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x
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Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended June 30, 2017
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o
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Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from ______________ to _____________
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Nevada
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45-0704149
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(State of incorporation)
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(IRS Employer ID Number)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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Mansfield-Martin Exploration Mining, Inc.
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Dated: September 25, 2017
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/s/ John T. Bauska
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John T. Bauska
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Chief Executive and Financial Officer
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Document and Entity Information - shares |
6 Months Ended | |
|---|---|---|
Jun. 30, 2017 |
Sep. 20, 2017 |
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| Document And Entity Information | ||
| Entity Registrant Name | Mansfield-Martin Exploration Mining, Inc. | |
| Entity Central Index Key | 0001516559 | |
| Document Type | 10-Q | |
| Document Period End Date | Jun. 30, 2017 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Is Entity a Well-known Seasoned Issuer? | No | |
| Is Entity a Voluntary Filer? | No | |
| Is Entity's Reporting Status Current? | Yes | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Common Stock, Shares Outstanding | 336,300,000 | |
| Document Fiscal Period Focus | Q2 | |
| Document Fiscal Year Focus | 2017 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Consolidated Balance Sheets Parenthetical | ||
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares outstanding | 336,300,000 | 50,720,000 |
| Common stock, shares issued | 336,300,000 | 50,720,000 |
| Shares issued in escrow | 284,500,000 | |
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred strock, shares outstanding | 0 | 0 |
Background and Description of Business |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| 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.
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. This transaction closed on June 27, 2017. |
Preparation of Financial Statements |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| 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.
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.
During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements filed with the U. S. Securities and Exchange Commission on its Annual Report on Form 10-K for the year ended December 31, 2016. The information presented within these interim financial statements may not include all disclosures required by accounting principles generally accepted in the United States of America and the users of financial information provided for interim periods should refer to the annual financial information and footnotes when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U. S. Securities and Exchange Commission’s instructions for Form 10-Q, are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending December 31, 2017.
The accompanying consolidated financial statements, as of and for the periods ended June 30, 2017 and 2016, 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”. |
Going Concern Uncertainty |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note C - Going Concern Uncertainty |
The Company currently owns a minority position in various mining claims and/or leases located in the Tombstone, Arizona Mining District. It is the Company’s intent to raise sufficient capital to successfully exploit the mineral deposits contained in these claims/leases. 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.
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. |
Summary of Significant Accounting Policies |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| 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, 2012.
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 June 30, 2017 and December 31, 2016, respectively, the Company does not have any outstanding items which could be deemed to be dilutive.
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. |
Fair Value of Financial Instruments |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| 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. |
Mining Leases and Claims |
6 Months Ended | ||||||||||||
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Jun. 30, 2017 | |||||||||||||
| Notes to Financial Statements | |||||||||||||
| Note F - Mining Leases and Claims | On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement). Under the terms of this Agreement, the Company issued issue 284,580,000 shares of its common stock into escrow for the benefit of Armada Mining, Inc., an Arizona corporation, and/or its assigns (Armada) in exchange for rights and interests in mining properties in the historic Tombstone Mining District. The Agreement allows for the Company to 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. A copy of the Agreement was furnished as an exhibit to a Form 8-K filed on or about November 28, 2016.
This exchange resulted in Armada owning approximately 85% of the Company, post-transaction. Subject to 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.
The completion of the acquisition of these currently non-performing claims/leases was initially subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals. On June 27, 2017, the Registrant announced that the due diligence process, although not totally complete, was sufficient to close the November 28, 2016 transaction. The transaction closed as follows:
NOTE: in both b) and c) - Armada will retain the remaining respective 55% in each specific group of claims/leases, subject to the generation of approximately $500,000 in net earnings from the respective claims AFTER the retirement of all affiliated debt. After the debt is retired and the $500,000 is paid to Armada, the residual 55% will transfer to the Company for no additional consideration.
This aggregate transaction has an approximate initial gross asset value of approximately $5,000,526 with the issuance or assumption of underlying debt to initially acquire said claims/leases of approximately $1,460,000.
The “wrap” note issued to Armada is for an aggregate $900,000 and bears interest at 7.0% interest. The “wrap” note is due on December 31, 2018 and may be prepaid at any time without penalty.
