UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
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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, 20172018
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 |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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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, 201718, 2018 there were 310,190,456329,882,379 shares of the Company’s common stock $0.001 par value, issued and outstanding.
MIRAGE ENERGY CORPORATION
(FORMERLY 4WARD RESOURCES, INC.)
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 20172018
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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 |
Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”("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, 2017.10-Q for the quarter ending April 30, 2018. 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 |
Table of Contents |
MIRAGE ENERGY CORPORATION
(FORMERLY 4WARD RESOURCES, INC.)
INDEX TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
April 30, 20172018
Page | |||
Consolidated Balance Sheets as of April 30, | 5 | ||
6 | |||
7 | |||
Notes to the Consolidated Interim Financial Statements (Unaudited) | 8 |
4 |
Table of Contents |
(FORMERLY 4WARD RESOURCES, INC.)
|
| April 30, |
| July 31, |
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| April 30, |
| July 31, |
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|
| 2017 |
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| 2016 |
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| 2018 |
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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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| $ | 5,182 |
| $ | 11,776 |
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Loans receivable and salary advances, related parties |
| - |
| 20,000 |
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Prepaid expenses |
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| 6,943 |
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| 2,859 |
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| 540 |
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| 1,559 |
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Total Current Assets |
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| 7,420 |
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| 99,024 |
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| 5,722 |
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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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| 5,007 |
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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 |
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| 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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| $ | 17,650 |
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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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| $ | 165,877 |
| $ | 208,678 |
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Accounts payable and accrued liabilities |
| 274,709 |
| 142,896 |
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| 422,598 |
| 337,384 |
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Loan payable |
| 77,844 |
| - |
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Convertible notes |
| 243,000 |
| 33,000 |
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Accrued salaries and payroll taxes, related parties |
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| 691,326 |
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| 303,750 |
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| 1,285,567 |
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| 854,553 |
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Total Current Liabilities |
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| 1,185,779 |
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| 496,646 |
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| 2,194,886 |
| 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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| 2,244,886 |
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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 April 30, 2018 and July 31, 2017 |
| 10,000 |
| 10,000 |
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Common stock, par value $0.001, 900,000,000 shares authorized, 324,516,064 shares issued and outstanding as of April 30, 2018; 310,190,456 shares issued and outstanding as of July 31, 2017 |
| 324,516 |
| 310,190 |
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Additional paid-in capital |
| 66,101 |
| 6,215 |
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| 325,146 |
| 66,101 |
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Accumulated deficit |
| (1,438,547 | ) |
| (448,551 | ) |
| (2,886,798 | ) |
| (1,843,358 | ) | ||||
Accumulated other comprehensive loss |
|
| (100 | ) |
|
| (11 | ) |
|
| (100 | ) |
|
| (100 | ) |
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
|
| (1,052,356 | ) |
|
| (304,483 | ) |
|
| (2,227,236 | ) |
|
| (1,457,167 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
| $ | 133,423 |
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| $ | 192,163 |
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| $ | 17,650 |
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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 |
| Nine Months Ended |
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| April 30, |
| April 30, |
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| April 30, |
| April 30, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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| 2018 |
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| 2017 |
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| 2018 |
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| 2017 |
