The following discussion of our financial condition and results of operations should be read together with our financial statements audited by MaloneBailey, LLP, our independent registered public accounting firm and the related notes that are included elsewhere in this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the caption "Risk Factors" or in other parts of this report. See "Cautionary Note Regarding Forward-Looking Statements."





Forward Looking Statements

Some of the statements contained in this Annual Report that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Annual Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:





    •   our ability to raise capital when needed and on acceptable terms and
        conditions;
    •   our ability to attract and retain management, and to integrate and
        maintain technical information and management information systems;
    •   the intensity of competition;
    •   general economic conditions; and
    •   other factors discussed in Risk Factors.

All forward-looking statements made in connection with this Annual Report which are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.






         18

  Table of Contents




Company's Plans

The Company has proposed to develop an integrated natural gas pipeline system in Texas and Mexico. The purpose of these pipelines will be to transport and store natural gas in a proposed underground natural gas storage facility, which the Company proposes to permit and develop in northern Mexico. The Company believes that it has made substantial progress toward these goals with its preliminary project engineering designs and high-level meetings with representatives of various Mexican regulatory agencies.

Discussion and Analysis of Financial Condition and Results of Operations

Revenues

Twelve-month period ended July 31, 2021

For the twelve (12) month period ended July 31, 2021, we generated no revenue and incurred a net loss of $4,222,660.

Our net loss of $4,222,660 for the twelve (12) month period ended July 31, 2021 was the result of operating expenses of $3,217,071 and other expenses (comprised of interest expense) of $1,005,589. Our operating expenses consisted of $3,155,895 in general and administrative expenses, and $61,176 in professional fees.

Twelve-month period ended July 31, 2020

For the twelve (12) month period ended July 31, 2020, we generated no revenue and incurred a net loss of $5,354,204.

Our net loss of $5,354,204 for the twelve (12) month period ended July 31, 2020 was the result of operating expenses of $1,028,705 and other expenses (comprised of interest expense) of $4,325,499. Our operating expenses consisted of $929,142 in general and administrative expenses, and $99,563 in professional fees.





Costs and Expenses

Our primary costs going forward are related to salaries and related payroll taxes, rent, as well as travel and professional fees associated with our proposed pipeline and natural gas storage activities in Mexico.

For the years ended July 31, 2020, and July 31, 2021, total general and administrative expenses were $929,142 and $3,155,895, respectively.

For the year ended July 31, 2020, we had $929,142 in general and administrative expenses compared to $3,155,895 in general and administrative expense for the year ended July 31, 2021. The $2,226,753 increase in general and administrative expenses was primarily the result of increased spending related to consulting fees, corporate advisory fees and directors' fee, net of decrease in financing fees.

The professional fees for the years ending July 31, 2020, and July 31, 2021, were $99,563 and $61,176, respectively. The $38,387 decrease was primarily result of reduction of spending related to audit fees and legal fees, net of increase in tax preparation fees.

The executive compensation for the years ending July 31, 2020, and July 31, 2021, was $368,000 and $368,000, respectively. There were no changes in the compensation amounts.






         19

  Table of Contents

Liquidity and Capital Resources





Cash Flows



Operating Activities

For the twelve (12) month period ended July 31, 2021, net cash used in operating activities was $821,595. The negative cash flow for the twelve (12) months ended July 31, 2021 related to our net loss of $4,222,660, adjusted for depreciation of $1,449, a decrease in financing fees of $17,000, a change of $753,376 in convertible debt due to fair market value, an increase of $191,750 in convertible debt due to default, an increase in expenses paid by shareholder of $28,188, a decrease in prepaid expenses of $40,860, an increase of $189,296 in accounts payable and accrued expenses and an increase of $6,229 in accrued salaries and payroll taxes - related parties.

For the twelve (12) month period ended July 31, 2020, net cash used in operating activities was $890,373. The negative cash flow for the twelve (12) months ended July 31, 2020 related to our net loss of $5,354,204, adjusted for depreciation of $1,581, an increase in financing fees of $38,098, a change of $3,991,040 in convertible debt due to fair market value, an increase of $230,942 in convertible debt due to default, an increase in expenses paid by shareholder of $29,642, a decrease in prepaid expenses of $7,799, an increase of $247,192 in accounts payable and accrued expenses and a decrease of $66,865 in accrued salaries and payroll taxes - related parties.





