Fonon Corp - FORM 10-K - March 27, 2015

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EXCEL - IDEA: XBRL DOCUMENT - Fonon Corp	Financial_Report.xls
EX-32.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - Fonon Corp	ex32-1.htm
EX-32.2 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - Fonon Corp	ex32-2.htm
EX-31.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER REQUIRED BY RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - Fonon Corp	ex31-1.htm
EX-31.2 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER REQUIRED BY RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - Fonon Corp	ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 000-51443

MABWE MINERALS INC.

(Exact name of registrant as specified in its charter)

Wyoming	36-4739442
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

41 Howe Lane, Freehold, N.J.	07728
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (732) 252-5146

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

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ 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 Act.

Yes ¨ No x

Note ☐ Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. x

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.

	Large accelerated filer ¨	Accelerated filer ¨

	Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

The aggregate market value of the voting and non-voting stock held by non-affiliates computed by reference to the price at which the common equity was sold as of the last business day of the registrant’s second quarter of 2014 (June 30, 2014) of $0.0418 per share was $1,938,966. For the purpose of this calculation, shares owned by officers, directors and 10% or more stockholders known to the registrant have been deemed to be owned by affiliates. This determination of affiliate status is not a determination for other purposes.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court of law.

Yes ¨ No ¨

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

The number of shares outstanding of registrant’s common stock, $0.001 par value per share, on March 20, 2015 was 140,458,392.

TABLE OF CONTENTS

		Page
PART I

Item 1.	Business	1
Item 1A.	Risk Factors	1
Item 1B.	Unresolved Staff Comments	1
Item 2.	Properties	1
Item 3.	Legal Proceedings	2
Item 4.	Mine Safety Disclosures	2

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3
Item 6.	Selected Financial Data	3
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item7A	Quantitative and Qualitative Disclosures About Market Risk	12
Item 8.	Financial Statements and Supplementary Data	12
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	12
Item 9A	Controls and Procedures	12
Item 9B.	Other Information	13

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	14
Item 11.	Executive Compensation	15
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	16
Item 13.	Certain Relationships and Related Transactions, and Director Independence	17
Item 14.	Principal Accountant Fees and Services	17

PART IV

Item 15.	Exhibits and Financial Statement Schedules	18
Signatures		19
Index to Financial Statements		F-1

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PART I

Cautionary statement regarding forward-looking statements.

When used in this report on Form 10-K (this “Report”), the words plan, estimate, expect, believe, should, would, could, anticipate, may, forecast, project, pro forma, goal, continues, intend, seek and other expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.” We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date of this Report. While forward-looking statements represent management's best judgment as to what may occur in the future, they are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events as well as those presently anticipated or projected. These factors include, but are not limited to, adverse economic conditions, entry of new and stronger competitors, capital availability, unexpected costs and failure to establish relationships with and capitalize upon access to new customers. We disclaim any obligations subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Item 1. Business.

Our Strategy

As a result of deconsolidation, we continue to search for opportunities to acquire companies which may be involved in like activities and ancillary services complimentary to our investment through equity arrangements where it is mutually beneficial to do so. We are currently further seeking new opportunities and/or strategic partnerships to maximize and leverage its advantages. We also still believe that there is value in the investment in Mabwe Corporation (PVT) LTD (“MAB-C”) based on the inherent value in the underlying raw materials un-extracted in the land.

Competition

We have significantly invested in a competitive industry with many established and well-recognized competitors. There is aggressive competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. Through our investment, we compete for the opportunity to participate in promising exploration projects with other entities, many of which have greater resources than us.

Employees

As of December 31, 2014 we had one full-time employee, our President and CEO, Al Pietrangelo.

Item 1A. Risk Factors.

Not Applicable.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

None.

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Item 3. Legal Proceedings.

From time to time, we may be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination or breach of contract actions incidental to the operation of our business. However, we are not currently involved in any litigation which we believe could have a materially adverse effect on our financial condition or results of operations. The following are ongoing matters involving our investee as it relates to the mining rights they own:

Mabwe Minerals Zimbabwe v. Base Minerals & 2 others (case HC6842/14) – Mabwe Minerals Zimbabwe (Private) Limited ("MAB-Z") is seeking damages in this case in the amount of $3,183,918 arising from the illegal occupation of the mine by the defendants. This matter is waiting to be scheduled for argument. Even though the occupation of the mine has been previously deemed illegal (HC1549/14) and therefore MAB-Z is thought to have reasonable basis for this suit, it is unclear that even if MAB-Z should prevail whether damages will be awarded and, if awarded, whether damages could be recovered.

Mabwe Minerals Zimbabwe v. Base Minerals Zimbabwe & ORS – MAB-Z has filed an application for joinder under HC10201, an application filed by Base Minerals Zimbabwe which is seeking an order to access the mine. MAB-Z has not been named as a defendant in this action which has required this application for joinder. This application is waiting to be scheduled for argument. MAB-Z believes that it should be successful since it has already obtained a court order finding it is the actual owner of the mine.

Mabwe Minerals Zimbabwe v. Base Minerals & The Mining Commissioner (case HC1414/14) – On February 13, 2014 a tribute agreement was filed by Base Mineral Zimbabwe against Chiroswa Syndicate. The tribute agreement expired in 2011 and Chiroswa had since sold the underlying Mine Blocks 1-6 at Dodge Mines to MAB-Z. MAB-Z believes that it is the rightful owner of these mine blocks on the basis that they were purchased under a lawful sale and for which MAB-Z holds the actual certificates of ownership. MAB-Z believes that this is a nuisance claim and is seeking to nullify the filing of this agreement. MAB-Z further believes that no impairment is necessary as of December 31, 2014.

Peter Valentine v. Mabwe Minerals Zimbabwe (case HC 4112/13) - Mr. Valentine has filed a claim relative to rights under a tribute agreement (case HC1414/14) seeking damages and a share of rights under an irregular sale of the Dodge mining rights. The tribute agreement expired in 2011 and MAB-Z believes that it is the lawful, free and clear owner of Dodge Mine Blocks 1-6. This case was heard before the High Court of Zimbabwe and was dismissed with costs as of October 16, 2014. As MAB-Z believed this suit to be a nuisance claim from the beginning MAB-Z still maintains that the facts of the case were rightly determined. This case is under appeal with the Supreme Court under case SC/517-14 heard on November 24, 2014. MAB-Z is currently awaiting determination of the appeal. MAB-Z believes this appeal to be baseless and that no impairment is necessary as of December 31, 2014.

Item 4. Mine Safety Disclosures.

Not Applicable.