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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 |
|
| $ | 208,854 |
| $ | 467,278 |
| $ | 748,466 |
| $ | 913,129 |
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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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| 19,389 |
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| 38,510 |
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| 64,957 |
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| 70,734 |
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Total Operating Expenses |
|
| 505,788 |
|
|
| 89,163 |
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| 983,863 |
|
|
| 248,134 |
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| 228,243 |
|
|
| 505,788 |
|
|
| 813,423 |
|
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| 983,863 |
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LOSS FROM OPERATIONS |
| (505,788 | ) |
| (89,163 | ) |
| (983,863 | ) |
| (248,134 | ) | ||||||||||||||||||||
LOSS BEFORE OPERATIONS |
| (228,243 | ) |
| (505,788 | ) |
| (813,423 | ) |
| (983,863 | ) | ||||||||||||||||||||
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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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| 115,227 |
|
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| 3,014 |
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| 230,017 |
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| 6,122 |
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Total Other Expense |
| 3,014 |
| 17 |
| 6,122 |
| 25 |
|
| 115,227 |
| 3,014 |
| 230,017 |
| 6,122 |
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LOSS BEFORE INCOME TAXES |
| (508,802 | ) |
| (89,180 | ) |
| (989,985 | ) |
| (248,159 | ) |
|
| (343,470 | ) |
|
| (508,802 | ) |
|
| (1,043,440 | ) |
|
| (989,985 | ) | ||||
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 | ) |
| (343,470 | ) |
| (508,802 | ) |
| (1,043,440 | ) |
| (989,985 | ) | ||||
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Foreign currency translation adjustments |
|
| (100 | ) |
|
| - |
|
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| (100 | ) |
|
| - |
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OTHER COMPREHENSIVE LOSS |
|
| - |
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| (100 | ) |
|
| - |
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| (100 | ) | ||||||||||||||||
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TOTAL COMPREHENSIVE LOSS |
| $ | (508,902 | ) |
| $ | (89,180 | ) |
| $ | (990,085 | ) |
| $ | (248,159 | ) |
| $ | (343,470 | ) |
| $ | (508,902 | ) |
| $ | (1,043,440 | ) |
| $ | (990,085 | ) |
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Basic and Diluted Loss per Common Share |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.02 | ) |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
Basic and Diluted Weighted Average Common Shares Outstanding |
|
| 310,152,928 |
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| 38,910,915 |
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| 191,961,783 |
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| 14,087,479 |
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| 316,567,075 |
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| 310,152,928 |
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| 313,795,366 |
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| 191,961,783 |
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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)
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| Nine Months Ended |
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| April 30, |
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| Nine Months Ended |
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| 2017 |
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| 2016 |
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| April 30, |
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| 2018 |
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| 2017 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net (loss) |
| $ | (990,085 | ) |
| $ | (248,159 | ) |
| $ | (1,043,440 | ) |
| $ | (990,085 | ) |
Adjustments to reconcile net (loss) to net cash used in operating activities: |
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Depreciation expense |
| 1,186 |
| - |
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| 1,185 |
| 1,186 |
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Stock-Based compensation |
| 262,500 |
| - |
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Loss on change in fair value of convertible debt |
| 121,391 |
| - |
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Penalty on convertible debt |
| 83,500 |
| - |
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Issuance of stock for services and fees |
| 42,500 |
| 262,500 |
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Changes in operating assets and liabilities |
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Prepaid expenses |
| (4,084 | ) |
| (136 | ) |
| 1,019 |
| (4,084 | ) | |||||
Accounts payable |
| 46,991 |
| 7,520 |
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| 185,679 |
| 46,991 |
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Accrued expenses |
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| 32,399 |
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| 1,560 |
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| 13,494 |
| 32,399 |
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Accrued salaries and payroll taxes, related parties |
|
| 429,576 |
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| 202,500 |
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| 419,500 |
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| 429,576 |
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Net cash (used) in operating activities |
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| (221,517 | ) |
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| (36,715 | ) |