Investing Activities

For the twelve (12) months ended July 31, 2021 net cash used in investing activities was nil.

For the twelve (12) months ended July 31, 2020 net cash used in investing activities was nil.





Financing Activities

For the twelve (12) months ended July 31, 2021, net cash provided from financing activities was $753,812. The positive cash flow from financing activities for such period was comprised of proceeds from sale of common stock and proceeds from sale of convertible debentures, net of loan repayments to a related party.

For the twelve (12) months ended July 31, 2020, net cash provided from financing activities was $986,858. The positive cash flow from financing activities for such period was comprised of an increase in loans payable from related parties, proceeds from sale of common stock and proceeds from sale of convertible debentures, net of loan repayments to a related party.





Liquidity

To date, we have funded our operations primarily with capital provided and loans provided by related parties, accrual of salaries and accounts payable, sales of common stock and convertible debentures.

As of July 31, 2021, Mirage Energy Corporation had $99,158 in cash on hand and prepaid expenses of $50,419. Since Mirage Energy Corporation is unable to reasonably project its future revenue, it must presume that it will not generate any revenue during the next twelve (12) to twenty-four (24) months. We therefore will need to obtain additional debt or equity funding in the next two (2) - three (3) months, but there can be no assurances that such funding will be available to us insufficient amounts or on reasonable terms.






         20

  Table of Contents

The Company's audited financial statements for the year ended July 31, 2021, contain a "going concern" qualification. As discussed in Note 3 of the Notes to Financial Statements, the Company has incurred losses and has not demonstrated the ability to generate cash flows from operations to satisfy its liabilities and sustain operations. Because of these conditions, our independent auditors have raised substantial doubt about our ability to continue as a going concern.

Our financial objective is to make sure the Company has the cash and debt capacity to fund on-going operating activities, investments and growth. We intend to fund future capital needs through our current cash position, additional credit facilities, future operating cash flow and debt or equity financing. We are continually evaluating these options to make sure we have capital resources to meet our needs.

Existing capital resources are insufficient to support continuing operations of the Company over the next 12 months.

Management makes no assurances that adequate capital resources will be available to support continuing operations over the next 12 months. Management plans to pursue additional capital funding through multiple sources.

For the year ended July 31, 2021, the Company has funded operations debt of $367,000 from convertible notes, proceeds from sale of $415,000 in common stock, while making loan repayments of $28,188 to related party. The Company plans to raise additional funds through various sources to support ongoing operations during 2021 and 2022.

While no assurances can be given regarding the achievement of future results as actual results may differ materially, management anticipates adequate capital resources to support continuing operations over the next 12 months through the combination of infused capital through exercised warrants, infused capital through non-public private placement and existing cash reserves.





Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





Revenue Recognition

The Company recognizes revenues when earned which shall be as products are shipped and services are delivered to customers or distributors. The Company shall also record accounts receivable for revenue earned but not yet collected.





Income Taxes

Income taxes are provided based upon the liability method of accounting pursuant to FASB ASC 740-10-25 Income Taxes - Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by FASB ASC 740-10-25-5.






         21

  Table of Contents

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, 2021, the Company had net operating loss carry forwards of approximately $4,428,618 with a portion expiring from years 2034 to 2037 if not used and are calculated at an expected tax rate of approximately 21%.

FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has not taken any tax positions that would require disclosure under FASB ASC 740.

Pursuant to FASB ASC 740, income taxes are provided for based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by FASB ASC 740 to allow recognition of such assets.

Earnings (Loss) Per Share ("EPS")

FASB ASC 260, Earnings Per Share provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted losses per share were the same at the reporting dates as there were no common stock equivalents considered dilutive and outstanding.





Derivative Instruments

FASB ASC 815, Derivatives and Hedging establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk; or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Impairment of Long-Lived Assets

Long-lived assets of the Company, including the Technology Rights, are reviewed for impairment when changes in circumstances indicate their carrying value has become impaired, pursuant to guidance established in the FASB ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets." Management considers assets to be impaired if the carrying amount of an asset exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the asset will be written down to fair value, and a loss is recorded as the difference between the carrying value and the fair value. Fair values are determined based on quoted market values, discounted cash flows, or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.






         22

  Table of Contents

Fair Value of Financial Instruments

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, trade accounts receivable, and accounts payable and accrued expenses.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.





Inflation

It is our opinion that inflation has not had a material effect on our operations.

© Edgar Online, source Glimpses