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PART II

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

Our common stock trades under the symbol “MBMI” on the OTCQB. The following table sets forth, for the quarters indicated, the high and low bid information for our common stock as reported by OTC Markets Inc, www.otcmarkets.com, a research service that compiles quote information reported on the National Association of Securities Dealers composite feed or other qualified inter-dealer quotation medium. The quotations reflect inter-dealer prices, without retail markup, markdown or commissions, and may not necessarily represent actual transactions.

	2013
Fiscal Quarter Ended	High		Low
31-Mar	$	0.3501		$	0.0106
30-Jun	$	0.64		$	0.1201
30-Sep	$	0.19		$	0.1
31-Dec	$	0.12		$	0.072

	2014
Fiscal Quarter Ended	High		Low
31-Mar	$	0.11		$	0.03
30-Jun	$	0.079		$	0.0406
30-Sep	$	0.11		$	0.0228
31-Dec	$	0.39		$	0.0205

	2014
Year Ended December 31, 2015	High		Low
1st Quarter Ended March 31, 2015 (through March 20., 2015)	$	0.05		$	0.01

Holders

On March 20, 2015, we had 140,458,392 shares of our common stock outstanding held by 405 record shareholders. This number of shareholders does not include beneficial owners, including holders whose shares are held in nominee or street name.

Dividends

We have never paid a cash dividend with respect to our common stock, and do not expect to pay cash dividends in the foreseeable future as management feels it is in the best interests of the shareholders to reinvest any surplus capital into the operations in order to grow the company.

Recent Sales of Unregistered Securities

There have been no recent sales of unregistered securities.

Item 6. Selected Financial Data.

Not applicable.

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

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition for the fiscal years ended December 31, 2014 and 2013. This discussion should be read in conjunction with our financial statements and related notes thereto beginning on page F-1 of this Report. This Report contains trend analysis and other forward-looking statements that involve risks and uncertainties, such as statements concerning future operating results; developments in markets and strategic focus; and future economic, business and regulatory conditions. Such forward-looking statements are generally accompanied by words such as “plan,” “estimate,” “expect,” “believe,” “should,” “would,” “could,” “anticipate,” “may,” “forecast,” “project,” “pro forma,” “goal,” “continues,” “intend,” “seek” and other words that convey uncertainty of future events or outcomes. The cautionary statements included in the “Risk Factors” section under Item 1A above or elsewhere in this Report should be read as being applicable to all forward-looking statements wherever they may appear. Our actual future results could differ materially from those discussed herein. We disclaim any obligations subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Overview

We were organized under the laws of the State of Colorado on January 22, 2001 under the name Pacific InterMedia, Inc. We originally were engaged in the business of offering EDGAR filing services to companies outsourcing the formatting and electronic filing of registration statements, periodic reports and other forms with the U. S. Securities and Exchange Commission (“SEC” or the “Commission”), but generated minimal revenues from these operations. On October 17, 2003, we completed a business combination transaction with Raptor Networks Technology, Inc., a California corporation (“Raptor”), whereby we acquired all of the issued and outstanding capital stock of Raptor in a cashless common stock share-for-share exchange in which Raptor became our wholly-owned subsidiary. Upon the completion of this acquisition transaction, we changed our name to Raptor Networks Technology, Inc. (the “Company”), terminated our EDGAR filing services operations and, by and through our subsidiary Raptor, became engaged in the data network switching industry.

On December 5, 2011, we entered into a Stock Purchase Agreement, dated December 2, 2011 (“Stock Purchase Agreement”), with Raptor Resources Holdings Inc. ("Raptor Resources") (RRHI:QB) (formerly Lantis Laser Inc. (LLSR.QB)) pursuant to which we agreed to issue Raptor Resources 109,928,311 shares of our common stock or 55% of our issued and outstanding shares of common stock in exchange for 5,000,000 shares of unregistered Raptor Resources common stock. All officers and directors of Raptor resigned at the time of execution of the Stock Purchase Agreement. Raptor Resources affected a 1:10 reverse stock split, received 80.14% of the fully diluted shares of Raptor's common stock on a post-split basis, changed the name of Raptor to Mabwe Minerals Inc., changed our domicile to Wyoming, had the company engage in the exploration and mining of industrial minerals and ceased any involvement with the historical business of Raptor. We are now a majority owned subsidiary of Raptor Resources. The name change to Mabwe Minerals Inc. and the 1:10 reverse split were effective on June 28, 2012. In accordance with the Stock Purchase Agreement all our former outstanding convertible notes that were acquired by California Capital Equity, LLC ("CCE"), were converted to our shares of common stock in exchange for 5,000,000 shares of Raptor Resources Common Stock prior to our 1:10 reverse split and an additional 13,510,752 shares of Mabwe Minerals Inc. common stock on a post-split basis.

As of June 28, 2012, we transitioned to an "exploration stage company" and will accordingly report and disclose information prescribed in ASC 915 and in accordance with accounting principles generally accepted in the United States of America (“GAAP”.) Following the shift of control to Raptor Resources Holdings under the terms of the Stock Purchase Agreement the Company’s core operations the mining and distribution of non-gold metals and minerals.

On July 18, 2012 we acquired a 49% stake in Mabwe Minerals Zimbabwe (PVT) Limited in exchange for 25,000 shares of Raptor Resources Holdings Inc. (RRHI) Preferred Convertible Series B Stock. This stock is convertible into 50 shares of RRHI common stock and 25 shares of Mabwe Minerals Inc. common stock following a one year holding period.

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Effective August 1, 2012 Dodge Mine Blocks 1-6 and associated debt was transferred from TAG Minerals – Zimbabwe to Mabwe Minerals Zimbabwe (PVT) Limited in support core operations and expected future revenue streams resultant from industrial mineral mining.

Effective September 28, 2012, Tapiwa Gurupira, 50% stakeholder of MAB-Z was appointed as a Director of Mabwe Minerals Inc.

On November 7, 2012 the principals of MAB-Z received approval from the Government of Zimbabwe to form a new parent holding corporation for the purpose of holding MAB-Z and the percentage investment stake in WGB Kinsey & Company (“Kinsey”.) The new company was named Mabwe Corporation (PVT) LTD (“MAB-C”.) The new corporation owns 100% of MAB-Z and 25% of Kinsey. The Company owns a 49% stake in MAB-C and the remaining 51% ownership in MAB-C is held by a former director of the Company and his father, Zimbabwean residents, Tapiwa Gurupira (50% ownership), with the remaining portion owned by Asswell Gurupira (1% ownership). MAB-C was the operating arm of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-C. MAB-C was a "variable interest entity" (VIE) with respect to guidance under ASC 810-10-5 and was therefore consolidated until December 28, 2014 (see below).