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| (175,172 | ) |
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| (221,517 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Loans receivable, related parties |
| (11,000 | ) |
| (3,000 | ) | ||||||||||
U.S. and Mexican project development costs |
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| (33,941 | ) |
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| (1,426 | ) | ||||||||
Loans to related party |
| - |
| (11,000 | ) | |||||||||||
Project development costs |
|
| - |
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| (33,941 | ) | ||||||||
Net cash (used) in investing activities |
|
| (44,941 | ) |
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| (4,426 | ) |
|
| - |
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| (44,941 | ) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from loan, related party |
| 27,700 |
| 169,744 |
| |||||||||||
Repayments of loan, related party |
| (93,122 | ) |
| - |
| ||||||||||
Proceeds from sale of common stock |
|
| 20,000 |
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|
| 41,341 |
|
| 25,000 |
| 20,000 |
| |||
Loans payable, related parties |
|
| 169,744 |
|
|
| - |
| ||||||||
Proceeds from convertible debt |
|
| 209,000 |
|
|
| - |
| ||||||||
Net cash provided by financing activities |
|
| 189,744 |
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| 41,341 |
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| 168,578 |
|
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| 189,744 |
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Effects on changes in foreign exchange rate |
|
| 1,026 |
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|
| - |
|
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| - |
|
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| 1,026 |
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Net increase (decrease) in cash |
| (75,688 | ) |
| 200 |
| ||||||||||
Net (decrease) in cash |
| (6,594 | ) |
| (75,688 | ) | ||||||||||
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Cash and cash equivalents - beginning of period |
|
| 76,165 |
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| - |
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| 11,776 |
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| 76,165 |
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Cash and cash equivalents - end of period |
| $ | 477 |
|
| $ | 200 |
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| $ | 5,182 |
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| $ | 477 |
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Supplemental Cash Flow Disclosures |
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Cash paid for interest |
| $ | 2,714 |
| $ | 54 |
| |||||||||
Cash payments for income taxes |
| $ | - |
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| $ | - |
| ||||||||
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NON-CASH TRANSACTIONS: |
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Supplemental Non-Cash Flow Disclosures |
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Net assets assumed in reverse merger |
| $ | 40,288 |
|
| $ | - |
|
| $ | - |
|
| $ | 40,288 |
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Cash paid for interest |
| $ | 6,122 |
|
| $ | 25 |
| ||||||||
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Cash payments for income taxes |
| $ | - |
|
| $ | - |
| ||||||||
Expenses paid by shareholder |
| $ | 22,621 |
|
| $ | - |
| ||||||||
Stock issued for convertible interest |
| $ | 3,745 |
|
| $ | - |
| ||||||||
Stock issued for convertible debt |
| $ | 202,126 |
|
| $ | - |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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(FORMERLY 4WARD RESOURCES, INC.)
Notes to the Consolidated Interim Financial Statements
April 30, 20172018
(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, 2017.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.
There are 10,000,000 shares of preferred stock that are convertible into 200,000,000 shares of common stock. As of April 30, 2018, the number of shares of common stock that can be issued for convertible debt as per Note 9 - Subsequent Events are 1,720,482. The other notes were not convertible at April 30, 2018.
Basis of Consolidation
These financial statements include the accounts of the Company and its wholly owned subsidiaries, 4Ward Resources, Inc., Cenote Energy, S. de R.L. de C.V., WPF Transmission, Inc., and WPF Mexico Pipelines, S. de R.L. de C.V. All material intercompany balances and transactions have been eliminated.
Financial Instruments
The Company’s notes that have become convertible are subject to ASC Topic 480, “Distinguishing Liabilities from Equity,” as the debt is a mostly fixed amount to be settled with a variable number of shares.
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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$1,043,440 and had net cash used in operations of $221,517$175,172 for the nine months ended April 30, 20172018 and had an accumulated deficit and working capital deficit of $1,438,547$2,886,798 and $1,178,359$2,189,164 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 April 30, 2018 and July 31, 2017 is as follows:
|
| April 30, |
|
| July 31, |
| ||
|
| 2018 |
|
| 2017 |
| ||
Notes payables related party, unsecured, interest bearing at 5% rate per annum, on demand |
| $ | 165,877 |
|
| $ | 187,600 |
|
Note, unsecured interest bearing at 2% per annum, due July 9, 2020 |
|
| 50,000 |
|
|
| 50,000 |
|
Note, unsecured interest bearing at 7.5% per annum, due April 15, 2018. This note is now in default as of April 16, 2018 and has a default interest of 17.5% |
|
| 77,844 |
|
|
| - |
