Annual Report (10-k)

Date : 04/17/2017 @ 2:35PM
Source : Edgar (US Regulatory)
Stock : Mansfield-martin Exploration Mining, Inc. (PC) (MCPI)
Quote : 0.0899  0.0 (0.00%) @ 2:05AM

Annual Report (10-k)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

Form 10-K




(Mark one)
x         Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2016

o         Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______________ to _____________



Commission File Number: 000-28453
 
 
Mansfield-Martin Exploration Mining, Inc.
(Exact name of registrant as specified in its charter)
 
Nevada
45-0704149
(State of incorporation)
(IRS Employer ID Number)
 
1137 Highway 80 East, Post Office Box 1218, Tombstone, AZ 86638
(Address of principal executive offices)
 
(520) 457-9404
(Issuer’s telephone number)
 
MCPI, Inc.
(Former name, former address and former fiscal year, if changed since last report)
 

 
Securities registered pursuant to Section 12 (b) of the Act - None
Securities registered pursuant to Section 12(g) of the Act: - Common Stock - $0.001 par value
 

 
Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  o No x
 
Indicate by check mark whether the registrant has (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 the Company was required to file such reports), and (2) has been subject to such filing requirements for 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post files). Yes  x No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer  o
Accelerated filer o
Non-accelerated filer  o
Smaller reporting company   x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes  x No o
 
The aggregate market value of voting and non-voting common equity held by non-affiliates as of April 13, 2017 was approximately $3,232,500 based upon 51,720,000 shares held by non-affiliates.

As of April 13, 2017, there were 336,300,000 shares of Common Stock issued and outstanding.
 

Mansfield-Martin Exploration Mining, Inc.

Form 10-K for the Year Ended December 31, 2016

Index to Contents
 

   
Page Number
Part I
   
     
Item 1
Business
3
Item 1A
Risk Factors
4
Item 1B
Unresolved Staff Comments
9
Item 2
Properties
9
Item 3
Legal Proceedings
9
Item 4
Mine Safety Disclosures
9
     
Part II
   
     
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
9
Item 6
Selected Financial Data
12
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
15
Item 8
Financial Statements and Supplementary Data
15
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
15
Item 9A
Controls and Procedures
16
Item 9B
Other Information
17
     
Part III
   
     
Item 10
Directors, Executive Officers and Corporate Governance
17
Item 11
Executive Compensation
19
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
20
Item 13
Certain Relationships and Related Transactions, and Director Independence
21
Item 14
Principal Accounting Fees and Services
22
     
Part IV
   
     
Item 15
Exhibits, Financial Statement Schedules
23
     
Signatures
 
24
 
 
2


Caution Regarding Forward-Looking Information

Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business  disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

PART I

Item 1 - Business

General

Mansfield-Martin Exploration Mining, Inc. (“Company” or “MMEM”) was incorporated under the laws of the State of Nevada on February 23, 2011.  The Company was originally incorporated as SW China Imports, Inc. on February 23, 2011 in the State of Nevada.  The Company’s initial business plan was to import high-end handmade lace wigs, hairpieces, and other beauty supplies and accessories manufactured overseas into the United States.  In June 2014, the Company changed its name to Med-Cannabis Pharma, Inc. and implemented a new business plan to enter into the retail sale of medical and personal use  marijuana, where allowable.  In October 2015, the Company changed its name to MCPI, Inc.  In March 2017, the Company, in anticipation of consummating a proposed asset acquisition transaction, changed its name to Mansfield-Martin Exploration Mining, Inc.

Effective March 31, 2016, the Company ceased activities in all of its subsidiaries and disposed of Med-Pharma Management, Inc. and High Desert MMJ, Inc.  Prior thereto, the Company’s subsidiaries were Medical Management Systems, Inc., an Oregon corporation engaged in providing back-office and support services to marijuana dispensaries in the State of Oregon; Med-Pharma Management, Inc., a Washington State corporation which was formed to own, manage or provide back-office and support services to marijuana dispensaries in Washington State; and High Desert MMJ, Inc. an Oregon corporation, which is a 99.0% partner in Emerald Mountain Organics, an Oregon joint venture, formed to facilitate the development and growing of medical marijuana plants for wholesale distribution to licenced dispensaries in the State of Oregon.

As of December 31, 2015, Medical Management Systems, Inc. held a Management Contract for three marijuana dispensaries located in Newport, Bend and Cottage Grove, Oregon; which are owned by a company controlled by a related party.  This Management Contract was terminated by the consent of both parties, effective March 31, 2016.   Med-Pharma only conducted introductory due diligence efforts in the State of Washington and, currently, had abandoned all activities in the State of Washington.  Emerald Mountain Organics had established an early-phase growing operation and  generated nominal sales through September 30, 2015.
During the first 10 days of October 2015, the Company’s subsidiary, High Desert MMJ, Inc., learned that the 1.0% minority partner in the Emerald Mountain Organics joint venture had absconded with all of the assets of the joint venture.  Efforts to locate and recover either the individuals representing said 1.0% minority partner or the said absconded assets were unsuccessful.  Accordingly, effective October 10, 2015, High Desert MMJ, Inc. abandoned the Emerald Mountain Organics joint venture and wrote off its investment.  The cumulative start-up losses in the Company’s consolidated financial statements for the Emerald Mountain Organics joint venture through the date of abandonment were approximately $53,000 and the Company recognized a loss on the stolen assets of approximately $51,000 during the quarter ended December 31, 2015.

On June 1, 2016, the Company entered into a Settlement, General and Mutual Release of Claims and Assignment of Interest Transfer Agreement (Settlement Agreement) with its majority shareholder and a related party.  The Settlement Agreement relates to the Company’s management of three medical marijuana dispensaries (Stores) located in Oregon, which are owned by Bendor Investments, Ltd. (Bendor), whose sole shareholder is Charles Stidham.  The Company owed Mr. Stidham approximately $1,100,000, including accrued interest, as of the date of the Settlement Agreement.
 
3

 
The Company asserted a claim for management fees of approximately $80,000 and reimbursement of monies advanced to support the operations of the Stores totaling approximately $343,000 for the services of the Company’s wholly-owned subsidiary, Medical Management Systems, Inc. (MMS), in managing the Stores.  Bendor disputed this claim.  To resolve the dispute, the parties agreed to forgive the accrued management fees and to offset the approximately $343,000 due from Bendor against the approximately $1,100,000 owed to Mr. Stidham with the Company releasing any and all interests it may have had in the Stores and MMS.  Additionally, the Company agreed to assign a trademark to Mr. Stidham as well as executing a new Note in the principal sum of $752,694.19.  The effect of the June 1, 2016 Settlement Agreement is reflected in the accompanying 2015 consolidated financial statements.

Pending Transaction

On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement) with Armada Mining, Inc. of Tombstone, Arizona, an Arizona corporation (Armada).  Under the terms of the Agreement, the Company will issue 284,580,000 shares of its common stock to Armada, its affiliates, related entities and other common parties in exchange for rights and interests in mining properties in the Tombstone Mining District of Arizona.  The Company will acquire rights and interests to approximately 3,800 acres of contiguous mineral leases, including some property acquired in fee simple, and ownership of 100% of Tombstone Development Company, which was formed in 1933, and is believed to be the oldest continually operating mining company in Arizona.  Subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals, the Company intends to commence development of these properties by processing previously mined materials for gold, silver and other precious or base metals, by reopening and developing existing mines using modern equipment and techniques and by completing an existing drill/test grid to establish the boundary of producible ore bodies, in anticipation of a Bankable Feasibility Study and further development.

Upon completion of the terms of the Agreement, Armada will own approximately 85% of the Company’s  post-transaction issued and outstanding common stock of the Company.  Armada has represented to the Company that it anticipates exchanging a portion of these shares with their existing shareholders; using a portion to satisfy existing obligations to related parties and others; and using a portion to finance other Armada operations.  The Agreement anticipates that Company, post-transaction, will have new Board of Directors that will, in turn, appoint new management for the Company.  Additionally, the Company and Armada have facilitated a change in the Company’s corporate name to better reflect the nature and focus of the Company’s proposed ongoing and future business interests.

As of the date of this filing, this transaction has not been completed and, in the opinion of current management, remains viable.
Where You Can Find Information

The public may read and copy any materials we file with the SEC in the SEC's Public Reference Section, Room 1580,100 F Street N.E., Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330.  Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at www.sec.gov or www.freeedgar.com.

Employees

The Company currently has no employees.

Management of the Company expects to use consultants, attorneys and accountants, as necessary, so long as it is seeking and evaluating business opportunities.

The need for additional employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities.

Item 1A - Risk Factors

We have a limited operating history with our current business.  The Company was incorporated in 2011 and was unsuccessful at previous business plans.

Originally, the Company was formed to operate as an importer of high-end handmade lace wigs, hairpieces and related beauty products.  The Company’s operations as both a support entity to the legal marijuana business and as a direct retailer, which it has focused on since the third quarter of 2014, generated only limited revenues and was abandoned in early-2016.  Future operations are subject to all the problems, expenses, difficulties, complications and delays encountered in establishing new businesses.  The Company believes that it will become commercially viable, generate significant revenues and operate at a profit in future periods; however, there are no assurances that these projections will occur.
 
4

 
The Company will require additional financing to become commercially viable.

As December 31, 2016, the Company had a line-of-credit (”LOC”) to a related party stockholder with an outstanding balance of approximately $820,000, bearing interest at 10% annually. This LOC was entered into on June 1, 2016 and replaced all previous shareholder notes.  During the year ended December 31, 2016 and 2015, interest expense on these financing vehicles was approximately $304,000 and $73,000, inclusive of non-cash charges for partial note conversions to common stock at less than “fair value”.

The Company’s current mining business can be capital intensive.

The  Company acknowledges that its Plan of Operations may not result in the consistent generation of positive working capital in the near future.  Although management believes that it will be able to successfully execute its business plan, which includes third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.

We currently rely on certain key individuals, and the loss of one of these key individuals could have an adverse effect on the Company.

Our success depends to a certain degree upon certain key members of our management.  These individuals are a significant factor in our growth and success.  The loss of the services of such members of management could have a material adverse effect on our Company.  We presently maintain no key-man insurance coverage on any of our officers.
The Company’s success will be dependent in part upon its ability to attract qualified personnel and consultants.