On July 31, 2013 the Company entered into a Master Distributer Agreement (“MDA”) with Steinbock Minerals Ltd. (“Steinbock”.) Steinbock together with its affiliate Yasheya Ltd. (“Yasheya”.) Steinbock is engaged and specializes in the worldwide marketing, distribution and sale of industrial minerals, including but not limited to, all barite grade types and talc. Steinbock and Yasheya were granted the exclusive right to market, sell, distribute, ship and deliver Dodge Mine barite to their customer base. This agreement remains in effect until cancelled by either party upon six months written notice.

On January 6, 2014, MAB-Z completed the process to acquire the mineral and metal rights to 110 hectares (272 acres) contiguous with Dodge Mines.

On December 28, 2014, Tapiwa Gurupira, 50% owner of MAB-Z, was removed as a Director of Mabwe Minerals Inc. As a result of this action, the Company deconsolidated MAB-C, a VIE, since the Company no longer had the power to direct the activities that most significantly impacted MAB-C’s economic performance.

Corporations established under the law of Zimbabwe must have a controlling ownership interest held by domestic parties. Consequently, 51% of MAB-C is owned by Tapiwa and Asswell Gurupira (domestic residents of Zimbabwe), and the remaining 49% is held by the Company. MAB-C owns 100% of MAB-Z a domestic Zimbabwe corporation. MAB-Z was the owner of the majority of the Company’s assets and obligor of a majority of the Company’s liabilities on a consolidated basis. In late 2013, the ownership of the mining rights on the Dodge Mines was challenged by litigation against MAB-Z described above. Despite MAB-Z holding legal certificates of ownership of the Dodge Mines claims, and being victorious on each and every count, appeals continue to be filed. The uncertainty of ownership of the Dodge Mine claims has delayed exploration and future revenue streams from the barite. When the Company entered into the mining industry in Zimbabwe with what it believed was clear title to these Dodge Mine claims, the economic conditions in Zimbabwe were not as poor as they are today, and the relationship between the Company and the Gurupiras was on much better terms. Tapiwa Gurupira was, until December 28, 2014, a director of the Company.

In 2012, despite not having voting control of MAB-C, the entire five member board of directors of MAB-C were acting as a cohesive unit in the best interest of the Company, and the Company had met both conditions of the VIE model, and therefore recognized MAB-C as a VIE and consolidated the financial results of MAB-C into the Company’s financial statements under ASC 810. During late 2014, culminating on December 28, 2014, it became evident to the Company, that the relationship with the MAB-C board members located in Africa and the board members located in the United States had deteriorated. The cohesiveness that embodied the prior two years was not there, and the funding of the operations in Africa had stopped. Essentially, the power of the U.S. directors of MAB-C to direct MAB-C's activities that most significantly impacted MAB-C’s economic performance had terminated. As of December 28, 2014, the Company determined that the investment of MAB-C was no longer a VIE, and thus would be considered an equity investment under ASC 970-323.

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CRITICAL ACCOUNTING POLICIES

Critical Accounting Estimates and Judgments

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements

Deferred Income Taxes

We record a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. We have considered estimated future taxable income and ongoing tax planning strategies in assessing the amount needed for the valuation allowance.

Exploration Stage Company/Development Stage Company

As of June 29, 2012 the Company moved from an Operating Stage Company to an Exploration Stage Company as a result of the execution of the change in ownership control to the majority controlling interest by Raptor Resources Holdings Inc. This transaction was deemed effective June 28, 2012 by FINRA and exploration stage activities commenced on June 29, 2012. In accordance with ASC 915 the Company will be reporting and disclosing additional information in addition to reporting and disclosure requirements otherwise prepared in accordance with U.S. generally accepted accounting principles (GAAP).

The Company had adopted the provisions of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns. As fully described in Note 3, on December 28, 2014, the Company deconsolidated MAB-C, a VIE due to the fact that the Company no longer has the power to direct the activities that most significantly impact MAB-C’s economic performance.

As a result of the deconsolidation, the Company exited the exploration stage and became a development stage company.

Principles of Consolidation

The financial statements include the accounts of the Company and its variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company has adopted the provisions of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns.

Mabwe Minerals Inc. on July 18, 2012, acquired a 49% interest in MAB-Z through the issuance of 25,000 shares of Raptor Resources Holdings Inc. Series B Preferred Convertible Stock.

Each share of the Series B Preferred Convertible Stock is convertible into 50 common shares of Raptor Resources Holdings Inc. and 25 common shares of Mabwe Minerals Inc. both subject to a one year holding period. The remaining 51% ownership in MAB-Z is held by a Director of the Company, a Zimbabwe resident, Tapiwa Gurupira (50%) with the remaining portion owned by Asswell Gurupira (1%). MAB-Z will be the operating arm of Mabwe Minerals, Inc., with the Company being the primary beneficiary of all the activities of its subsidiary, MAB-Z.

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As a result of the investment by Mabwe Minerals Inc. funded by Preferred Convertible Series B Stock of Raptor Resources Holdings Inc., MAB – Z has been identified by the Company as a VIE. The value of the Series B Preferred Convertible Stock is $25,000, which was reflected as Goodwill on the consolidated balance sheet prior to deconsolidation at December 28, 2014.

MAB-C was a Variable Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and was therefore consolidated.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Significant estimates made by management include the recoverability of long-lived assets, the valuation of stock-based compensation and the valuation allowance of the deferred tax asset. Actual results could differ from those estimates.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the assets estimated useful lives as follows: computer equipment, furniture and fixtures and testing equipment are depreciated over three years and office equipment is depreciated over five years. Scientific and measurement equipment is recorded with a useful life of seven years. Repairs and maintenance of a routine nature are charged as incurred. Significant renewals and betterments are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements of operations.

Revenue Recognition

Prior to the change in business, the Company recorded revenues when the following criteria were met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price to the customer is fixed or determinable; and (iv) collection of the sales price is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss have passed to the customer. Revenue is deferred in all instances where the earnings process is incomplete. The Company will recognize revenue from sales when all contingencies contained in agreements are satisfied and risk of loss is transferred to shipper or other agent of consignee. Payments received before all of the relevant criteria for revenue recognition are satisfied will be recorded as deferred revenue in the accompanying balance sheets. Revenues and costs of revenues from contracts are recognized during the period in which the service was performed.

Since the Company entered the Exploration Stage, no revenues have been recorded.

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Inventory

Prior to deconsolidation, for MAB-C, inventories, including stockpiles and mineralized material are carried at the lower of cost or net realizable value. Cost is comprised of production costs for mineralized material produced and processed. Production costs include the costs of materials, costs of processing, refinement, extraction, direct labor, mine site and processing facility overhead costs and site development cost, depreciation, depletion and amortization.