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued June 28, 2017 in the amount of $33,000 with fees of $3,000 and cash proceeds of $30,000, convertible at December 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 March 30, 2018. This note defaulted on November 15, 2017 and a default penalty of $16,500 was added to the note for a total of $49,500 and incurred default interest rate of 22%. During January and February 2018, $49,500 of this debt plus $1,980 in interest was converted and the Company issued 5,024,243 shares of common stock with a fair value of $110,708 in payment leaving no balance due. The convertible note had a net change in fair value of $59,227. |
|
| - |
|
|
| 33,000 |
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued August 22, 2017 in the amount of $38,000 with fees of $3,000 and cash proceeds of $35,000, convertible at February 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 May 30, 2018. This note defaulted on November 15, 2017 and a default penalty of $19,000 was added to the note for a total of $57,000 and incurred default interest rate of 22%. During March 2018, $45,000 of this debt was converted and the Company issued 8,251,365 shares of common stock with a fair value of $95,164 in payment leaving a principal balance of $12,000 of which fair market value was recorded at April 30, 2018 as $24,000. The convertible note has a net change in fair value of $62,164. |
|
| 24,000 |
|
|
| - |
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued December 4, 2017 in the amount of $53,000 with fees of $3,000 and cash proceeds of $50,000, convertible at June 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 September 15, 2018. This note defaulted on March 25, 2018 and a default penalty of $26,500 was added to the note for a total of $79,500 and incurred default interest rate of 22%. As of April 30, 2018, $0 of this debt was converted and the Company issued no shares of common stock leaving a principal balance of $79,500. This note becomes convertible on June 2, 2018. |
|
| 79,500 |
|
|
| - |
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued January 5, 2018 in the amount of $75,000 with an original issue discount of $2,000 and cash proceeds of $73,000, convertible at July 4, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of January 5, 2019. This note is in default and incurred default interest rate of 18%. The Company has not received any notice of default and associated default penalties remain unassessed by Lender. |
|
| 75,000 |
|
|
| - |
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued February 26, 2018 in the amount of $43,000 with fees of $3,000 and cash proceeds of $40,000, convertible at August 25, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of November 30, 2018. This note defaulted on March 25, 2018 and a default penalty of $21,500 was added to the note for a total of $64,500 and incurred default interest rate of 22%. As of April 30, 2018, $0 of this debt was converted and the Company issued no shares of common stock leaving a principal balance of $64,500. This note becomes convertible on August 25, 2018. |
|
| 64,500 |
|
|
| - |
|
Loan payable related party, unsecured, non-interest bearing, on demand |
|
| - |
|
|
| 21,078 |
|
Total Debt |
|
| 536,721 |
|
|
| 291,678 |
|
Less: Current Maturities |
|
| 486,721 |
|
|
| 241,678 |
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt |
| $ | 50,000 |
|
| $ | 50,000 |
|
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At the date each convertible instrument becomes convertible it is subject to ASC Topic 480, “Distinguishing Liabilities from Equity,” since the debt is a mostly fixed amount to be settled with a variable number of shares.
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, 2017 and 2016,2018, 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$1,238,250 as of April 30, 2017.2018. Accrued salaries of $702,250$1,238,250 combined with accrued payroll taxes of $31,076 is netted with advances of $42,000$47,317 for a total accrued related party salaries and payroll tax of $691,326$1,285,567 for the nine months ended.period from June 2015 until April 30, 2018.
Also, Mr. Michael Ward, President, was owed $21,078 at July 31, 2017 which has decreased to $0 as of April 30, 2018 resulting from additional $27,700 of cash proceeds, expenses paid of $22,621, and repayments of $71,399. Additionally, a company owned by the spouse of the CEO provided an additionala loan of $137,600$165,877 and $187,600 respectively, to 4Ward Resources, Inc. duringfor the nine months. This additional loan increasedperiod ended April 30, 2018 and year ended July 31, 2017. Due to partial payments totaling $21,723, the balance has 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.$165,877.
NOTE 56 – LEASES
On June 9, 2016, the Company entered into a Lease Agreement for its San Antonio, Texas office lease location. The Lease Period is for three (3) years beginning July 1, 2016. The Company shall pay as additional rent all other sums of money as shall become due and payable by them under this Lease. To date after twenty-two (22) months of this thirty-six (36) month lease, no such additional charges have been made. Below is the schedule of rent for the remaining Lease term as of April 30, 2018.
Year Amount 2018 2019 Total Remaining Base Rent $ 13,503 $ 83,045 $ 96,548
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company committed to eighteen (18) months of Acquisition of Pipeline Rights of Way to Marcos y Asociados with a total amount of $77,844 which was due April 15, 2018 and not paid as of April 30, 2018. Interest will continue accruing after April 30, 2018 until it is paid.
From time to time, the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 8 - EQUITY
On February 2, 2017,In January, the Company offered and sold 40,000 sharesentered into consulting agreements with two consultants with total consideration of common stock to accredited investor for $20,000.
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 150,0001,000,000 shares of common stock valued at $1.75$42,500. These shares were issued in March 2018 and are fully vested when they were issued. The term of both agreements shall be for a period of six months.
On March 21, 2018, the Company offered and sold Fifty Thousand (50,000) shares of common stock to Michael Liska valued at $0.50 per share as director compensation.for $25,000.