The assumed note is in the principal amount of $560,000 and bears interest at 5.0%. This note originally matured on August 20, 2015, is secured by a Deed of Trust on the underlying claims/leases and no notice of default or demand for payment has been made by the initial borrower. Management is of the opinion that this note is currently in “demand” status and the underlying assets are not at risk for foreclosure. |
Notes Payable to Stockholders |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note G - 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 June 30, 2017 and December 31, 2016, respectively, an aggregate of approximately $820,371 , inclusive of the effect of the June 1, 2016 Settlement Agreement, has been advanced to support the Company’s working capital needs. The Company is delinquent in making the required monthly installment payments. |
Note Payable to Management Services Company |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note H - Note Payable to Management Services Company |
Concurrent with the November 2016 proposed transaction with Armada, the Company engaged the services of an unrelated third-party to provide management services to the Company on a “for fee” month-to-month informal agreement. Included in the services to be provided is a line-of-credit note payable up to the amount of $150,000 with interest at 6.0% per annum. The note matures on December 31, 2017 or when the Company completes a successful capital infusion of at least $500,000 directly related to the commencement of mining operations in and around Tombstone, Arizona. Through June 30, 2017, approximately $26,849 has been advanced against this line-of-credit. |
Note Payable to Financial Services Firm |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note I - Note Payable to Financial Services Firm | On February 22, 2017, the Company entered into a Material Definitive Agreement (MDA) with L2 Capital, LLC, a Kansas limited liability company (“L2 Capital”). Our MDA has several components: 1) Under the Equity Purchase Agreement (‘Equity Line”), the Company 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 and 2) Under the Registration Rights Agreement (“Registration Rights”), the Company 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 in the MDA are share reserve requirements, under which our transfer agent has agreed to maintain a portion of our authorized but unissued shares sufficient to meet our obligations under the Equity Line and Note. |
Income Taxes |
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| Note J - Income Taxes |
The components of income tax (benefit) expense for the each of the six month periods ended June 30, 2017 and 2016, respectively, are as follows:
As of June 30, 2017, after consideration of the pending Armada transaction, the Company will have an aggregate net operating loss carryforward(s) to offset future taxable income of approximately $90,000. 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 six months ended June 30, 2017 and 2016, respectively, are as follows:
Temporary differences, consisting primarily of the prospective usage of net operating loss carryforwards give rise to deferred tax assets and liabilities as of June 30, 2017 and December 31, 2016, respectively:
During the six months ended June 30, 2017 and the year ended December 31, 2016, respectively, the valuation allowance against the deferred tax asset increased (decreased) by approximately $(416,400) and $62,400, respectively. |
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Common Stock Transactions |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note K - 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.
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.
On November 28, 2016, the Company entered into a Material Definitive Agreement (Agreement). Under the terms of this Agreement, the Company issued into escrow 284,580,000 shares of its common stock to Armada Mining, Inc., an Arizona corporation, and/or its assigns (Armada) in exchange for rights and interests in mining properties in the historic Tombstone Mining District. The Agreement allows for the Registrant to 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. A copy of the Agreement was furnished as an exhibit to a Form 8-K filed on or about November 28, 2016. This exchange resulted in Armada owning approximately 85% of the Company, post-transaction. Subject to 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. The completion of the acquisition of these currently non-performing claims/leases was initially subject to the completion of due diligence, acquisition of adequate financing and various regulatory approvals. On June 27, 2017, the Registrant completed the closing on the November 28, 2016 transaction. |
Preferred Stock |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note L - Preferred Stock |
The Company is authorized to issue up to 25,000,000 shares of preferred stock, $0.001 par value. As of June 30, 2017, December 31, 2016 and June 30, 2016, respectively, there are no shares of preferred stock issued and outstanding. |
Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Notes to Financial Statements | |
| Note M - Subsequent Events |
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. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
|---|---|
Jun. 30, 2017 | |
| Summary Of Significant Accounting Policies Policies | |
| 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. |
| 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. |
| 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. |
| 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, 2012.