In-process Inventories - In-process inventories represent mineralized materials that are currently in the process of being converted to a certifiable lot of saleable product through the extraction and/or refinement process. The value of in-process material is measured based on assays of the material fed into the process and the projected recoveries of material. In-process inventories are valued at the average cost of the material extracted along with all other necessary cost to feed into the process attributable to the source material coming from the mines and/or stockpiles plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.

Finished Goods Inventories - Finished goods inventories include minerals that are certified in quantifiable lots that require no further processing or capital expenditure other than loading and transport related activities from to transfer title or complete the earnings cycle. These minerals are valued per lot at the average cost of their production.

Stockpile reserves

Prior to deconsolidation, for MAB-C, stockpiles represent mineralized material that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile. Stockpile tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the material, including applicable overhead, depreciation, and depletion relating to mining operations, and removed at each stockpile’s average cost per ton.

MAB-C is extracting API grade barite from the Dodge Mine site and as requested and desired by our master distributor we are actively in the process of trying to obtain necessary equipment whereby they may further refine the mineral to be able to attain and sell chemical grade barite. The additional process crushes and sifts the extracted barite and allows for the removal of silica. The added step involves the process of jigging which separates particles in the raw barite based on specific gravity. This additional step in the process involves a large outlay of capital to acquire additional machinery to further refine our extraction and sift out unwanted minerals.

Site Development Cost

Prior to deconsolidation, for MAB-C, site development costs consist of labor, surveying, mapping, engineering, other site development and licensing as well as any development costs necessary to prepare site Dodge Mine Blocks 1-6 for mining operations.

Extraction Cost

Prior to deconsolidation, for MAB-C, extraction costs consist of the direct expenses of mineral removal from the established site. These costs include drilling, blasting, the loading, hauling and management of stockpiles and waste by-product, mineral refinement and excavation. These direct costs are directly associated with the production of saleable material and the increase of stockpile reserves.

Impairment or Disposal of Long-Lived Assets

The Company reviews its long-lived assets and certain related intangibles for impairment periodically, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.

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Income Taxes

The Company accounts for income taxes in accordance with the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates for the periods in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company records a valuation allowance based on the weight of available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized. In determining the possible realization of deferred tax assets, the Company considers future taxable income from the following sources: (i) the reversal of taxable temporary differences, (ii) taxable income from future operations and (iii) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into periods in which net operating losses might otherwise expire.

The Company also recognizes the income tax effect of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. If recognized, the tax portion of the adjustment would affect the effective tax rate.

Earnings or Loss per Common Share

Basic earnings or loss per share is computed by dividing the net income or loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded when there is a loss as the effect is anti-dilutive.

Uncertainty in Income Taxes

The Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2008, and they evaluate their tax positions on an annual basis. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception.

Fair Value of Financial Instruments

Unless otherwise indicated, the fair value of all reported assets and liabilities which represent financial instruments (none of which are held for trading purposes) approximate the carrying values of such instruments.

Stock-Based Compensation

The Company accounts for stock-based compensation at fair value using the Black-Scholes Option pricing model. All stock-based compensation cost is measured at the grant date using the Black-Sholes Option Pricing Model, based on the fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statements of operations.

Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate that the Company presently uses is 10%.

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Goodwill

Management periodically assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Subsequent Events

In accordance with ASC 855 “Subsequent Events”, the Company is required to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or the date the financial statements were available to be issued.

Selected Financial Data

The following table sets forth selected financial data regarding our financial position and operating results. This data should be read in conjunction with our financial statements and related notes thereto beginning on page F-1 of this Report.

MABWE MINERALS INC.

STATEMENTS OF OPERATIONS

	For the Years Ended December 31,
	2014			2013			Change ($)			Change (%)

REVENUE, NET	$	-			-			-			0	%
COST OF SALES		-			-			-			0	%
GROSS PROFIT		-			-			-			0	%
OPERATING EXPENSES
Salary expense and salary related costs		-			-			-			0	%
Professional, consulting and marketing fees		253,249			442,428			(189,179	)		-43	%
Extraction Cost		366,282			755,094			(388,812	)		-51	%
Site Development Cost		82,211			544,034			(461,823	)		-85	%
Selling, General and administrative		88,165			200,577			(112,412	)		-56	%
Depreciation		797			66			731			1108	%
Total operating expenses		790,704			1,942,199			(1,151,495	)		-59	%
Loss from operations		(790,704	)		(1,942,199	)		1,151,495			-59	%
OTHER INCOME (EXPENSE)
Interest Income (Expense)		(80,672	)		(40,186	)		(40,486	)		101	%
Gain on Investment - W.G.B. Kinsey - Equity Method		(12,367	)		(542,908	)		530,541			-98	%
Gain on deconsolidation, net of impairment of loan from MAB-C		387,244			-			387,244			0	%
Total other income (expense)		294,205			(583,094	)		877,299			-150	%
Income (loss) before income taxes		(496,499	)		(2,525,293	)		2,028,794			-80	%
Income tax benefit		-			-			-			0	%
NET INCOME (LOSS)	$	(496,499	)		(2,525,293	)		2,028,794			-80	%

Gross Profit

Gross profit for years ended December 31, 2014 and 2013 was $0. We are an exploration/development stage company for these years and have yet to record any revenue from operations.

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Operating Expenses

The decrease in operating expenses in 2014 resulted primarily because the Company’s investment in MAB-C, prior to deconsolidation had minimal operational efforts as a result of defending legal claims over mine issues and tribute issues. Results are reflective of continuing operations as a mining company having entered the exploration stage on June 29, 2012 with the focus of engaging in the mining of non-gold industrial metals. As the company entered a new line of continuing operations it has realized related expenses. These changes in the business model resulted in significant increases of professional fees, consulting fees, extraction and site development cost and G&A as compared to prior years. As a result of the deconsolidation, the Company will treat their 49% investment in accordance with ASC 970-323 as an equity method investment. Investments in less than 50% interest in the voting securities of the investee company are accounted for using the equity method of accounting. Investment in equity investee is increased by additional investments and earnings and decreased by dividends and losses. The Company reviews such investment in equity investee for impairment whenever events and circumstances indicate a decline in the recoverability of its carrying value.

Effective December 28, 2014, the Company’s deconsolidated MAB-C as a result of no longer having the power to direct the activities that most significantly impact MAB-C’s economic performance. The Company’s retained non-controlling investment in MAB-C at fair value at the date of deconsolidation amounted to $2,756,769, net of the loss related to the write-off of $1,965,036 and the recognition of liabilities related to the guarantee of the debt of MAB-C in the amount of $413,489, which nets to a gain of $387,244. The Company’s share of the earnings or losses of the equity investee is reflected in the caption “gain on deconsolidation, net of impairment of loan from MAB-C” in the statements of operations.