The Company’s success will be dependent in part upon its ability to attract qualified creative marketing, sales and development professionals.  The inability to do so on favorable terms may harm the Company’s proposed business.

The Company must effectively meet the challenges of managing expanding operations.

The Company’s business plan anticipates that operations will undergo significant expansion during 2017 and beyond.  This expansion will require the Company manage a larger and more complex organization, which could place a significant strain on our managerial, operational and financial resources.  Management may not succeed with these efforts.  Failure to expand in an efficient manner could cause expenses to be greater than anticipated, revenues to grow more slowly than expected and could otherwise have an adverse effect on the business, financial condition and results of operations.

Our business could be affected by changes in governmental regulation.

Federal, State and Local laws and regulations governing mining operations are broad in scope and are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance.  In addition, violations of these laws, actual or alleged, could disrupt the Company’s planned business and adversely affect our financial condition and results of operations.  In addition, it is possible that additional or revised Federal, State and Local laws and regulations may be enacted in the future governing the mining industry.  There can be no assurance that the Company will be able to comply with any such laws and regulations and its failure to do so could significantly harm our business, financial condition and results of operations.

Our business will be subject to other operating risks which may adversely affect the Company’s financial condition.

Our planned operations will be subject to risks normally incidental to retail and manufacturing operations dependent on internal and third-party production and distribution operations which could result in work stoppages, damage to property or unavailable product for resale.  This may be caused by:

·
breakdown of equipment;
·
labor disputes;
·
imposition of new government regulations;
·
sabotage by operational personnel;
·
cost overruns; and
·
fire, flood, or other acts of God.
 
 
5

 
We will likely face significant competition.

The mining industry is subject to significant competition as it implements its business strategy.  The ability of MCPI to effectively compete could be hindered by a lack of funds, poor positioning, management error, and other factors.  The inability to effectively compete could adversely affect our business, financial condition and results of operations.

RISKS RELATED TO OUR PUBLIC COMPANY STATUS AND OUR COMMON STOCK

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial office and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees.  During the course of our testing, we may identity other deficiencies that we may not be able to timely remediate.  In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes Oxley”).  Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud.  If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

The costs of being a public company could result in us being unable to continue as a going concern.

As a public company, we are required to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal control.  The costs of this compliance could be significant.  If our revenues do not increase and/or we cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs in the normal course of business that would result in our being unable to continue as a going concern.

Management and the Board of Directors may be Indemnified.

The Certificate or Articles of Incorporation and Bylaws of MMEM provide for indemnification of directors and officers at the expense of the respective corporation and limit their liability.  This may result in a major cost to the corporation and hurt the interests of stockholders because corporate resources may be expended for the benefit of directors and officers.  The Company has been advised that, in the opinion of the SEC, indemnification for liabilities arising under Federal Securities Laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

The market for the MMEM Shares is extremely limited and sporadic.

MMEM’s common stock is quoted on the OTC Pink Sheets.  The market for MMEM’s common stock is limited and sporadic.  Trading in stock quoted on the Pink Sheets is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects.  This volatility could depress or exaggerate the market price of MMEM’s common stock for reasons unrelated to operating performance.  Moreover, the trading of securities in the Pink Sheets is often more sporadic than the trading of securities listed on a quotation system like NASDAQ, or a stock exchange like the New York Stock Exchange.
 
6

 
MMEM’s common stock is a penny stock. Trading of MMEM’s common stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our common stock.

MMEM’s common stock is a penny stock.  The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  MMEM’s common stock is covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors.  The term “accredited investor ” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in, and limit the marketability of, MMEM’s common stock.

In addition to the penny stock rules promulgated by the SEC, FINRA (the Financial Industry Regulatory Authority) has adopted rules that require when recommending an investment to a customer, a broker- dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low -priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.  FINRA’s requirements make it more difficult for broker-dealers to recommend that their customers buy MMEM’s common stock, which may limit investor ability to buy and sell MMEM’s common stock.

The market for penny stocks has experienced numerous frauds and abuses that could adversely impact MMEM’s common stock.

Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

·
control of the market for the security by one or a few broker-dealers that are often related to a promoter or issuer;
·
manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·
boiler room practices involving high pressure sales tactics and unrealistic price projections by sales persons;
·
excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
·
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
 
The board of directors of MMEM has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to adversely affect common stockholder voting power and rights upon liquidation.

MMEM’s Certificate of Incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders of preferred stock the rights to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.
 
7

 
The ability of our principal stockholders, including our CEO, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs.

Upon completion of the Armada transaction, the principal stockholder of MMEM common stock will hold 284,580.000 shares (or approximately 84.5%) of the Company’s issued and outstanding common stock.  Additionally, a former controlling shareholder holds a convertible Promissory Note with a balance due of approximately $881,000, including accrued interest, which currently has a conversion clause to common stock which has been indefinitely suspended by the Holder of the Promissory Note.  The revocation of this suspension could cause the issuance of an additional 881,000,000 shares of common stock, which is far in excess of the Company’s currently authorized shares.

Because of the number of shares currently held and the conversion feature on the Promissory Note, these parties are in a position to significantly influence membership of our board of directors as well as all other matters requiring stockholder approval, as well as control the affairs of MMEM and it’s subsidiaries.  The interests of our principal stockholders may differ from the interests of other stockholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of other officers and directors and other business decisions. The minority stockholders have no way of overriding decisions made by our principal stockholders.  This level of control may also have an adverse impact on the market value of our shares because our principal stockholders may institute or undertake transactions, policies or programs that result in losses and/or may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.

We do not expect to pay cash dividends in the foreseeable future.

The Company has never paid cash dividends on their shares of common stock. MMEM does not expect to pay a cash dividends on its common stock at any time in the foreseeable future.  The future payment of dividends depends upon future earnings, capital requirements, financial requirements and other factors that the companies’ boards of directors will consider.  Since they do not anticipate paying cash dividends on the common stock, return on investment, if any, will depend solely on an increase, if any, in the market value of the common stock.

Future sales of shares of MMEM common stock pursuant to Rule 144 under the Securities Act could adversely affect the market price of MMEM’s common stock.

MMEM currently has approximately 51,720,000 outstanding shares of its common stock which were issued pursuant registration statements and/or exemptions from registration under the Securities Act and applicable state securities laws, but which are now available for public sale pursuant to Rule 144 under the Securities Act and comparable exemptions under applicable state securities laws.  The potential of such sales could adversely affect the market price of MMEM’s common stock.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested-director transactions, conflicts of interest and similar matters.
Sarbanes-Oxley as well as rule changes proposed and enacted by the SEC, the NYSE/AMEX and the NASDAQ Stock Market as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance.  These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the NASDAQ Stock Market.  Because we are not currently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with voluntary compliance, we have not yet adopted these measures.

We do not currently have independent audit or compensation committees. As a result, directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested- director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations as a result thereof.

We intend to comply with all corporate governance measures relating to director independence as and when required.  However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley.  The enactment of Sarbanes-Oxley has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers.  The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
 
8

 
Item 1B - Unresolved Staff Comments

None

Item 2 - Properties

The Company currently maintains a physical and mailing address at 1137 Highway 80 East, Post Office Box 1218, Tombstone, AZ 86638.  The Company’s telephone number there is (520) 457-9404.  Other than this mailing address, the Company does not currently maintain any other office facilities, and does not anticipate the need for maintaining office facilities at any time in the foreseeable future.  The Company pays no rent or other fees for the use of the mailing address as this address is virtually full-time by other businesses related to the Company’s majority stockholder.

It is likely that the Company will not establish an office until it has completed a business acquisition transaction, but it is not possible to predict what arrangements will actually be made with respect to future office facilities.

Item 3 - Legal Proceedings

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

Item 4 - Mine Safety Disclosures

As of the date of this filing, the Company has not completed the Armada transaction, as previously discussed. Accordingly, The Company has no reportable events as defined in Section 1503 of the Dodd-Frank Act and does not anticipate nor is aware of any reportable events currently existing or to exist within the Armada transaction.
PART II

Item 5 - Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Trading and Eligibility for Future Sale

Our common stock started trading on September 11, 2012.  Our current trading symbol is “MCPI”.  Currently there is only a limited, sporadic, and volatile market for our stock.  The following table sets forth the high and low sales prices of our common stock as reported on www.bigcharts.com  for the periods  indicated.  These prices represent prices between inter-dealer prices, do not include retail markups, markdowns, or commissions, and do not necessarily reflect actual transactions.

   
High
   
Low
 
Fiscal year ended December 31, 2016
           
Quarter ended December 31, 2016
 
$
0.25
   
$
0.03
 
Quarter ended September 30, 2016
 
$
0.08
   
$
0.02
 
Quarter ended June 30, 2016
 
$
0.18
   
$
0.04
 
Quarter ended March 30, 2016
 
$
0.19
   
$
0.07
 
                 
Fiscal year ended December 31, 2015
               
Quarter ended December 31, 2015
 
$
0.30
   
$
0.25
 
Quarter ended September 30, 2015
 
$
0.40
   
$
0.27
 
Quarter ended June 30, 2015
 
$
0.40
   
$
0.17
 
Quarter ended March 31, 2015
 
$
0.23
   
$
0.04
 
                 
Fiscal year ended December 31, 2014
               
Quarter ended December 31, 2014
 
$
0.30
   
$
0.24
 
Quarter ended September 30, 2014
 
$
0.80
   
$
0.14
 
Quarter ended June 30, 2014
 
$
0.12
   
$
0.02
 
Quarter ended March 31, 2014
 
$
0.02
   
$
0.001
 

The closing price of our common stock on April 13, 2017 was $0.0625 as reported by the OTCQB Bulletin Board.
 
9

 
Holders of Record

As of April 10, 2017, we had 51,720,000 shares of our common stock issued and outstanding held by approximately 75 stockholders of record.  We had no shares of preferred stock issued and outstanding.

Transfer Agent

Our independent stock transfer agent is VStock Transfer LLC.  Their address is 18 Lafayette Place, Woodmere, NY 11598.  Their phone number is (212) 828-8436.

Common Stock

The Company is authorized to issue up to 500,000,000 shares of common stock with a par value of $0.001 per share.