NOTE 9 - SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to April 30, 2018, identifying those that are required to be disclosed as follows:
On May 9, 2018, PowerUp Lending Group Ltd. converted principal in the amount of $8,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 for 963,855 shares of common stock.
On May 14, 2018, PowerUp Lending Group Ltd. converted the remaining principal $4,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 along with $2,280 of accrued interest for 756,627 shares of common stock.
On June 7, 2018, PowerUp Lending Group Ltd. converted principal in the amount of $15,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 1,562,500 shares of common stock.
On June 11, 2018, PowerUp Lending Group Ltd. converted principal in the amount of $20,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 2,083,333 shares of common stock.
Table of Contents |
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, as filed on January 27, 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.)Corporation.
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 Mexico and the United States.various Mexican regulatory agencies.
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, 2017 and 2016
The following table provides the results of operations for the three months ended April 30, 2017 and 2016:
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 $ - $ - - - - - 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 ended April 30, 2017 and 2016, our revenues were $nil, our cost 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.
Our operating expenses were primarily composed of salaries and wages and directors fees.
Nine Months ended April 30, 2017 and 2016
The following table provides the results 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 cost 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. Our operating expenses were primarily composed of salaries and wages and director fees.
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Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Three Months ended April 30, 2018 and 2017
Revenues
Three month period ended April 30, 2018
For the ninethree (3) month period ended April 30, 2018, we generated no revenue and incurred a net loss of $343,470.
Our net loss of $343,470 for the three (3) month period ended April 30, 2018 was the result of operating expenses of $228,243 and other expense (comprised of interest expense) of $115,227. Our operating expenses consisted of $208,854 in general and administrative expenses, and $19,389 in professional fees.
Three month period ended April 30, 2017
For the three (3) month period ended April 30, 2017, we generated no revenue and incurred a net loss of $508,802.
Our net loss of $508,802 for the three (3) month period ended April 30, 2017 was the result of operating expenses of $505,788 and other expense (comprised of interest expense) of $3,014. Our operating expenses consisted of $467,278 in general and administrative expenses, and $38,510 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, 2018 and April 30, 2017, total general and 2016, other comprehensive loss was $100administrative expenses were $228,243 and $nil, respectively; and our total comprehensive loss was $990,085 and $248,159,$505,788, respectively.
Limited Operating History; NeedFor the three (3) months ended April 30, 2018, we had $208,854 in general and administrative expenses compared to $467,278 in general and administrative expenses for Additional Capital
There is no historical financial information about us on which to base an evaluation of our performance. We cannot guarantee we will be successfulthe three (3) months ended April 30, 2017. The $258,424 decrease in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in developing our website,general and possible cost overrunsadministrative expenses was primarily due to the price and cost increasesreduction in supplies and services.spending related to director compensation.
WhileThe professional fees for the officersthree (3) months ending April 30, 2018 and directors have generally indicatedApril 30, 2017 were $19,389 and $38,510, respectively. The $19,121 decrease was primarily related to a willingness to provide servicesreduction in legal fees 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.transfer agent costs.
If we are unableThe executive compensation for the three (3) months ending April 30, 2018 and April 30, 2017 was $116,500 and $116,500, respectively. No change was due to meet our needs for cash from eithersame executives on the stockholders and / or the money that we raise from future financings, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.payroll during this quarter with no change in compensation amounts.
We have no plans to undertake any product research and development during the next twelve months.
Liquidity and Capital Resources
Working CapitalCash Flows
April 30, July 31, 2017 2016 Current Assets 7,420 Current Liabilities 1,185,779 Working Capital (Deficit) Operating Activities$ $ 99,024 496,646 $ (1,178,359 ) $ (397,622 )
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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 atFor the nine (9) month period ended 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 to2018, net cash used in operating activities was $175,172. The negative cash flow for the nine (9) months ended April 30, 2018 related to our net loss of $1,043,440, a decrease in prepaid expenses of $1,019, adjusted for depreciation of $1,185, an increase of $83,500 in convertible debt due to default, a change of $121,391 in convertible debt due to fair market value, an increase of $185,679 in accounts payable, an increase of $13,494 in accrued expenses and expenditures for our Mexicanan increase of $419,500 in accrued salaries and U.S. projects.payroll taxes – related parties.