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. |
| 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 June 30, 2017 and December 31, 2016, respectively, the Company does not have any outstanding items which could be deemed to be dilutive. |
| 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. |
Income Taxes (Tables) |
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| Income Taxes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of income tax (benefit) expense |
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| Company's income tax (benefit) expense |
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| Net operating loss carryforwards to deferred tax assets and liabilities |
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Background and Description of Business (Details Narrative) |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Jun. 01, 2016
USD ($)
|
Jun. 30, 2017 |
Nov. 28, 2016
a
shares
|
Mar. 31, 2016 |
Dec. 31, 2015
USD ($)
|
Oct. 10, 2015
USD ($)
|
|
| Entity Incorporation, State Country Name | State of Nevada | |||||
| Entity Incorporation, Date of Incorporation | Feb. 23, 2011 | |||||
| Loss on stolen assets | $ 51,000 | $ 53,000 | ||||
| Emerald Mountain Organics [Member] | ||||||
| Majority partnership percentage | 99.00% | |||||
| Minority partnership percentage | 1.00% | |||||
| Armada [Member] | ||||||
| Post-transaction issued and outstanding common stock owd | 85.00% | |||||
| Common shares issued | shares | 284,580,000 | |||||
| Ownership percentage | 100.00% | |||||
| Area of mineral lease | a | 3,800 | |||||
| Mr. Stidham [Member] | ||||||
| Due to related party | $ 1,100,000 | |||||
| Note payable to stockholder | 752,694 | |||||
| Medical Management Systems, Inc [Member] | ||||||
| Management fees | 80,000 | |||||
| Reimbursement of advance | 343,000 | |||||
| Bendor Investments, Ltd [Member] | ||||||
| Due from related party | $ 343,000 |
Going Concern Uncertainty (Details Narrative) - shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
Mar. 23, 2016 |
|---|---|---|---|---|
| Going Concern Uncertainty Details Narrative | ||||
| Preferred stock, shares authorized | 25,000,000 | 25,000,000 | 25,000,000 | 25,000,000 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Notes Payable to Stockholders (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|
May 11, 2016 |
Nov. 30, 2016 |
Sep. 30, 2015 |
Jul. 28, 2014 |
Dec. 31, 2014 |
Jun. 30, 2017 |
Dec. 31, 2016 |
|
| Note payable to stockholder | $ 820,371 | $ 820,371 | |||||
| Additional paid-in capital | $ 4,973 | ||||||
| Repayment of debt | $ 150 | ||||||
| South Beach [Member] | |||||||
| Note payable to stockholder | $ 927,000 | $ 500,000 | |||||
| Interest rate | 12.00% | 10.00% | |||||
| Maturity date | Oct. 31, 2016 | Jul. 31, 2015 | |||||
| Note payable monthly installments | $ 13,300 | ||||||
| Charles Stidham [Member] | |||||||
| Note payable to stockholder | $ 752,694 | ||||||
| Interest rate | 10.00% | ||||||
| Note payable monthly installments | $ 15,992 | ||||||
| Convertible conversion price | $ 0.001 | ||||||
Note Payable to Management Services Company (Details Narrative) |
6 Months Ended |
|---|---|
|
Jun. 30, 2017
USD ($)
| |
| Note Payable To Management Services Company Details Narrative | |
| Line-of-credit note payable | $ 150,000 |
| Line of credit note payable interest | 6.00% |
| Maturity date | Dec. 31, 2017 |
| Line-of-credit advances | $ 26,849 |
| Maturity date description | When the Company completes a successful capital infusion of at least $500,000 directly related to the commencement of mining operations in and around Tombstone, Arizona |
Note Payable to Financial Services Firm (Details Narrative) - USD ($) |
1 Months Ended | |
|---|---|---|
Feb. 22, 2017 |
Nov. 30, 2016 |
|
| Repayment of debt | $ 150 | |
| L2 Capital [Member] | ||
| Capital commitment fee percentage | 3.00% | |
| Convertible promissory Note | $ 90,000 | |
| Convertible note interest rate | 8.00% | |
| Repayment of debt | $ 45,000 | |
| Repayment of debt description | 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. |
|
| Default description | 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. |
|
| Equity Purchase Agreement [Member] | ||
| Common stock prevailing OTC market price percentage | 75.00% | |
| Common stock prevailing OTC market value | $ 3,000,000 | |
Income Taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
| Federal: | ||||
| Current | ||||
| Deferred | ||||
| Total | ||||
| State: | ||||
| Current | ||||
| Deferred | ||||
| State and local income tax expense benefit | ||||
| Total | ||||
Income Taxes (Details 1) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
| Income Taxes Details 1 | ||||
| Statutory rate applied to income before income taxes | $ (31,000) | $ (32,600) | ||
| 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” | ||||
| Other, including reserve for deferred tax asset and application of net operating loss carryforward(s) | 31,000 | 32,600 | ||
| Income tax expense | ||||
Income Taxes (Details 2) - USD ($) |
Jun. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carryforwards | $ 31,000 | $ 447,400 |
| Less valuation allowance | (31,000) | (447,400) |
| Net Deferred Tax Asset |
Income Taxes (Details Narrative) - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
| Income Taxes Details Narrative | ||
| Net operating loss carry-forwards | $ 90,000 | |
| Deferred tax asset valuation allowance | $ (416,400) | $ 62,400 |
Preferred Stock (Details Narrative) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
Mar. 23, 2016 |
|---|---|---|---|---|
| Preferred Stock Details Narrative | ||||
| Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 25,000,000 | 25,000,000 | 25,000,000 | 25,000,000 |
| Preferred stock, shares issued | 0 | 0 | 0 | |
| Preferred strock, shares outstanding | 0 | 0 | 0 |