On March 27, 2014, the then-controlling shareholders of the Company sold 210,000,000 issued and outstanding shares of the Company to Big Sky Oil, Inc. and another investor in a private transaction, effecting a change in control of the Company.
On July 28, 2014, Big Sky Oil, Inc., the majority shareholder of the Company, as a result of the March 2014 change in control transaction, surrendered for no compensation and returned to the Company’s treasury 159,930,000 shares of the Company’s common stock it had acquired in the March 2014 transaction.  Big Sky agreed to return these shares to the treasury for use in future possible issuances by the Company.

On November 14, 2014, the Company issued an aggregate of 100,000 shares for consulting services rendered in conjunction with due diligence related to providing back-office and other support services to marijuana dispensaries located in both Oregon and Washington State.  These shares were valued at $30,000 using the closing price on the date the shares were issued.

On January 15, 2015, the Company issued an aggregate of 50,000 shares for consulting services related to the provision of back-office and other management support services to marijuana dispensaries located in the State of Oregon.  This stock was valued at $0.30 per share, which approximated the closing price on date of the issuance.

During the period ended March 31, 2015, South Beach Live, Inc., a corporation controlled by a majority shareholder of the Company, transferred 1,000,000 shares of its holdings in the Company’s common stock to consultants for ongoing services associated with marketing strategies.  South Beach Live, Inc. is a related party and does not expect to be repaid for this transaction which was valued at approximately $300,000 and recorded as professional fees and contributed capital on the books of the Company.

On November 30, 2016, Charles Stidham notified the Company that he was withdrawing his suspension of the conversion clause in his March 31, 2016 Promissory Note only for the conversion of $150 in outstanding principal and, concurrently, reinstating the suspension of the conversion clause for all remaining outstanding principal.  This limited one-time conversion caused the issuance 0f 1,500,000 shares of common stock with a “fair value” of $217,350 resulting in a non-cash charge to operations of approximately $217,200, which is reflected as a component of interest expense in the accompanying financial statements.

As of December 31, 2016 and 2015, respectively, the Company had 336,300,000 and 50,220,000 shares of its common stock issued and outstanding.

On February 29, 2016, the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission noting a pending 1 for 10 reverse split of the Company’s issued and outstanding common stock; as approved by the Company’s Board of Directors, and a concurrent amendment to the Company’s Articles of Incorporation setting the authorized capital of the Company from the authorized, as adjusted, 25,000,000 post-split shares of common stock to 500,000,000 shares of $0.001 par value common stock and the authorized, as adjusted, 250,000 post-split shares of preferred stock to 25,000,000 shares of $0001 par value preferred stock.  The time to implement the reverse split action has expired and no further action is anticipated by the Company’s Board of Directors.

Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.

In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders.  However, the rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of preferred stock that our Board of Directors may decide to issue in the future.
 
10

 
Preferred Stock

The Company is authorized to issue up to 25,000,000 shares of preferred stock with a par value of $0.001 per share.

As of December 31, 2016, the Company had no shares of its preferred stock issued and outstanding.
Dividend Policy

We have never declared or paid cash dividends.  We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future.  Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our directors.

Share Purchase Warrants

We have not issued and do not have outstanding any warrants to purchase shares of our stock.

Options

We have not issued and do not have outstanding any options to purchase shares of our stock.

Convertible Securities

We have not issued and do not have outstanding any securities convertible into shares of our stock or any rights convertible or exchangeable into shares of our stock.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2016, we have not adopted an equity compensation plan and have not granted any stock options.

Recent Sales of Unregistered Securities

Set forth below is information regarding the issuance and sales of securities without registration since January 1, 2012 through December 31, 2016:

On April 30, 2013, nine shareholders returned to the Company an aggregate of 300,000,000 shares of our restricted common stock, $0.0001 par value, which were subsequently cancelled by our Board of Directors.  These shares were returned to our corporate treasury.

On July 11, 2013, we issued 10,000,000 shares of common stock to Taurus Financial Partners, LLC in consideration of its services of assisting us with our continued SEC and EDGAR filing requirements.  We valued these services at $26,000, or $0.0026 a share, which was the closing price of our common stock as quoted on the OTC Bulletin Board on the same day.  In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering.  By virtue of its relationship to us, Taurus Financial Partners had access to all relevant information relating to our business and represented that it had the required investment intent.  In addition, the securities issued bore an appropriate restrictive legend.

On March 27, 2014 the then-controlling shareholders of Mansfield-Martin Exploration Mining, Inc. (formerly either MCPI, Inc; Med-Cannabis Pharma, Inc.; or SW China, Inc.) sold 210,000,000 of their shares to Big Sky Oil, Inc. and another investor, resulting in a change of control.

On July 28, 2014, Big Sky Oil, Inc., the majority shareholder of Mansfield-Martin Exploration Mining, Inc. (formerly MCPI, Inc.; Med-Cannabis Pharma Inc.; or SW China, Inc.) voluntarily returned 159,930,000 shares of the Company’s common stock it had purchased from prior management.  These shares were returned to the treasury for use in future possible issuances by the Company.

On November 14, 2014, the Company issued 100,000 shares of common stock to Carla Wienert for services in conjunction with on-site store management.  The Company relied on exemptions from registration pursuant to Regulation D and Section 4(2) of the Securities Act of 1933, as amended.
 
11

 
On November 30, 2016, Charles Stidham notified the Company that he was withdrawing his suspension of the conversion clause in his March 31, 2016 Promissory Note only for the conversion of $150 in outstanding principal and continuing the suspension of the conversion clause for all remaining outstanding principal.  This limited one-time conversion caused the issuance 0f 1,500,000 shares of common stock with a “fair value” of $217,350 resulting in a non-cash charge to operations of approximately $217,200, which is reflected as a component of interest expense in the accompanying financial statements.

Purchases of Equity Securities by the Issuer and Affiliated Purchases

During each month within the fourth quarter of the fiscal year ended December 31, 2016, neither we nor any “affiliated purchaser”, as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.

Item 6 - Selected Financial Data

Not applicable

Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

(1) Caution Regarding Forward-Looking Information

Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business  disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

(2) General

The Company was originally incorporated as SW China Imports, Inc. on February 23, 2011 in the State of Nevada.  The Company’s initial business plan was to import high-end handmade lace wigs, hairpieces, and other beauty supplies and accessories manufactured overseas into the United States.

In June 2014, the Company changed its name to Med-Cannabis Pharma, Inc. and implemented a new business plan to enter into the retail sale of medical and personal use  marijuana, where allowable.  In October 2015, the Company changed its name to MCPI, Inc.
Effective March 31, 2016, the Company ceased activities in all of its subsidiaries and disposed of Med-Pharma Management, Inc. and High Desert MMJ, Inc.  Prior thereto, the Company’s  subsidiaries were Medical Management Systems, Inc., an Oregon corporation engaged in providing back-office and support services to marijuana dispensaries in the State of Oregon; Med-Pharma Management, Inc., a Washington State corporation which was formed to own, manage or provide back-office and support services to marijuana dispensaries in Washington State; and High Desert MMJ, Inc. an Oregon corporation, which is a 99.0% partner in Emerald Mountain Organics, an Oregon joint venture, formed to facilitate the development and growing of medical marijuana plants for wholesale distribution to licenced dispensaries in the State of Oregon.

As of September 30, 2015, Medical Management Systems, Inc. held a Management Contract for three marijuana dispensaries located in Newport, Bend, and Cottage Grove, Oregon, which are owned by a company controlled by a related party.  This Management Contract was terminated by the consent of both parties, effective March 31, 2016.   Med-Pharma only conducted introductory due diligence efforts in the State of Washington and, currently, has abandoned all activities in the State of Washington.  Emerald Mountain Organics had, as of September 30,2015, established an early-phase growing operation and has generated nominal sales.
 
12

 
During the first 10 days of October 2015, the Company’s subsidiary, High Desert MMJ, Inc., learned that the 1.0% minority partner in the Emerald Mountain Organics joint venture had absconded with all of the assets of the joint venture.  Efforts to locate and recover either the individuals representing said 1.0% minority partner or the said absconded assets were unsuccessful.  Accordingly, effective October 10, 2015, High Desert MMJ, Inc. abandoned the Emerald Mountain Organics joint venture and wrote off its investment.  The cumulative start-up losses in the Company’s consolidated financial statements for the Emerald Mountain Organics joint venture, through the date of abandonment were approximately $53,000 and the Company recognized a loss on the stolen assets of approximately $51,000 during the quarter ended December 31, 2015.

On June 1, 2016, the Company entered into a Settlement, General and Mutual Release of Claims and Assignment of Interest Transfer Agreement (Settlement Agreement) with its majority shareholder and a related party.  The Settlement Agreement relates to the Company’s management of three medical marijuana dispensaries (Stores) located in Oregon, which are owned by Bendor Investments, Ltd. (Bendor), whose sole shareholder is Charles Stidham.  The Company owed Mr. Stidham approximately $1,100,000, including accrued interest, as of the date of the Settlement Agreement.

The Company asserted a claim for management fees of approximately $80,000 and reimbursement of approximately $343,000 for the services of the Company’s wholly-owned subsidiary, Medical Management Systems, Inc. (MMS), in managing the Stores.  Bendor disputed this claim.  To resolve the dispute, the parties agreed to forgive the accrued management fees and to offset the approximately $343,000 due from Bendor against the approximately $1,100,000 owed to Mr. Stidham with the Company releasing any and all interests it may have had in the Stores and MMS.  Additionally, the Company agreed to assign a trademark to Mr. Stidham as well as executing a new Note in the principal sum of $752,694.19.  The effect of the June 1, 2016 Settlement Agreement , due to the timing of this release of these amended financial statements and this transaction, is reflected in the accompanying consolidated financial statements.

In March 2017, the Company, in anticipation of consummating a proposed asset acquisition transaction, changed its name to Mansfield-Martin Exploration Mining, Inc.