The following table sets forth certain information about the Company’s Investment in MAB-C:

		% of Outstanding Shares				Carrying Amount of Investment
MAB-C at December 31, 2014			49	%		$	-

Gain on deconsolidation, net of impairment of loan from MAB-C

		Years Ended
		December 31,
		2014		2013

MAB-C	$	387,244	$	-

The Company recorded its share of MAB-C’s net gain using the equity method of accounting and such investment has been reduced to zero. Under ASC 323-10-35 “Investments – Equity Method”, the equity method investor shall discontinue applying the equity method when the investment has been reduced to zero and shall not provide for additional losses, unless the equity method investor provides or commits to provide additional funds to the investee, has guaranteed obligations of the investee, or is otherwise committed to provide further financial support to the investee. The Company is not obligated or committed to provide additional funds or further financial support to MAB-C and as such the Company shall not record additional share of losses of MAB-C upon reducing such investment to zero.

Salary Expense

Employee costs for the years ended December 31, 2014 and 2013 amount to $0. The company has no employees under a salary arrangement.

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Liquidity and Capital Resources

Our independent registered public accounting firm with respect to our financial statements included an explanatory paragraph related to our ability to continue as a going concern in their reports for each of our fiscal years ended December 31, 2014 and 2013. Reports of independent registered public accounting firms questioning a company's ability to continue as a going concern generally are viewed very unfavorably by analysts and investors. There are a number of risks and challenges associated with such a qualified report including, but not limited to, a significant impediment to our ability to raise additional capital or seek financing from entities that will not conduct such transactions in the face of such increased level of risk of insolvency and loss, increased difficulty in attracting talent and the diversion of the attention of executive officers and other key employees to raising capital or financing rather than devoting time to the day-to-day operations of our business. We urge potential investors to review the report of our independent registered public accounting firm and our financial statements and related notes beginning on page F-1 of this Report, the cautionary statements included in the “Risk Factors” section under Item 1A of this Report and to seek independent advice concerning the substantial risks related thereto before making a decision to invest in us, or to maintain an investment in us.

For the years ended December 31, 2014 and 2013, we had a net loss of $496,499 and $2,525,293, respectively. Prior to December 28, 2014, with the deconsolidation of MAB-C, a VIE due to the fact that the Company no longer has the power to direct the activities that most significantly impact MAB-C’s economic performance the net losses realized were a result of the commencement of mining operations in the third quarter of 2013 with no commensurate revenue.

Since our inception, including the year ended December 31, 2014, we have financed our operations almost exclusively from cash on hand raised through the sale of our securities and borrowings. As of December 31, 2014 we had a stockholders deficit of $494,665 compared to $488,481 in 2013.

These conditions, among others, raised substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm has qualified their opinions with respect to our financial statements to include an explanatory paragraph related to our ability to continue as a going concern in their reports for each of our fiscal years ended December 31, 2003 through December 31, 2014.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying financial statements do not reflect any adjustments which might be necessary if we are unable to continue as a going concern.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

The financial statements and corresponding notes to the financial statements called for by this item appear under the caption “Index to Financial Statements” beginning on Page F-1 of this Report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer are Al Pietrangelo) have concluded, based on their evaluation as of December 31, 2014, that the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) are not effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, including to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding whether or not disclosure is required, since we do not have separate persons performing the functions of CEO and CFO.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2014, since we do not have separate persons performing the functions of CEO and CFO.

Our internal control over financial reporting is supported by written policies and procedures, that:

(1)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2)

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 our company are being made only in accordance with authorizations of our management and directors; and

(3)

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 limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this report.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2014, there was not a change in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Set forth below is certain information with respect to our directors and executive officers.

Name		Age		Position with Company
Al Pietrangelo		57		Chief Executive Officer, President, Director and Chairman of the Board

Al Pietrangelo (age 57), is our Chief Executive Officer, President and Chairman of the Board since December 5, 2011 pursuant to the Stock Purchase Agreement between Raptor Resources Holdings Inc.(f/k/aLantis Laser Inc.) and Raptor Network Technology, Inc. Mr. Pietrangelo is also Chief Executive Officer, President and Chairman of the Board of Raptor Resources Holdings Inc. effective May 23, 2011. Mr. Pietrangelo has served as President, CEO and Chairman of the Board of Directors of TAG Minerals Inc., an affiliate of Raptor Resources Holdings Inc. since 2010. From 2006 to 2010 Mr. Pietrangelo was CEO and Director of Rock of Angels Capital Corp., Rock of Angels Acquisition Corp. and Rock of Angels Holdings Inc. From 2005 to 2006 Mr. Pietrangelo was President and a Director of 4 Star Capital Management Inc. From 2002 to 2004 Mr. Pietrangelo served as Secretary and Director of Hypervelocity, Inc. We believe that Mr. Pietrangelo has the management background to assist the Company in its growth and the expertise to assist it in the public markets. Mr. Pietrangelo obtained a B.S. in Business Administration from the University of South Florida.

Family Relationships

There are no family relationships among our executive officers and directors.

Board’s Role in Risk Oversight

The Board consists of one member: Al Pietrangelo, who actively participates in the management of the Company. The Company’s Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements. The Audit Committee oversees management of financial risks. The Nominating and Corporate Governance Committee manages risks associated with the independence of the Board of Directors and potential conflicts of interest. Each committee is responsible for evaluating certain risks and overseeing the management of such.

Board Committees

Our Board of Directors serves as the Audit, Nominating and Governance Committees since there are no separately designated committees. Neither of our directors is an “independent director” as defined in Rule 5605(a)(2) of the NASDAQ Listing Rules.

Code of Ethics

Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from provisions of these codes that relate to one or more of the items set forth in Item 406(b) of Regulation S-B by describing on our Internet website, located at http://www.mabweminerals.com, within four business days following the date of a waiver or a substantive amendment, the date of the waiver or amendment, the nature of the amendment or waiver and the name of the person to whom the waiver was granted.

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Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of copies of these reports furnished to us during 2014 and thereafter, or written representations received by us from reporting persons that no other reports were required, we believe that all Section 16(a) filing requirements applicable to our reporting persons during 2014 were complied with.

Item 11. Executive Compensation.

Compensation of Executive Officers

The following section contains information about the compensation paid to our executive officers and directors during the years ended December 31, 2014 and 2013.