As atFor the nine (9) month period ended 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.net cash used in operating activities was $221,517. 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 costsnegative cash flow for our Mexican and U.S. projects.
Cash Flow from Operating Activities
During the nine (9) months ended April 30, 2017 related to our net loss of $990,085, an increase in prepaid expenses of $4,084, adjusted for depreciation of $1,186, an increase of $46,991 in accounts payable, and 2016, the Company used $221,517 and $36,715an increase of $32,399 in cash from operating activities, respectively.accrued expenses.
Cash Flow from Investing Activities
DuringFor the nine (9) months ended April 30, 2018 net cash used in investing activities was nil.
For the nine (9) months ended April 30, 2017 net cash used in investing activities was $44,941. The negative cash flow from investing activities for such period was comprised of loans receivable – officer in the amount of $11,000 and 2016,project development costs of $33,941.
Financing Activities
For the nine (9) months ended April 30, 2018, net cash provided by financing activities was $168,578. The positive cash flow from financing activities for such period was comprised of an increase in proceeds from related party loan and convertible debt and increase in repayment of related party loan.
For the nine (9) months ended April 30, 2017, net cash provided from financing activities was $189,744. The positive cash flow from financing activities for such period was comprised of an increase in loans payable from related parties and proceeds from sale of common stock.
Liquidity
To date, we have funded our operations primarily with capital provided and loans provided by related parties, salaries accrued to related parties and accounts payable along with sale of convertible debentures.
As of April 30, 2018, Mirage Energy Corporation had $5,182 in cash on hand and prepaid expenses of $540. 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 used $44,941has incurred losses and $4,426 inhas not demonstrated the ability to generate cash for investingflows 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, respectively.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.
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Cash Flow from Financing ActivitiesManagement 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.
DuringFor the nine months ended April 30, 2017 and 2016,2018, the Company was provided with cashhas funded operations of $189,744$175,172 through loan proceeds of $209,000 and $41,341 by financing activities, respectively.proceeds from related parties’ loan payable of $27,700. The $209,000 loan proceeds are from sale of convertible notes. The Company plans to raise additional funds through various sources to support ongoing operations during 2018.
Going ConcernWhile 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 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 intends to recognize 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 blended tax rate of approximately 26%.
“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.
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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 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.
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Item 4. Controls and Procedures.
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’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, 2017,2018, 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,March 21, 2018, the Company offered and sold 40,000Fifty Thousand (50,000) shares of common stock to accredited investor for $20,000.Michael Liska valued at $0.50 per share.
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 150,000The 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 registrationwere not registered under Section 4(a)(2) of the Securities Act of 1933, as amended (the ““Securities Act”), and were offered, sold and issued in reliance upon the exemption from registration provided by Section 4 (a) (2) of the Securities Act, ”). The offer, sale and grant represented private transactions as a transaction by an issuer 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.See Item 5 below.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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DuringDebt Financing Transactions
The Company entered into a series of security purchase agreements and corresponding convertible promissory notes in a series of debt financing transactions. The following is a summary of the quarter,promissory notes, which are qualified their entirety, by the attached Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5.
The Company has defaulted under the terms of the convertible promissory notes, principally for untimely filing of its SEC periodic reports.
Note 1
On June 28, 2017, the Company sold allborrowed $33,000 from Power Up Lending Group Ltd., a Virginia corporation ("Power Up"). The promissory note bears interest at the rate of 12% per annum and was due March 30, 2018. The note is convertible into Company common stock at a Forty-five percent (45%) discount to the market price of our common stock. Market price is the average of the lowest one day trading price during a twenty (20) days preceding conversion. On January 9, January 19, February 1, and February 16, 2018, the Company issued 940,439, 1,181,102, 1,351,351, and 1,551,351 conversion shares, respectively. The Power Up notes may be paid off during the initial 180 days at specified premiums. The Company may pay off the note during the initial 180 days at a premium. After the expiration of 180 days, the Company may not pay off the note. The note may be paid off at maturity. The Holder has voluntarily limited its conversion to no more than 4.99% of the Company's issued and outstanding common stock. This note went into default due to the Company's untimely filing of its equity interest in Bridgewater Construction, Ltd. to Emanuel Oliveira in exchangeAnnual Report for the satisfactionyear ending July 31, 2017. A default penalty of $16,500 was assessed. As of March 6, 2018, this note had been paid in full by equity.