Pending Transaction

On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement) with Armada Mining, Inc. of Tombstone, Arizona, an Arizona corporation (Armada).  Under the terms of the Agreement, the Company will issue 284,580,000 shares of its common stock to Armada, its affiliates, related entities and other common parties in exchange for rights and interests in mining properties in the Tombstone Mining District of Arizona.  The Company will acquire rights and interests to approximately 3,800 acres of contiguous mineral leases, including some property acquired in fee simple, and ownership of 100% of Tombstone Development Company, which was formed in 1933, and is believed to be the oldest continually operating mining company in Arizona.  Subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals, the Company intends to commence development of these properties by processing previously mined materials for silver, as well as precious and base metals, by reopening and developing existing mines using modern equipment and techniques and by completing an existing drill/test grid to establish the boundary of producible ore bodies, in anticipation of a Bankable Feasibility Study and further development.

Upon completion of the terms of the Agreement, Armada will own approximately 85% of the Company’s  post-transaction issued and outstanding common stock of the Company.  Armada has represented to the Company that it anticipates exchanging a portion of these shares with its existing shareholders; using a portion to satisfy existing obligations to related parties and others; and using a portion to finance other Armada operations.  The Agreement anticipates that Company, post-transaction, will have new Board of Directors that will, in turn, appoint new management for the Company.  Additionally, the Company and Armada have facilitated a change in the Company’s corporate name to better reflect the nature and focus of the Company’s proposed ongoing and future business interests.

As of the date of this filing, this transaction has not been completed and, in the opinion of current management, remains viable.

(3) Results of Operations

The Company has no recognized revenues for either Calendar 2016 or 2015.

In 2015 and 2014, the Company, pursuant to a Management Agreement, has recorded deferred revenues of approximately $65,000 and $5,000, respectively, for management fees receivable from a related party owner of three (3) marijuana dispensaries located in the State of Oregon.  These accrued management fees were forgiven pursuant to the June 1, 2016 Settlement Agreement previously discussed.
 
13


 
In conjunction with the Company’s business plan, as discussed in Item I of this document, the Company has expended considerable effort and financial resources to the implementation of its business plan.  The Company has incurred operating expenses requiring cash payments of approximately $86,000 and $298,000, which were funded through a line-of-credit with an entity affiliated with the Company’s controlling stockholder.

Earnings (Loss) per share for the respective years ended December 31, 2016 and 2015 were $(0.01) and $(0.01) based on the weighted-average shares issued and outstanding at the end of each respective period.

It is anticipated that future expenditure levels will remain relatively consistent until such time that the Company fully implements its current business plan, at which time, the Company’s expenses and working capital requirements may increase significantly.

The Company does not expect to generate any meaningful revenue or incur operating expenses for purposes other than fulfilling the obligations of a reporting company under the Exchange Act unless and until such time that the Company begins meaningful operations.

(4) Plan of Business

On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement) with Armada Mining, Inc. of Tombstone, Arizona, an Arizona corporation (Armada).  Under the terms of the Agreement, the Company will issue 284,580,000 shares of its common stock to Armada, its affiliates, related entities and other common parties in exchange for rights and interests in mining properties in the Tombstone Mining District of Arizona.  The Company will acquire rights and interests to approximately 3,800 acres of contiguous mineral leases, including some property acquired in fee simple, and ownership of 100% of Tombstone Development Company, which was formed in 1933, and is believed to be the oldest continually operating mining company in Arizona.  Subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals, the Company intends to commence development of these properties by processing previously mined materials for silver, as well as precious and base metals, by reopening and developing existing mines using modern equipment and techniques and by completing an existing drill/test grid to establish the boundary of producible ore bodies, in anticipation of a Bankable Feasibility Study and further development.

Upon completion of the terms of the Agreement, Armada will own approximately 85% of the Company’s  post-transaction issued and outstanding common stock of the Company.  Armada has represented to the Company that it anticipates exchanging a portion of these shares with their existing shareholders; using a portion to satisfy existing obligations to related parties and others; and using a portion to finance other Armada operations.  The Agreement anticipates that Company, post-transaction, will have new Board of Directors that will, in turn, appoint new management for the Company.  Additionally, the Company and Armada have facilitated a change in the Company’s corporate name to better reflect the nature and focus of the Company’s proposed ongoing and future business interests.

As of the date of this filing, this transaction has not been completed and, in the opinion of current management, remains viable.

(5) Liquidity and Capital Resources

At December 31, 2016 and 2015, respectively, the Company had working capital of approximately $(953,000) $(770,000); inclusive of all related party accounts receivable, accrued expenses and line-of-credit notes payable.

It is the belief of management and significant stockholders that they will provide sufficient working capital necessary to support and preserve the integrity of the corporate entity.   However, there is no legal obligation for either management or significant stockholders to provide additional future funding.  Further, the Company is at the mercy of future economic trends and business operations for the Company’s majority stockholder to have the resources available to support the Company.  Should this pledge to provide continuing financing not be fulfilled, the Company has not identified any alternative sources.  Consequently, there is substantial doubt about the Company's ability to continue as a going concern.

The Company's need for working capital may change dramatically as a result of any future business transaction.  There can be no assurance that the Company will identify and/or enter into any business transaction in the future.  Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage the business, product, technology or company it acquires.
 
14


 
The Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a potential business transaction.  Accordingly, there can be no assurance that sufficient funds will be available to the Company to allow it to cover the expenses related to such activities.

Regardless of whether the Company’s cash assets prove to be inadequate to meet the Company’s operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.

(6) Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”).  GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note D of our financial statements.  While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates.  Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

Item 7A - Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 8 - Financial Statements and Supplementary Data

The required financial statements begin on page F-1 of this document.

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On July 3, 2015, the Board of Directors of the Company dismissed its independent registered public accounting firm, M&K CPAS, PLLC (“M&K”).

The reports of M&K on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2014 and 2013 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles except as to a going concern qualification. During the fiscal years ended December 31, 2014 and 2013, and the subsequent interim period through July 2, 2015, there were no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) with M&K on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to M&K’s satisfaction, would have caused M&K to make reference to the subject matter thereof in its reports for such fiscal years and interim period, or (ii) “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

The Company provided M&K with a copy of the disclosures made in a Current Report on Form 8-K and requested that M&K furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the Company’s statements herein and, if not, stating the respects in which it does not agree. A copy of the letter furnished by M&K was filed in said Form 8-K.

On July 3, 2015, the Company engaged Bongiovanni & Associates, PA (Bongiovanni) as its new independent certified public accounting firm to audit the Company’s financial statements for the fiscal year ended December 31, 2015.
 
15

 
During the fiscal years ended December 31, 2014 and 2013, and the subsequent interim period through July 2, 2015, neither the Company nor anyone on its behalf consulted with Bongiovanni regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that Bongiovanni concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event” (as that term is described in Item 304(a)(1)(v) of Regulation S-K).

During the 2 nd quarter of Calendar 2016, the Company was informed that its auditors, Bongiovanni & Associates, PA had changed its name to L&L CPA’s, PA, effective December 31, 2015.

On April 12, 2017, the Board of Directors of the Company, as a result of a pending change in control and change in officers and directors, elected to dismiss its independent registered public accounting firm, L&L CPA’s PA (L&L) of Cornelius NC.  The reports of L&L on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2015 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles except as to a going concern qualification.  During the fiscal years ended December 31, 2015, and the subsequent interim period through April 12, 2017, there were no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) with L&L on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to L&L’s satisfaction, would have caused L&L to make reference to the subject matter thereof in its reports for such fiscal years and interim period, or (ii) “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

The Company provided L&L with a copy of the disclosures made in a Current Report on Form 8-K and requested that L&L furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the Company’s statements herein and, if not, stating the respects in which it does not agree.  A copy of the letter furnished by L&L was filed in said Form 8-K.

On April 12, 2017, the Company’s Board of Directors elected to engage David S. Friedkin, CPA of River Vale, NJ (Friedkin) as its new independent certified public accounting firm to audit the Company’s financial statements for the fiscal year ended December 31, 2016.

During the fiscal years ended December 31, 2015 and 2014, and the subsequent interim period through April 12, 2017, neither the Company nor anyone on its behalf consulted with Friedkin regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that Friedkin concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event” (as that term is described in Item 304(a)(1)(v) of Regulation S-K).

Item 9A - Controls and Procedures

Disclosure Controls and Procedures.   Our management, under the supervision and with the participation of our Chief Executive and Chief Financial Officer (Certifying Officers), have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this Annual Report.  Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure.  Based upon that evaluation, our Certifying Officers concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to a weakness in our controls described below.  However, our Certifying Officers believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.

Management’s Annual Report on Internal Control over Financial Reporting.  Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.
 
16

 
Internal control over financial reporting is defined under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

--
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
--
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
--
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.  Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

Management's assessment of the effectiveness of the Company's internal control over financial reporting is as of the year ended December 31, 2016 has determined that we have a business plans with significant risk, no operations, revenues or employees.  Because we have only two executive operating officers, the Company's internal controls are deficient for the following reasons, (1) there are limited entity level controls due to our limited personnel, (2) there are no segregation of duties as that same person approves, enters, and pays the Company's bills, and (3) there is no separate audit committee.  As a result, the Company's internal controls have an inherent weakness which may increase the risks of errors in financial reporting under current operations and accordingly are deficient as evaluated against the criteria set forth in the Internal Control - Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission.  Based on our evaluation, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2016.

This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting, pursuant to the current appropriate Laws and Regulations.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting which internal controls will remain deficient until such time as the Company grows to a point to justify a larger staff and a more complex system of controls and procedures.


Item 9B - Other Information

Not applicable.

PART III

Item 10 - Directors, Executive Officers and Corporate Governance

The directors and executive officers serving the Company are as follows:

Name
 
Age
 
Position Held and Tenure
         
John T. Bauska
 
66
 
President, Chief Executive Officer,
       
Secretary/Treasurer, Chief Financial Officer and Sole Director,
       
since November 2016
         
Dan M. Leatzow   40   Director, since November 2016

Our directors serve for a term beginning with election and ending with resignation, removal by the stockholders, or election of a successor by the stockholders.  Executive officers serve by appointment at the discretion of the board of directors.
 