Summary Compensation Table

The following table provides information concerning the compensation for the years ended December 31, 2014 and 2013 for our principal executive officer and our principal financial officer, who were the only persons that served as executive officers during 2014 and 2013 (collectively, the “named executive officers”).

Summary Compensation Table

Name and Principal Positions	Year	Salary		Bonus		Stock Awards(1)		Option Awards		Non-Equity Incentive Plan Compensation		Nonqualified Deferred Compensation Earnings		All Other Compensation(2)		Total
Al Pietrangelo CEO/President	2014	$	-	$	-	$	-	$	-	$	-	$	-	$	5,253	$	5,253
Al Pietrangelo CEO/President	2013	$	-	$	-	$	-	$	-	$	-	$	-	$	22,354	$	22,354

(1)

These amounts are equal to the aggregate grant date fair value, computed in accordance with ASC 718, but without giving effect to estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to these option grants, refer to Note 2 of our financial statements and related notes beginning on page F-1 of this Report.

(2)

For Al Pietrangelo costs consist of life and health insurance premiums and cost which are, for the executive officers, fully paid by the company.

Employment Agreements and Executive Compensation

There are no employment contracts, termination agreements or change-in-control arrangements between us and any of our named executive officers. The Board of Directors reviews and, if deemed appropriate, adjusts the annual salaries of our named executive officers on at least an annual basis. The Board of Directors may from time to time grant performance or similar cash bonuses to our named executive officers at its discretion. The Board of Directors may also periodically award options or warrants to our named executive officers under our existing option and incentive plans at its discretion.

Compensation of Directors

We have only one director, who is a named executive officer. No compensation was paid to any director other than what is disclosed under our Summary Compensation Table, above.

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Stock Option Plan

There currently are no active in-effect stock option plans.

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

The following table sets forth, as of March 23, 2015, certain information with respect to the beneficial ownership of our stock by (i) each of our named executive officers, (ii) each of our directors, (iii) each person known to us to be the beneficial owner of more than 5% of each class of our outstanding voting securities, and (iv) all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to the securities. To our knowledge, except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Shares of common stock underlying derivative securities, if any, that currently are exercisable or convertible or are scheduled to become exercisable or convertible for or into shares of common stock within 60 days after the date of the table are deemed to be outstanding in calculating the percentage ownership of each listed person or group but are not deemed to be outstanding as to any other person or group. Percentage of beneficial ownership is based on 140,458,392 shares of common

	Number of Shares of Common Stock			Percent of Common Stock
Name of Beneficial Owner(1)	Beneficially Owned			Beneficially Owned
Raptor Resources Holdings Inc.		90,071,649	(1)		64.1	%
California Capital Equity		13,510,752			9.6	%
All executive officers and directors (1 persons)		1,000,000	(2)		0.7	%

	(1)	Unless otherwise indicated, the address is c/o Mabwe Minerals Inc., 41 Howe Lane, Freehold, New Jersey 07728.
	(2)	Represents 1,000,000 shares of common stock for Al Pietrangelo.

Equity Compensation Plan Information

The following table sets forth information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans as of December 31, 2014.

Plan Category	Number of Shares to be Issued Upon Exercise		Weighted Average Exercise Price		Number of Securities Available for Issuance
Warrants to Investors(1)		3,105,000	$	0.15	N/A

Total		3,105,000	$	$0.15	N/A


	(1)	Warrants issued to various investors through private placement sales originally set to expire in the first and second quarters of 2014, but were subsequently extended by one year to 2015.

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Item 13. Certain Relationships and Related Transactions and Director Independence.

Certain Relationships and Related Transactions

None.

Director Independence

Our Board of Directors has one member, Al Pietrangelo, who is President and CEO, and therefore, does not qualify as an “independent director” as defined in Rule 5605(a)(2) of the NASDAQ Listing Rules.

Item 14. Principal Accounting Fees and Services.

The following table sets forth the aggregate fees billed to us for the fiscal years ended December 31, 2014 and 2013 independent auditing firm, KBL, LLP.

	Fiscal 2014		Fiscal 2013
Audit Fees (1)	$	14,000	$	16,500
Audit-Related Fees (2)	$	-	$	-
Tax Fees (3)	$	-	$	-
All Other Fees (4)	$	-	$	-

(1)

Audit Fees consist of fees billed for professional services rendered for the audit of our consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by our accountants in connection with statutory and regulatory filings or engagements.

(2)

Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” This category includes fees related to due diligence services pertaining to potential business acquisitions/disposition; and consultation regarding accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standard or interpretation by the SEC, FASB or other regulatory or standard-setting bodies as well as general assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the Sarbanes-Oxley Act of 2002.

(3)

Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance, planning and advice.

(4)

All Other Fees consist of fees for products and services other than the services reported above.

Our Audit Committee is responsible for approving all Audit, Audit-Related, Tax and Other Services. The Audit Committee pre-approves all auditing services and permitted non-audit services, including all fees and terms to be performed for us by our independent registered public accounting firm at the beginning of the fiscal year. Non-audit services are reviewed and pre-approved by project at the beginning of the fiscal year. Any additional non-audit services contemplated by our company after the beginning of the fiscal year are submitted to the Audit Committee chairman for pre-approval prior to engaging the independent auditor for such services. Such interim pre-approvals are reviewed with the full Audit Committee at its next meeting for ratification.

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Part IV

Item 15. Exhibits and Financial Statement Schedules.

