financial statements ended July 31, 2015are prepared in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and July 31, 2016. This meansassumptions that there is substantial doubt that we can continue as an on-going business foraffect the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have generated limitedreported 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 have limited operating history. There are no assurances that we will be able to obtain additional financing through either private placements, bank financing or other loans necessary to support our working capital requirements. Toexpenses during the extent that funds generatedreporting period. Actual results could differ from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us.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, 2017, the Company had net operating loss carry forwards of approximately ($794,945), which will begin to expire in 2036 and are calculated at an expected tax rate of approximately 34%.
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. At December 31, 2015, 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.
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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 arrangementsarrangements.
Inflation
It is our opinion that have or are reasonably likely to haveinflation has not had a current or futurematerial effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting Company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sCommission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report due to our limited member of officers and members of the Board of Directors.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the quarter ended April 30,October 31, 2017, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II – OTHERII-OTHER INFORMATION
There are no material legal proceedings pending against the Company to the knowledge of management.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 2, 2017, the Company offered and sold 40,000 shares of common stock to accredited investor for $20,000.None.
On March 8, 2017, the Company authorized a stock grant of 50,000 common shares to each of three members of the board of directors totaling 150,000 shares of common stock valued at $1.75 per share as director compensation.
The authorization and issuance of the shares of common stock was made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”). The offer, sale and grant 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 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
During the quarter, the Company sold all of its equity interest in Bridgewater Construction, Ltd. to Emanuel Oliveira in exchange for the satisfaction of the Company’s debt to Oliveira in the amount of $759. The effective date of the transaction was February 1, 2017.None.
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101 | The following financial information from our Quarterly Report on Form 10-Q for the quarter ended |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 20, 2017
Mirage Energy Corporation
(Registrant)
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By: | /s/ Michael R. Ward | /s/ Michael R. Ward | |||
Michael R. Ward | Michael R. Ward | ||||
Chief Executive Officer (Principal Executive Officer) | Chief Financial Officer (Principal Accounting Officer) |
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