17

 
John T. Bauska - Mr. Bauska has over 40 years of experience in roadbuilding and earthmoving, and over 30 years of experience in precious metals mining in Montana and Arizona.  He has been involved in mining projects in the Tombstone Mining District for nearly 20 years, including as Vice President of Mergers and Acquisitions at Tombstone Exploration & Mining Corp. (TMBXF).  Mr. Bauska is currently  an officer and director of Trelis Corporation, a private Montana corporation with mineral leases and seasonal mining operations in the Bannack Mining District in Montana; a manager of Henry & Munro, LLC, a private company that provides venture capital to small companies, predominantly in extractive industries, in Montana; a director of Ionic Water Technologies, Inc., a private technology company that has developed waste water treatment equipment for the mining industry; a director of Bio-2, Inc., a private company that has developed a a biological water enhancement device; and the owner and manager of Morning View Arabians, LLC, a private company that breeds and deals in registered Arabian horses.   Mr. Bauska attended the University of Montana-Western from 1968 to 1970.

Dan M. Leatzow - Dr. Leatzow has over 25 years of experience in extractive industries – both oil and gas drilling and hard rock mining--, predominantly in waste water treatment and remediation.  Dr. Leatzow is currently on staff at Flathead Valley Community College as a Specialist in Advanced Manufacturing, and is an Entrepreneur in Residence at Washington State University.  Dr. Leatzow was a founder of Synergetix, Inc., a private company that provides engineering outsourcing for water quality monitoring and purification; he is currently a consultant to Synergetix.  Dr. Leatzow is President and CEO of pHoretic Technologies, Inc., a start-up formed to develop diagnostic and testing equipment from technology innovated by Washington State University.  Prior to 2013, Dr. Leatzow was the senior engineer for a series of companies providing permitting and engineering services relating to industrial waste water treatment and remediation plans for oil and gas development and mining projects.  Dr. Leatzow holds a Ph.D. in Chemical Engineering from Washington State University, conferred in 1998, and B.S. degrees in Chemical Engineering and Aerospace Engineering Sciences from the University of Colorado – Boulder, both conferred in 1994.

Committees of the Board of Directors

Our Board of Directors presently does not have any active committees.

Financial Expert

The Company does not currently have a designated “financial expert” on the Board of Directors.  We believe that the cost of obtaining and retaining an independent director who can also serve as our financial expert is prohibitive at this time.

Information Concerning Non-Director Executive Officers

We currently have no executive officers serving who are non-directors.
Code of Ethics

We do not currently have a Code of Ethics applicable to our principal executive, financial, and accounting officers.

Potential Conflict of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our Board of Directors.  Thus, there is a potential conflict of interest in that our directors have the authority to determine issues concerning management compensation, including their own, and audit issues that may affect management decisions.  We are not aware of any other conflicts of interest with any of our officers or directors.

Board’s Role in Risk Oversight

The Board of Directors assesses on an ongoing basis the risks faced by MCPI.  These risks include financial, technological, competitive, and operational risks.  The Board dedicates time at each of its meetings to review and consider the relevant risks faced at that time.  In addition, since MCPI does not have an Audit Committee, the Board of Directors is also responsible for the assessment and oversight of MCPI’s financial risk exposures.
 
18

 
Compliance With Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act  requires the Company's directors, executive officers and persons who own more than ten percent of a registered class of the Company's equity securities ("10% holders"), to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of Common stock and other equity securities of the Company.

Directors, officers and 10% holders are required by SEC Regulation to furnish the Company with copies of all of the Section 16(a) reports they file.  Based solely on a review of reports furnished to the Company and/or written representations from the Company's directors and executive officers during the fiscal year ended December 31, 2016, there was no compliance with the Section 16(a) filing requirements applicable to its directors, officers and 10% holders for such year.

Involvement on Certain Material Legal Proceedings During the Past Five (5) Years

(1)
No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations or is subject to any pending criminal proceeding.

(2)
No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.

(3)
No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.

(4)
No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.

Code of Ethics

The Company has not adopted a code of ethics applicable to our principal executive, financial, and accounting officers.

Item 11 - Executive Compensation

Executive Officers

Our Board of Directors appoints our executive officers to serve at the discretion of the board.

Executive Compensation

We do not have any employment or consulting agreements with any parties nor do we have a stock option plan or other equity compensation plans.



(Remainder of this page left blank intentionally)
 
 
19

 
SUMMARY COMPENSATION TABLE
 
Name and
Principal Position
 
Year
 
Salary($)
   
Bonus ($)
   
Stock
Awards ($)
   
Option
Awards ($)
   
Non-Equity
Incentive Plan
Compensation ($)
   
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
   
All Other
Compensation ($)
   
Total ($)
 
                                                     
Wayne Duke   2016   $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-  
Former Principal                                                                    
Executive Officer                                                                    
                                                                     
Carla Wienert,
 
2015
  $ 33,365     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-  
Former Principal  
2014
  $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ 2,500     $ 2,500  
Executive Officer                                                                    
                                                                     
Gracela Moreno,   2015   $ 15,000       -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ -0-     $ 15,000  
Former Principal   2014   $ 22,000       -0-     $ -0-     $ -0-     $  -0-     $ -0-     $ -0-     $ 22,000  
Executive Officer                                                                    

The Company has no other executive compensation issues which would require the inclusion of other mandated table disclosures.

Director Compensation

Ms. Wienert was paid $2,500 in Calendar 2014 after joining the Company as a director in November 2014.

Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of the date of this Annual Report, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding Common Stock of the Company.  Also included are the shares held by all executive officers and directors as a group.

   
Shares Beneficially Owned (1)
 
Name and address
 
Number of Shares
   
Percentage (3)
 
             
Armada Mining, Inc. (2)
 
 
284,580,000
     
84.6
%
1137 Highway 80 East
               
PO Box 1218
               
Tombstone AZ 86638
               
                 
John T. Bauska (2)
   
284,580,000
     
84.6
%
1137 Highway 80 East
               
PO Box 1218
               
Tombstone AZ 86638
               
                 
All Executive officers and
               
Directors as a Group (1 person)
   
284,580,000
     
84.6
%
 
(1)
On February 20, 2017, there were 336,300,000 shares of our common stock outstanding and no shares of preferred stock issued and outstanding.  We have no outstanding stock options or warrants.
(2)
Under applicable SEC rules, a person is deemed the "beneficial owner" of a security with regard to which the  person directly or indirectly, has or shares (a) the voting power, which includes the power to vote or direct the  voting of the security, or (b) the investment power, which includes the power to dispose,  or direct the disposition, of the security, in each case irrespective of the person's economic interest in the security.  Under SEC rules, a person is deemed to beneficially own securities which the person has the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of another security.

20


(3)
In determining the percent of voting stock owned by a person on December 31, 2016 (a) the numerator is the number of shares of common stock beneficially owned by the person, including shares the beneficial ownership of which may be acquired within 60 days upon the exercise of options or warrants or conversion of convertible securities,  and (b) the denominator is the total of (i) the 336,300,000 shares of common stock outstanding on February 20, 2016, and (ii) any shares of common stock which the person has the right to acquire within 60 days upon the exercise of options or warrants or conversion of convertible securities.  Neither the numerator nor the denominator includes shares which may be issued upon the exercise of any other options or warrants or the conversion of any other convertible securities.
 
Changes in Control

On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement) with Armada Mining, Inc. of Tombstone, Arizona, an Arizona corporation (Armada).  Under the terms of the Agreement, the Company agreed to issue 284,580,000 shares of its common stock to Armada in exchange for rights and interests in mining properties in the historic Tombstone Mining District of Arizona.

Upon completion of the terms of the Agreement, Armada will own approximately 85% of the Company’s  post-transaction issued and outstanding common stock.  Armada has represented to the Company that it anticipates exchanging a portion of these shares with their existing shareholders; using a portion to satisfy existing obligations to related parties and others; and using a portion to finance other Armada operations.

Item 13 - Certain Relationships and Related Transactions, and Director Independence

Relationships and Transactions

On March 27, 2014, certain shareholders of the Company  (formerly MCPI, Inc.; Med-Cannabis Pharma, Inc.; or SW China Imports, Inc.) sold 210,000,000 shares of then issued and outstanding shares of common stock to Big Sky Oil, Inc. and another investor, resulting in a change of control.
In the change of control agreements dated March 27, 2014, $1,806 of related party debt was forgiven by a former shareholder.

On July 28, 2014, the Company entered into a $500,000 Line of Credit note payable with South Beach Live, Ltd. (South Beach), a Company stockholder and an entity related to a significant Company stockholder, to provide funds necessary to support the corporate entity and provide working capital to pursue business combination or acquisition opportunities.  This note bore interest at 10.0% and matured in July 2015.  This note replaced a non-interest bearing shareholder note payable to a former controlling stockholder that was assumed during a 2014 change in control transaction.  During the twelve months ended December 31, 2014, the Company recognized an aggregate $4,973 as additional paid-in capital for the economic event related to the non-interest bearing feature on the assumed note payable through its retirement.

On September 30, 2015, the Company executed a replacement Promissory Note with the principal stockholder of South Beach Live, Ltd. in the amount of $927,000, bearing interest at 12.0% and payable in monthly installments of approximately $13,300, including accrued interest with a final maturity and balloon payment due on October 31, 2016.

As of December 31, 2015, the outstanding balance on this note is approximately $950,008 as the lender continues to advance funds to support the Company’s working capital needs.  The Company is delinquent in making the required monthly installment payments.

On June 1, 2016, the Company entered into a Settlement, General and Mutual Release of Claims and Assignment of Interest Transfer Agreement (Settlement Agreement) with its majority shareholder and a related party.  The Settlement Agreement relates to the Company’s management of three medical marijuana dispensaries (Stores) located in Oregon, which are owned by Bendor Investments, Ltd. (Bendor), whose sole shareholder is Charles Stidham.  The Company owes Mr. Stidham approximately $1,100,000, including accrued interest, as of the date of the Settlement Agreement.

The Company asserted a claim for management fees of approximately $80,000 and reimbursement of  approximately $343,000 for the services of the Company’s wholly-owned subsidiary, Medical Management Systems, Inc. (MMS), in managing the Stores.  Bendor disputed this claim.  To resolve the dispute, the parties agreed to forgive the accrued management fees and to offset the approximately $343,000 due from Bendor against the approximately $1,100,000 owed to Mr. Stidham with the Company releasing any and all interests it may have had in the Stores and MMS.  Additionally, the Company agreed to assign a trademark to Mr. Stidham as well as executing a new Note in the principal sum of $752,694.19.
 