Exhibit Number		Description
2.1		Agreement and Plan of Merger dated August 23, 2003 between Pacific InterMedia, Inc., and Raptor Networks Technology, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Form 8-K filed with the SEC on October 22, 2003)
2.2		Amendment to Agreement and Plan of Merger dated October 15, 2003 between Pacific InterMedia, Inc., and Raptor Networks Technology, Inc. (incorporated herein by reference to Exhibit 2.2 to the Company’s Form 8-K filed with the SEC on October 22, 2003)
3.1		Articles of Incorporation, as amended as of June 8, 2005 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 10-KSB for fiscal year ended December 31, 2004, filed with the SEC on April 15, 2005)
3.2		Articles of Amendment to Articles of Incorporation increasing Company’s authorized common stock to 75,000,000 shares, effective June 9, 2005 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on June 15, 2005)
3.3		Articles of Amendment to Articles of Incorporation increasing authorized common stock to 110,000,000 shares, effective May 31, 2006 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on June 5, 2006)
3.4		Articles of Amendment to Articles of Incorporation (Profit) of Raptor Networks Technology, Inc. as filed with the Colorado Secretary of State on April 30, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on May 4, 2007)
3.5		Bylaws (incorporated herein by reference to Exhibit B to the Definitive Information Statement, filed with the SEC on April 24, 2012)
3.6		Amendment to Bylaws – Article II, Section 1 (incorporated herein by reference to Exhibit 3.3 to the Company’s Form 10-KSB for fiscal year ended December 31, 2004, filed with the SEC on April 15, 2005)
3.7		Action with Respect to Bylaws certified by the Secretary of Raptor Networks Technology, Inc. on May 2, 2007 (incorporated herein by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the SEC on May 4, 2007)
10.1		Stock Purchase Agreement between Lantis Laser Inc. and Raptor Networks Technology, Inc. dated December 2, 2011 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K, filed with the SEC on December 8, 2011)
10.2		First Amended and Restated 2005 Stock Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 10-QSB for fiscal quarter ended June 30, 2007, filed with the SEC on August 21, 2007)
10.3		Form of 2005 Stock Plan Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the Company’s Form 10-KSB for fiscal year ended December 31, 2005, filed with the SEC on April 3, 2006)
10.4		Form of 2005 Stock Plan Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the Company’s Form 10-KSB for fiscal year ended December 31, 2005, filed with the SEC on April 3, 2006)
21		Subsidiaries of the Registrant (incorporated herein by reference to Exhibit 21 to the Company’s Form 10-KSB for fiscal year ended December 31, 2005, filed with the SEC on April 3, 2006)
31.1x		Certification of the Chief Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2x		Certification of the Chief Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1x		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2x		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

		x Filed herewith.
		** This exhibit is a management contract or a compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 27, 2015	MABWE MINERALS INC.

	By:	/s/ Al Pietrangelo
		Al Pietrangelo
		Chief Executive Officer
		(principal executive officer)

Dated: March 27, 2015	MABWE MINERALS INC.

	By:	/s/ Al Pietrangelo
		Al Pietrangelo
		Chief Financial Officer
		(principal financial officer)

Pursuant to requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Capacity	Date

/s/ Al Pietrangelo	Director	March 27, 2015
Al Pietrangelo

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Mabwe Minerals Inc.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm	F-2

Financial Statements

Balance Sheets	F-3

Statements of Operations	F-4

Statement of Stockholders’ Equity (Deficit)	F-5

Statements of Cash Flows	F-6

Notes to Financial Statements	F-7

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Directors of

Mabwe Minerals, Inc.

We have audited the accompanying balance sheets of Mabwe Minerals, Inc. (the "Company") as of December 31, 2014 and 2013, and the related statements of operations, changes in stockholders' equity (deficit) and cash flows for the years ended December 31, 2014 and 2013. 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 audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mabwe Minerals, Inc. as of December 31, 2014 and 2013, and the results of its statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 2014 and 2013 in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, due to the lack of positive cash flow, and the substantial losses it has incurred, this raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

KBL, LLP

/s/KBL, LLP

New York, NY

March 26, 2015

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MABWE MINERALS INC.

BALANCE SHEETS

	December 31, 2014			December 31, 2013
ASSETS
CURRENT ASSETS
Cash	$	840		$	55,653
Prepaid expenses		1,575			232,483

Total current assets		2,415			288,136

Fixed assets, net of depreciation		-			5,510

OTHER ASSETS
Investment - W.G.B. Kinsey & Co (Pvt) Ltd		-			12,367
Mineral rights		-			433,000

Total Other Assets		-			445,367

INTANGIBLE ASSETS
Goodwill		-			25,000
Total Intangible Assets		-			25,000

TOTAL ASSETS	$	2,415		$	764,013

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
Unearned revenue	$	-		$	105,000
Accounts payable and accrued expenses		57,363			747,161
Commitment - guaranty of debt - investee		413,489			-
Related Party Payable (Receivable) (Net)		26,228			(59,667	)
Loan payable - related party		-			40,000
Current portion of securitized loan - current		-			385,000

Total current liabilities		497,080			1,217,494

LONG TERM LIABILITIES
Securitized Loan - Long Term		-			35,000

Total long term liabilities		-			35,000

TOTAL LIABILITIES		497,080			1,252,494

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' (DEFICIT)
Preferred stock, no par value; 5,000,000 shares authorized;
no shares issued and outstanding		-			-
Common stock, $0.001 par; 500,000,000 shares authorized;
140,458,392 and 140,248,392 shares issued and outstanding		140,459			140,249
Additional paid-in capital		87,484,981			86,994,876
Additional paid-in capital - Warrants		177,266			177,266
Accumulated deficit		(88,297,371	)		(87,800,872	)

Total stockholders' (deficit)		(494,665	)		(488,481	)

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)	$	2,415		$	764,013

The accompanying notes are an integral part of these financial statements.

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MABWE MINERALS INC.

STATEMENTS OF OPERATIONS

	For the Years Ended
	December 31,			December 31,
	2014			2013

Operations:
OPERATING EXPENSES
Professional, consulting and marketing fees	$	253,249		$	442,428
Extraction cost		366,282			755,094
Site development and reclamation cost		82,211			544,034
General and administrative		88,165			200,577
Depreciation and accretion		797			66

Total operating expenses		790,704			1,942,199

Loss from operations		(790,704	)		(1,942,199	)

OTHER INCOME (EXPENSE)
(Loss) on Investment - W.G.B. Kinsey - Equity Method		(12,367	)		(542,908	)
Gain on deconsolidation, net of impairment of loan from MAB-C		387,244			-
Interest expense		(80,672	)		(40,186	)

Total other income (expense)		294,205			(583,094	)

Loss before provision for income taxes		(496,500	)		(2,525,293	)

Provision for income taxes		-			-

NET LOSS	$	(496,500	)	$	(2,525,293	)

Loss per share - basic	$	(0.00	)	$	(0.02	)

Weighted average number of shares outstanding - basic		140,401,185			137,214,303

Loss per share - diluted	$	(0.00	)	$	(0.02	)

Weighted average number of shares outstanding - diluted		172,081,928			170,018,594

The accompanying notes are an integral part of these financial statements.

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MABWE MINERALS INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013


							Additional
					Additional		Paid in
	Common Stock				Paid in		Capital		Accumulated
	Shares		Amount		Capital		Warrants		Deficit			Total


Balance, December 31, 2012		131,980,750	$	131,981	$	86,112,423	$	-	$	(85,275,579	)	$	968,825

Net Income (Loss)		-		-		-		-		(2,525,293	)		(2,525,293	)

Shares issued for cash		6,677,642		6,678		696,556		177,266		-			880,500

Shares issued for services and prepaid expenses		1,590,000		1,590		185,897		-		-			187,487

Balance, December 31, 2013		140,248,392	$	140,249	$	86,994,876	$	177,266	$	(87,800,872	)	$	(488,481	)

Net Income (Loss)		-		-		-		-		(496,499	)		(496,499	)

WGB Kinsey restrucring - related party forgivness of debt		-		-		478,015		-		-			478,015

Shares issued for cash		100,000		100		4,900		-		-			5,000

Shares issued for services and prepaid expenses		110,000	$	110	$	7,190	$	-	$	-		$	7,300

Balance, December 31, 2014		140,458,392	$	140,459	$	87,484,981	$	177,266	$	(88,297,371	)	$	(494,665	)

The accompanying notes are an integral part of these financial statements.