Note 2
On August 22, 2017, the Company borrowed $38,000 from Power Up. The promissory note bears interest at the rate of 12% per annum and is due on May 30, 2018. The note is convertible into Company common stock at a Forty-five percent (45%) discount to the market price of our common stock. Market price is the average of the Company’s debtlowest one day trading price during a twenty (20) days preceding conversion. The note may be paid off during the initial 180 days at a specified premium. The Company may pay off the note during the initial 180 days at a premium. After the expiration of 180 days, the Company may not pay off the note. The note may be paid off at maturity. The Holder has voluntarily limited its conversion to Oliveira in the amount of $759. The effective dateno more than 4.99% of the transactionCompany's issued and outstanding common stock. This note went into default due to the Company's untimely filing of its Annual Report for the year ending July 31, 2017. A default penalty of $19,000 was February 1, 2017.assessed. The current balance of this note as of April 30, 2018 was $24,000.
Note 3
On December 4, 2017, the Company borrowed $53,000 from Power Up. The promissory note bears interest at the rate of 12% per annum and is due on September 15, 2018. The note is convertible into Company common stock at a Forty-five percent (45%) discount to the market price of our common stock. Market price is the average of the lowest one day trading price during a twenty (20) days preceding conversion. The note may be paid off during the initial 180 days at a specified premium. The Company may pay off the note during the initial 180 days at a premium. After the expiration of 180 days until the maturity date, the note may be paid off at a 150% premium. The Holder has voluntarily limited its conversion to no more than 4.99% of the Company's issued and outstanding common stock. This note went into default due to the Company's untimely filing of its Quarterly Report for the period ending January 31, 2018. A default penalty of $ 26,500 was assessed. As of April 30, 2018, none of this loan had been repaid and balance of the note was $79,500. This note became convertible into common shares on, or after June 2, 2018.
Note 4
On February 26, 2018, the Company borrowed $43,000 from Power Up Lending Group, Inc. The promissory note bears interest at the rate of 12% per annum and is due on November 30, 2018. The note is convertible into Company common stock at a Forty-five percent (45%) discount to the market price of our common stock. Market price is the average of the lowest one day trading price during a twenty (20) days preceding conversion. The note may be paid off during the initial 180 days at a specified premium. The Company may pay off the note during the initial 180 days at a premium. After the expiration of 180 days until the maturity date, the note may be paid off at a 150% premium. The Holder has voluntarily limited its conversion to no more than 4.99% of the Company's issued and outstanding common stock. This note went into default due to the Company's untimely filing of its Quarterly Report for the period ending January 31, 2018. A default penalty of $21,500 was assessed. As of April 30, 2018, $0 of this debt was converted and the Company issued no shares of common stock leaving a principal balance of $64,500. This note becomes convertible on August 25, 2018.
Note 5
On January 5, 2018, the Company borrowed $75,000 from JSJ Investments, Inc., a Texas corporation. The promissory note bears interest at the rate of 12% and is due on January 5, 2019. The note has an original issue discount of $2,000. The note is convertible into Company common stock at a Forty-five percent (45%) discount to the market price of our common stock. Market price is the average of the lowest one day trading price during a twenty (20) days preceding conversion. The Company may pay off the note during the initial 180 days at a premium. After the expiration of 180 days, the Company may not pay off the note. The note may be paid off at maturity. The Holder has voluntarily limited its conversion to no more than 4.99% of the Company's issued and outstanding common stock. The Company has defaulted on this note under paragraph 10(a)(iv, xi, xii, xiii, xiv). The Company has not received any notice of default and associated default penalties remain unassessed by Lender.
Trade Creditor Note:
On March 12, 2018, 4Ward Resources, Inc., a subsidiary executed a promissory note for $77,844 with Marcos Y Asociados Infraestructura Y Energia, S.C., a vendor representing the balance due as of 01/31/18 for rights of way services on behalf of the Company's development activities in Mexico. The note is due on, or before April 15, 2018.
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Exhibit No Description of Exhibit Location of Exhibit
JSJ Investments, Inc. Convertible Promissory Note dated January 5, 2018 10-Q filed April 30, 2018 | ||
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 April 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) Condensed Notes to Interim Consolidated Financial Statements |
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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: June 20, 2018
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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