21

 
Conflicts of Interest

Certain conflicts of interest could arise in the future, including, but not limited to, the following:

·
None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities.
·
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
·
Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by us.
·
Since all of our directors own shares of our common stock that could be sold, in whole or in part, as a negotiated element of a business acquisition, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business and completing a business combination.

In general, officers and directors of a Nevada corporation are required to present business opportunities to a corporation if:

·
the corporation could financially undertake the opportunity;
·
the opportunity is within the corporation's line of business; and
·
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.

Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.

Director Independence

The Board of Directors has determined that none of its directors is "independent" under the criteria set forth in Rule 5065(a)(2) of the Nasdaq Listing Rules.  The Board does not have a separately designated audit, nominating, or compensation committee, so the functions normally attributed to these committees are performed by the entire board. Accordingly, none of our directors is "independent" under applicable Nasdaq Listing Rules that define independence for purposes of directors performing the functions of such committees.

Item 14 - Principal Accountant Fees and Services

The Company paid or accrued the following fees in each of the prior two fiscal years to it’s principal accountant(s), M&K CPA’s, PLLC of Houston, Texas and L&L CPA’s PA (formerly Bongiovanni & Associates, PA) of Cornelius, NC:

   
Year ended
   
Year ended
 
   
December 31,
   
December 31,
 
   
2015
   
2015
 
1. Audit fees
           
M&K CPA’s, PLLC
 
$
   
$
13,285
 
L & L CPA’s PA (formerly Bongiovanni & Associates, PA)
   
9,500
     
8,000
 
2. Audit-related fees
   
     
 
3. Tax fees
   
     
 
4. All other fees
   
     
 
                 
Totals
 
$
9,500
   
$
21,285
 

We have considered whether the provision of any non-audit services, currently or in the future, by our principal accounting firm is compatible with their maintaining their independence and have determined that these services do not compromise their independence.
 
22

 
Financial Information System Design and Implementation: Our principal accountants did not charge the Company any fees for financial information system design and implementation fees.

The Company has no formal audit committee.  However, the entire Board of Directors (Board) is the Company's defacto audit committee.  In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors' independence as required by the appropriate Professional Standards issued by the Public Company Accounting Oversight Board, the U. S. Securities and Exchange Commission and/or the American Institute of Certified Public Accountants.  The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Company's internal controls.

The Company’s principal accounting firm(s) did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.
 
Item 15 - Exhibits and Financial Statement Schedules
 
 
3.1*
Articles of Incorporation
3.2*
Bylaws
31.1
Section 302 Certifications under Sarbanes-Oxley Act of 2002
32.1
Section 906 Certification under Sarbanes Oxley Act of 2002
101          Interactive data files pursuant to Rule 405 of Regulation S-T.  (+)
 
(+) - to be filed separately by amendment

* Incorporated by our Registration Statement on Form S-1 filed May 3, 2011.
 
(Financial statements begin on the following page)
 
 
23

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)

CONTENTS


 
Page
Report of Registered Independent Public Accounting Firm
 
David S. Friedkin, CPA
F-2
L&L CPAS PA
F-3
   
Consolidated Financial Statements
 
   
Consolidated Balance Sheets
 
as of December 31, 2016 and 2015
F-4
   
Consolidated Statements of Operations and Comprehensive Loss
 
for the years ended December 31, 2016 and 2015
F-5
   
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
 
for the years ended December 31, 2016 and 2015
F-6
   
Consolidated Statements of Cash Flows
 
for the years ended December 31, 2016 and 2015
F-7
   
Notes to Consolidated Financial Statements
F-8
 
 
F-1

 
LETTERHEAD OF DAVID S. FRIEDKIN, CPA


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders
Mansfield-Martin Exploration Mining, Inc. (formerly MCPI, Inc.)

We have audited the consolidated balance sheet of Mansfield-Martin Exploration Mining, Inc. (formerly MCPI, Inc.) as of December 31, 2016, and the related consolidated statements of operations, accumulated deficit, and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  The financial statements of Mansfield-Martin Exploration Mining, Inc. as of December 31, 2015, were audited by other auditors whose report dated August 1, 2016, expressed an unqualified opinion on those statements.  Those statements included an explanatory paragraph that described the Company’s uncertainty to continue as a going concern discussed in Note C of those financial statements.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mansfield-Martin Exploration Mining, Inc. and Subsidiaries as of December 31, 2016 and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note C to the financial statements, the Company has insufficient working capital, a stockholders’ deficit, recurring net losses, and a current business plan with significant risk, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters are also described in Note C.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ David S. Friedkin CPA                                                   

River Vale, New Jersey
April 12 th , 2017

F-2

 
LETTERHEAD OF L&L CPAS PA


REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders
MCPI, Inc. and Subsidiaries

We have audited for accompanying balance sheet of MCPI, Inc. and Subsidiaries (“the Company”) as of December 31, 2015 and the related consolidated statements of operations, stockholders’ deficit and consolidated cash flows for the years ended December 31, 2015.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2015 and the results of its operations, changes in stockholders’s deficit and cash flows for the years ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note C to the financial statements, the Company has insufficient working capital, a stockholders’ deficit and recurring net losses, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters are also described in Note C.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ L&L CPAS, PA                                                

L&L CPAS, PA
F.K.A. Bongiovanni & Associates, PA
Certified Public Accountants

Cornelius, North Carolina
The United States of America
August 1, 2016

F-3

Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Consolidated Balance Sheets
December 31, 2016 and 2015


   
December 31,
   
December 31,
 
   
2016
   
2015
 
ASSETS
 
             
Current Assets
           
Cash and cash equivalents
 
$
   
$
 
                 
Total Current Assets
   
     
 
                 
Total Assets
 
$
   
$
 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
                 
Current Liabilities
               
Accounts payable - Trade
 
$
12,236
   
$
20,947
 
Accrued expenses to former management
   
59,846
     
59,846
 
Accrued interest payable to stockholder
   
60,888
     
81,816
 
Note payable to stockholder
   
820,371
     
607,314
 
                 
Total Liabilities
   
953,341
     
769,923
 
                 
Commitments and Contingencies
               
                 
Stockholders' Equity (Deficit)
               
Preferred stock - $0.001 par value
               
25,000,000 shares authorized.
               
None issued and outstanding.
   
     
 
Common stock - $0.001 par value.
               
500,000,000 shares authorized.
               
50,720,000 and 50,220,000 shares
               
issued and outstanding
   
51,720
     
50,220
 
Additional paid-in capital
   
59,552,470
     
59,336,620
 
Accumulated deficit
   
( 60,557,531
)
   
( 60,156,763
)
                 
Total Stockholders' Equity (Deficit)
   
(953,341
)
   
(769,923
)
                 
Total Liabilities and Stockholders’ Equity (Deficit)
 
$
   
$
 




The accompanying notes are an integral part of these consolidated financial statements.
 
F-4

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Consolidated Statements of Operations and Comprehensive Loss
Years ended December 31, 2016 and 2015


   
Year ended
   
Year ended
 
   
December 31,
   
December 31,
 
   
2016
   
2015
 
             
Revenues
 
$
   
$
 
Cost of Sales
   
     
 
                 
Gross Profit
   
     
 
                 
Operating expenses
               
Professional fees
   
98,793
     
462,640
 
General and administrative costs
   
     
98,485
 
Depreciation and amortization
   
     
 
                 
Total operating expenses
   
98,793
     
561,125
 
                 
Loss from operations
   
(98,793
)
   
(561,125
)
                 
Other income (expense)
               
Loss on abandonment of grow operation
   
     
(52,644
)
Loss on theft of grow operation assets
   
     
(51,380
)
Interest expense on notes payable to stockholders
   
( 301,975
)
   
(73,340
)
                 
Loss before provision for income taxes
   
(400,768
)
   
(738,489
)
                 
Provision for income taxes
   
     
 
                 
Net loss
   
(400,768
)
   
(738,489
)
                 
Other comprehensive income
   
     
 
                 
Comprehensive loss
 
$
( 400,768
)
 
$
( 738,489
)
                 
Loss per weighted-average share of common stock outstanding,
               
computed on net loss - basic and fully diluted
 
$
( 0.01
)
 
$
( 0.01
)
                 
Weighted-average number of shares of common stock outstanding -
               
basic and fully diluted
   
50,347,049
     
50,217,945
 




The accompanying notes are an integral part of these consolidated financial statements.
 
F-5

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
Years ended December 31, 2016 and 2015


               
Additional
             
   
Common Stock
   
paid-in
   
Accumulated
       
   
Shares
   
Amount
   
capital
   
Deficit
   
Total
 
                               
Balances at December 31, 2014
   
50,170,000
   
$
50,170
   
$
59,021,670
   
$
(59,418,274
)
 
$
(346,434
)
                                         
Issuance of common stock for consulting fees
   
50,000
     
50
     
14,950
     
     
15,000
 
                                         
Contributed capital
   
     
     
300,000
     
     
300,000
 
                                         
Net loss for the year
   
     
     
     
(738,489
)
   
( 738,489
)
                                         
Balances at December 31, 2015
   
50,220,000
     
50,220
     
59,336,620
     
(60,156,763
)
   
(769,923
)
                                         
Partial conversion of note payable to common stock
   
1,500,000
     
1,500
     
125,850
     
     
217,150
 
                                         
Net loss for the year
   
     
     
     
(400,768
)
   
( 400,768
)
                                         
Balances at December 31, 2016
   
51,720,000
   
$
51,720
   
$
59,552,470
   
$
( 60,557,531
)
 
$
( 953,341
)




The accompanying notes are an integral part of these consolidated financial statements.
 
F-6

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Consolidated Statements of Cash Flows
Years ended December 31, 2016 and 2015


   
Year ended
   
Year ended
 
   
December 31,
   
December 31,
 
   
2016
   
2015
 
Cash Flows from Operating Activities
           
Net income (loss) for the period
 
$
(400,768
)
 
$
(738,489
)
Adjustments to reconcile net loss to net cash used in operating activities
               
Depreciation and amortization
   
     
 
Common stock issued for professional fees
   
     
315,000
 
Note payable to related party restructuring fees
   
21,140
     
 
Financing expense related to partial conversion of note payable to common stock
   
217,200
     
 
Increase (Decrease) in
               
Accounts payable
   
(8,711
)
   
53,561
 
Accrued expenses
   
84,775
     
76,430
 
Deferred revenues
   
     
(5,000
)
                 
Net cash used in operating activities
   
(86,364
)
   
( 298,498
)
                 
Cash Flows from Investing Activities
   
     
 
                 
Cash Flows from Financing Activities
               
Cash received from notes payable to stockholders
   
86,364
     
283,735
 
                 
Net cash provided by financing activities
   
     
283,735
 
                 
Increase (Decrease) in Cash
   
     
(14,763
)
                 
Cash at beginning of period
   
     
14,763
 
                 
Cash at end of period
 
$
   
$
 
                 
Supplemental Disclosure of Interest and Income Taxes Paid
               
Interest paid during the period
 
$
   
$
 
Income taxes paid during the period
 
$
   
$
 
                 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
               
Partial conversion of note payable to common stock
 
$
(150
)
 
$
 




The accompanying notes are an integral part of these consolidated financial statements.
 
F-7

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements
December 31, 2016 and 2015


Note A - Background and Description of Business

Mansfield-Martin Exploration Mining, Inc. (“Company” or “Med-Cannabis Pharma”) was incorporated under the laws of the State of Nevada on February 23, 2011.  The Company was originally incorporated as SW China Imports, Inc. on February 23, 2011 in the State of Nevada.  The Company’s initial business plan was to import high-end handmade lace wigs, hairpieces, and other beauty supplies and accessories manufactured overseas into the United States.  In June 2014, the Company changed its name to Med-Cannabis Pharma, Inc. and implemented a new business plan to enter into the retail sale of medical and personal use  marijuana, where allowable.  In October 2015, the Company changed its name to MCPI, Inc.  In March 2017, the Company, in anticipation of consummating a proposed asset acquisition transaction, changed its name to Mansfield-Martin Exploration Mining, Inc.

Effective March 31, 2016, the Company ceased activities in all of its subsidiaries and disposed of Med-Pharma Management, Inc. and High Desert MMJ, Inc.  Prior thereto, the Company’s  subsidiaries were Medical Management Systems, Inc., an Oregon corporation engaged in providing back-office and support services to marijuana dispensaries in the State of Oregon; Med-Pharma Management, Inc., a Washington State corporation which was formed to own, manage or provide back-office and support services to marijuana dispensaries in Washington State; and High Desert MMJ, Inc. an Oregon corporation, which is a 99.0% partner in Emerald Mountain Organics, an Oregon joint venture, formed to facilitate the development and growing of medical marijuana plants for wholesale distribution to licenced dispensaries in the State of Oregon.

As of December 31, 2015, Medical Management Systems, Inc. held a Management Contract for three marijuana dispensaries located in Newport, Bend and Cottage Grove, Oregon; which are owned by a company controlled by a related party.  This Management Contract was terminated by the consent of both parties, effective March 31, 2016.   Med-Pharma only conducted introductory due diligence efforts in the State of Washington and, currently, had abandoned all activities in the State of Washington.  Emerald Mountain Organics had, as of September 30,2015, established an early-phase growing operation and has generated nominal sales.

During the first 10 days of October 2015, the Company’s subsidiary, High Desert MMJ, Inc., learned that the 1.0% minority partner in the Emerald Mountain Organics joint venture had absconded with all of the assets of the joint venture.  Efforts to locate and recover either the individuals representing said 1.0% minority partner or the said absconded assets were unsuccessful.  Accordingly, effective October 10, 2015, High Desert MMJ, Inc. abandoned the Emerald Mountain Organics joint venture and wrote off said investment.  The cumulative start-up losses in the Company’s consolidated financial statements for the Emerald Mountain Organics joint venture, through the date of abandonment were approximately $53,000 and the Company recognized a loss on the stolen assets of approximately $51,000 during the quarter ended December 31, 2015.

On June 1, 2016, the Company entered into a Settlement, General and Mutual Release of Claims and Assignment of Interest Transfer Agreement (Settlement Agreement) with its majority shareholder and a related party.  The Settlement Agreement relates to the Company’s management of three medical marijuana dispensaries (Stores) located in Oregon, which are owned by Bendor Investments, Ltd. (Bendor), whose sole shareholder is Charles Stidham.  The Company owes Mr. Stidham approximately $1,100,000, including accrued interest, as of the date of the Settlement Agreement.

The Company asserted a claim for management fees of approximately $80,000 and reimbursement of monies advanced to support the operations of the Stores totaling approximately $343,000 for the services of the Company’s wholly-owned subsidiary, Medical Management Systems, Inc. (MMS), in managing the Stores.  Bendor disputed this claim.  To resolve the dispute, the parties agreed to forgive the accrued management fees and to offset the approximately $343,000 due from Bendor against the approximately $1,100,000 owed to Mr. Stidham with the Company releasing any and all interests it may have had in the Stores and MMS.  Additionally, the Company agreed to assign a trademark to Mr. Stidham as well as executing a new Note in the principal sum of $752,694.19.

Note B - Preparation of Financial Statements

The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has elected a year-end of December 31.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
F-8

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note B - Preparation of Financial Statements - Continued

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

For segment reporting purposes, the Company operated in only one industry segment during the periods represented in the accompanying financial statements and makes all operating decisions and allocates resources based on the best benefit to the Company as a whole.

The accompanying consolidated financial statements, as of and for the periods ended December 31, 2016 and 2015, respectively and as appropriate, contain the accounts of Mansfield-Martin Exploration Mining, Inc.; its former wholly-owned subsidiaries, Medical Management Systems, Inc., Med-Pharma Management, Inc., High Desert MMJ, Inc.; and it’s former majority-owned joint venture, Emerald Mountain Organics.  All significant intercompany transactions have been eliminated.  The consolidated entities are collectively referred to as “Company”.

Note C - Going Concern Uncertainty

The Company was in the initial phases of providing back-office and support services to marijuana dispensaries and participates in a marijuana development and growing operation, all located in the State of Oregon.  The dispensary operations under management by Medical Management Systems, Inc. began generating positive cash flows from operations during the 4 th quarter of 2015.  However, management terminated the Medical Management Systems, Inc. Management Agreement on March 31, 2016 and wrote off all management fees (and deferred revenues) through that date.  Further, the Company liquidated its Med-Pharma Management, Inc. and High Desert MMJ, Inc. subsidiaries as of March 31, 2016.  All other efforts started by the Company and/or its subsidiaries in prior periods were either unsuccessful or abandoned.  There is no assurance that the Company will be able to successful in the implementation or operation of its current business plan.

The Company has limited operating history, limited cash on hand, no operating assets and has a business plan with inherent risk.  Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s financial statements which includes a statement describing our going concern status.  This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.

Because of the Company's lack of operating assets, the Company’s continuance may become fully dependent upon either future sales of securities and/or advances or loans from significant stockholders or corporate officers to provide sufficient working capital to preserve the integrity of the corporate entity during the development phase.

The Company's continued existence is dependent upon its ability to implement its business plan, generate sufficient cash flows from operations to support its daily operations, and provide sufficient resources to retire existing liabilities and obligations on a timely basis.  The Company faces considerable risk in it’s business plan and a potential shortfall of funding due to our uncertainty to raise adequate capital in the equity securities market.

The Company is dependent upon existing cash balances to support its day-to-day operations.  In the event that working capital sufficient to maintain the corporate entity and implement our business plan is not available, the Company’s existing controlling stockholders intend to maintain the corporate status of the Company and provide all necessary working capital support on the Company's behalf.  However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist.  There is no legal obligation for either management or existing controlling stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company’s existing controlling stockholders to have the resources available to support the Company.

The Company anticipates offering future sales of equity securities.  However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.

The Company’s Articles of Incorporation authorizes the issuance of up to 25,000,000 million shares of preferred stock and 500,000,000 shares of common stock.  The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede the implementation of the Company’s business plan.  The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.
 
F-9

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note C - Going Concern Uncertainty - Continued

In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities.  Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.

While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.

Note D - Summary of Significant Accounting Policies

1.   Cash and cash equivalents

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

2.   Organization costs

The Company has adopted the provisions of provisions required by the Start-Up Activities topic of the FASB Accounting Standards Codification whereby all costs incurred with the incorporation and reorganization of the Company were charged to operations as incurred.

3.   Revenue recognition

Revenue is recognized by the Company at the point at which a transaction is delivered or services are provided to a consumer at a fixed price, collection is reasonably assured, the Company has no remaining performance obligations and no right of return by the purchaser exists.

4.   Income taxes

The Company files income tax returns in the United States of America and various states, as appropriate and applicable.  The Company is no longer subject to U.S. federal, state and local, as applicable, income tax examinations by regulatory taxing authorities for any period prior to January 1, 2011.

The Company uses the asset and liability method of accounting for income taxes.  At December 31, 2016 and 2015, respectively, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences.  Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals.

The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification.  The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority.  As a result of the implementation of Codification’s Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.

5.   Income (Loss) per share

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.

Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

As of December 31, 2016 and 2015, respectively, the Company does not have any outstanding items which could be deemed to be dilutive.
 
F-10

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note D - Summary of Significant Accounting Policies - continued

6.   New and Pending Accounting Pronouncements

The Company is of the opinion that any and all other pending accounting pronouncements, either in the adoption phase or not yet required to be adopted, will not have a significant impact on the Company\'s financial position or results of operations.

Note E - Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.

Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates.  The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates.  The Company does not use derivative instruments to moderate its exposure to financial risk, if any.

Note F - Notes Payable to Stockholders

On July 28, 2014, the Company entered into a $500,000 Line of Credit note payable with South Beach Live, Ltd. (South Beach), a Company stockholder and an entity related to a significant Company stockholder, to provide funds necessary to support the corporate entity and provide working capital to pursue business combination or acquisition opportunities.  This note bore interest at 10.0% and matured in July 2015.  This note replaced a non-interest bearing shareholder note payable to a former controlling stockholder that was assumed during a 2014 change in control transaction.  During the twelve months ended December 31, 2014, the Company recognized an aggregate $4,973 as additional paid-in capital for the economic event related to the non-interest bearing feature on the assumed note payable through its retirement.

On September 30, 2015, the Company executed a replacement Promissory Note with the principal stockholder of South Beach Live, Ltd. in the amount of $927,000, bearing interest at 12.0% and payable in monthly installments of approximately $13,300, including accrued interest with a final maturity and balloon payment due on October 31, 2016.

On May 11, 2016, as a component of the aforementioned Settlement Agreement, the Company and Charles Stidham, who was, directly and indirectly, a controlling stockholder of the Company, entered into a new Promissory Note agreement dated March 31, 2016.  The note is for the principal amount of $752,694.19, bears interest at 10.0% per annum and requires monthly debt service payments of approximately $15,992.55 commencing June 30, 2016 through June 30, 2017, at which time all remaining principal and accrued interest is due and payable.  The note also contains a repayment clause where the principal and accrued interest may be paid in common stock of the Company at a conversion rate of $0.001 per share.

For all periods from the inception of the debt through the date of these financial statements, the lender formally suspended the common stock conversion clause contained in the note.  On November 30, 2016, the lender notified the Company that the lender was exercising the common stock conversion clause for the repayment of $150 in debt and continuing the suspension of the conversion clause for the remaining balance of the debt.  The continuation of the suspension of the conversion clause remains in effect as of the date of these financial statements.  The Company is delinquent in making the scheduled monthly debt service payments and no action is expected to be taken by the lender.

Through December 31, 2016 and 2015, respectively, an aggregate of approximately $820,371 and $607,314, inclusive of the effect of the June 1, 2016 Settlement Agreement, as the lender continues to advance funds to support the Company’s working capital needs.  The Company is delinquent in making the required monthly installment payments.


 

(Remainder of this page left blank intentionally)
 
F-11

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note G - Income Taxes

The components of income tax (benefit) expense for the each of the years ended December 31, 2016 and 2015, respectively, are as follows:

   
Year ended
   
Year ended
 
   
December 31,
   
December 31,
 
   
2016
   
2015
 
Federal:
           
Current
  $     $  
Deferred
           
             
State:
               
Current
           
Deferred
           
             
                 
     Total
  $     $  

As of December 31, 2016, the Company had aggregate net operating loss carryforward(s) to offset future taxable income of approximately $1,275,000.   The amount and availability of any net operating loss carryforward(s) will be subject to the limitations set forth in the Internal Revenue Code.  Such factors as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of any net operating loss carryforward(s).

The Company's income tax (benefit) expense for the each of the years ended December 31, 2016 and 2015, respectively, are as follows:

   
Year ended
   
Year ended
 
   
December 31,
   
December 31,
 
   
2016
   
2015
 
             
Statutory rate applied to income before income taxes
 
$
(136,000
)
 
$
(189,400
)
Increase (decrease) in income taxes resulting from:
               
State income taxes
   
     
 
Non-deductible charge for the effect of the partial conversion
               
of the note payable to common stock at less than “fair value”
   
73,600
     
 
Other, including reserve for deferred tax asset
               
and application of net operating loss carryforward(s)
   
62,400
     
189,400
 
                 
Income tax expense
 
$
   
$
 

Temporary differences, consisting primarily of the prospective usage of net operating loss carryforwards give rise to deferred tax assets and liabilities as of December 31, 2016 and 2015, respectively:

   
December 31,
   
December 31,
 
   
2016
   
2015
 
Deferred tax assets
           
Net operating loss carryforwards
 
$
447,400
   
$
385,000
 
Less valuation allowance
   
( 447,400
)
   
( 385,000
)
                 
Net Deferred Tax Asset
 
$
   
$
 

During the each of the years ended December 31, 2016 and 2015, respectively, the valuation allowance against the deferred tax asset increased by approximately $62,400 and $251,000.

Note H - Common Stock Transactions

On March 23, 2016, the Company filed an amendment to its Articles of Incorporation stating “After giving effect to a ten for one reverse split, Article III is amended to read as follows: The total number of shares of all classes of stock which the Corporation shall have the authority to issue is five hundred twenty five million (525,000,000) shares, of which five hundred million (500,000,000) shares, par value $0.001 per share, shall be designated as “Common Stock” and twenty five million (25,000,000) shares, par value $0.001 per share, shall be designated as “Preferred Stock.”  The effect of this action is reflected in the accompanying financial statements as of the first day of the first period presented.
 
F-12

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note H - Common Stock Transactions - Continued

On January 15, 2015, the Company issued an aggregate of 50,000 shares for consulting services related to the provision of back-office and other management support services to marijuana dispensaries located in the State of Oregon.  This stock was valued at $0.30 per share, which approximated the closing price on date of the issuance.

During the period ended March 31, 2015, South Beach Live, Inc., a corporation controlled by a majority shareholder of the Company, transferred 1,000,000 shares of its holdings in the Company’s common stock to consultants for ongoing services associated with marketing strategies.  South Beach Live, Inc. is a related party and does not expect to be repaid for this transaction which was valued at approximately $300,000 and recorded as professional fees and contributed capital on the books of the Company.

On February 29, 2016, the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission noting a pending 1 for 10 reverse split of the Company’s issued and outstanding common stock; as approved by the Company’s Board of Directors, and a concurrent amendment to the Company’s Articles of Incorporation setting the authorized capital of the Company from the authorized, as adjusted, 25,000,000 post-split shares of common stock to 500,000,000 shares of $0.001 par value common stock and the authorized, as adjusted, 250,000 post-split shares of preferred stock to 25,000,000 shares of $0001 par value preferred stock.  The time to implement the reverse split action has expired and no further action is anticipated by the Company’s Board of Directors.

On November 30, 2016, the stockholder controlling the outstanding promissory note for working capital notified the Company that he was withdrawing his suspension of the conversion clause in the promissory note for the conversion of only $150 in outstanding principal and continuing the suspension of the conversion clause for all remaining outstanding principal.  This limited one-time conversion caused the issuance 0f 1,500,000 shares of common stock with a “fair value” of $217,350 resulting in a non-cash charge to operations of approximately $217,200, which is reflected as a component of interest expense in the accompanying financial statements.

Note I - Preferred Stock

The Company is authorized to issue up to 25,000,000 shares of preferred stock, $0.001 par value.  As of December 31, 2016, there are no shares of preferred stock issued and outstanding.

Note J - Subsequent Events

On February 22, 2017, the Company entered into a Material Definitive Agreement (MDA) with L2 Capital, LLC, a Kansas limited liability company (“L2 Capital”).  The MDA has several components:  Under the Equity Purchase Agreement (‘Equity Line”), the Registrant has the right, but not the obligation, to sell shares of its common stock to L2 Capital at 75% of the prevailing OTC market price, as determined by the public market over time periods set out in the Equity Line, for up to $3,000,000.  Under the Registration Rights Agreement (“Registration Rights”), the Registrant Is obliged to register the offering of shares to be put under the Equity Line with the Securities and Exchange Commission on Form S-1, and certain Blue Sky regulators, so that L2 Capital may, presumably, resell such shares under our Rule 424 Prospectus.  The Registrant paid a 3% capital commitment fee to L2 Capital, by issuing to it a $90,000 8% Convertible Promissory Note (“Note”)  The Note requires us to repay $45,000, with interest, in six (6) months, and the balance upon the effective date of the referenced Form S-1, or an additional six (6) months, whichever is earlier.  Our default would trigger conversion rights in favor of L2 Capital, permitting it to demand issuance of shares at a 30% discount to market sufficient to satisfy any amounts due.  Also included are share reserve requirements, under which our transfer agent, VStock Transfer, Inc., agrees to maintain a portion of our authorized but unissued shares sufficient to meet our obligations under the Equity Line and Note.  The foregoing is a summary only of the terms of the MDA.  Copies of the Equity Line, Registration Rights and Note are submitted herewith, and the descriptions herein are qualified entirely by reference to the express language of these documents.

Management has evaluated all other activity of the Company through the issue date of the financial statements and concluded that no subsequent events have occurred that would require recognition in the accompanying financial statements or disclosure in the Notes to Consolidated Financial Statements.
 
F-13

 
Mansfield-Martin Exploration Mining, Inc.
(formerly MCPI, Inc.)
Notes to Consolidated Financial Statements - Continued
December 31, 2016 and 2015


Note K - Pending Transaction

On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement) with Armada Mining, Inc. of Tombstone, Arizona, an Arizona corporation (Armada).  Under the terms of the Agreement, the Company will issue 284,580,000 shares of its common stock to Armada, its affiliates, related entities and other common parties in exchange for rights and interests in mining properties in the Tombstone Mining District of Arizona.  The Company will acquire rights and interests to approximately 3,800 acres of contiguous mineral leases, including some property acquired in fee simple, and ownership of 100% of Tombstone Development Company, which was formed in 1933, and is believed to be the oldest continually operating mining company in Arizona.  Subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals, the Company intends to commence development of these properties by processing previously mined materials for silver, as well as precious and base metals, by reopening and developing existing mines using modern equipment and techniques and by completing an existing drill/test grid to establish the boundary of producible ore bodies, in anticipation of a Bankable Feasibility Study and further development.

Upon completion of the terms of the Agreement, Armada will own approximately 85% of the Company’s  post-transaction issued and outstanding common stock of the Company.  Armada has represented to the Company that it anticipates exchanging a portion of these shares with their existing shareholders; using a portion to satisfy existing obligations to related parties and others; and using a portion to finance other Armada operations.  The Agreement anticipates that Company, post-transaction, will have new Board of Directors that will, in turn, appoint new management for the Company.  Additionally, the Company and Armada have facilitated a change in the Company’s corporate name to better reflect the nature and focus of the Company’s proposed ongoing and future business interests.

As of the date of this filing, this transaction has not been completed and, in the opinion of current management, remains viable.




(Remainder of this page left blank intentionally)



(Signatures follow on next page)
 
F-14

 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
Mansfield-Martin Exploration Mining, Inc.
     
     
     
Dated: April 17, 2017
 
/s/ John T. Bauska
   
John T. Bauska
   
Chief Executive Officer and Financial Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates as indicated.
 
     
     
     
Dated: April 17, 2017
 
/s/ John T. Bauska
   
John T. Bauska
   
President, Secretary/Treasurer and Director
   
     
     
Dated: April 17, 2017
  /s/ Dan M. Leatzow
    Dan M. Leatzow
    Director
 
 
24

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