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MABWE MINERALS INC.

STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(496,500	)	$	(2,525,293	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and accretion expense		797			66
Common stock issues for services		7,300			187,487
Change in fair value of investment		12,367			542,908
Gain on deconsolidation, net of loan impairment of MAB-C		(387,244	)		-
Adjustment to cash due to deconsolidation		(12,138	)		-
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(6,198	)		(156,072	)
Unearned revenue		3,740			105,000
Accounts payable and accrued liabilities		208,850			692,649
Net cash used in operating activities		(669,026	)		(1,153,255	)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions of fixed assets, net of disposals		-			(5,577	)
Net cash used in investing activities		-			(5,577	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		89,500			420,000
Proceeds from related parties, net of repayments		526,224			(70,120	)
Proceeds from private placement, net of fees (including cash received for shares to be issued) - preferred and common stock		5,000			860,500
Increase in cash from loan overdraft line of credit		378,489			-
Repayments made on note payable		(385,000	)		(13,500	)
Net cash provided by financing activities		614,213			1,196,880
Net increase (decrease) in cash and cash equivalents		(54,813	)		38,048
CASH - BEGINNING OF YEAR		55,653			17,605
CASH - END OF YEAR	$	840		$	55,653

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	104,445		$	-
Cash paid for income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Accrued interest payable (prepaid interest) added (removed) to (from) principal balance	$	13,873		$	26,241
Prepaid expenses incurred as a result of issuance of common stock	$	-		$	97,500

Adjustments related to deconsolidation of MAB-C
Cash	$	12,138		$	-
Prepaid expenses		24,902			-
Fixed assets		4,713			-
Mining rights		433,000			-
Goodwill		25,000			-
Asset retirement obligation - asset		83,350			-
Accounts payable and accrued expenses		(222,301	)		-
Payable - related parties		(426,456	)		-
Unearned revenue		(108,740	)		-
Asset retirement obligation - liability		(83,350	)		-
Notes payable		(129,500	)		-
Securitized loan/cash overdraft		(413,489	)		-
Guaranty of debt of former VIE		413,489			-
	$	(387,244	)	$	-

Recognition of asset retirement obligation	$	83,350		$	-
Conversion of accounts payable to a related party (net of prepaid expenses) to additional paid in capital	$	478,015		$	-

The accompanying notes are an integral part of these financial statements.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The Company was incorporated under the laws of the state of Colorado on January 22, 2001 under the name Pacific InterMedia, Inc. (“Pacific”).

On October 17, 2003, Pacific completed a business combination transaction with Raptor Networks Technology, Inc. (“Raptor”), a closely-held California corporation, through acquisition of all of the issued and outstanding common stock of Raptor in exchange for authorized but previously unissued restricted common stock of Pacific. Immediately prior to completion of the acquisition transaction, Pacific had a total of 4,034,000 shares of its common stock issued and outstanding comprised of 1,034,000 registered shares held by approximately 25 stockholders and 3,000,000 shares of restricted stock held by Pacific’s founder and sole officer and director.

As a material aspect of the acquisition, Pacific re-acquired and cancelled the 3,000,000 restricted shares as consideration for transfer of its remaining assets consisting of cash and office equipment to the officer and director, leaving only the registered common stock, 1,034,000 shares, as all of its issued and outstanding capital stock prior to completion of the Raptor acquisition.

Pursuant to terms of the acquisition agreement, all of the issued and outstanding common stock of Raptor, 19,161,256 shares, was acquired by Pacific, share-for-share, in exchange for its authorized but previously unissued common stock. Upon completion of the acquisition, Raptor became a wholly owned subsidiary of Pacific and the Raptor shareholders became shareholders of Pacific. Unless otherwise indicated, all references in these financial statements to “the Company” include Pacific and its wholly owned subsidiary, Raptor. All intercompany transactions have been eliminated in consolidation. On December 3, 2003, Pacific changed its name to Raptor Networks Technology, Inc.

The acquisition transaction had been treated as a reverse merger, with Raptor considered the accounting acquirer.

The Company was a provider of integrated high-speed Ethernet switching systems which enable new emerging high bandwidth critical applications. The data network market areas that the Company is targeting include video, storage, Internet Protocol telephony and technology refresh. The Company is currently focusing on the United States market. Principal operations had commenced, although minimal revenues had been recognized to date.

The Company’s service contract with a Government prime contractor was almost depleted as of March 31, 2011 and consequently, revenues for the quarter under review amounted to close to zero. Taking into account the current status of the U.S. Government budget and the fact that the Company no longer has any rights in or to its intellectual property, the Company was no longer able to generate future revenue in that line of business.

In September 2008, the Company shifted its principal operating model from product sales to licensing enabling a reduction in headcount, footprint and infrastructure that reduced operating expense run rates substantially. This shift in business model was not successful as the Company had not generated any revenues from licensing agreements until July 5, 2011, at which time the Company entered into an agreement with California Capital Equity, LLC (“CCE”) granting CCE an exclusive license (even as to the Company) leaving the Company without any continuing rights in or to its intellectual property. In addition, on August 1, 2011, all of the Company’s remaining assets were sold during a public foreclosure sale. For further details on these transactions, see the disclosures in the Forms 8-K filed by the Company on July 11, 2011 and August 4, 2011. As a result of the above transactions, the Company classified all of its operations as discontinued operations, except certain general and administrative expenses related to the public shell company, such as EDGAR fees, audit fees and legal expenses related to review of public filings and amounts related to the Company’s convertible debt.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation (Continued)

All of our convertible notes payable have matured and the Company did not pay the principal balances and accrued interest at maturity or thereafter. The note holders exercised their right as a secured lender against the Company’s assets and held a public foreclosure sale of substantially all of the Company’s assets and acquired all of these assets at a price of $100,000, which price was credited against the outstanding notes on August 1, 2011. As a result of the public sale on August 1, 2011, the Company retained no material assets with which to continue its operations. The Company was seeking companies or businesses with an interest in utilizing the Company as a public shell vehicle and in August 2011 signed a non-binding Letter of Intent with an interested party for a possible merger. This transaction was completed in December 2011, when Raptor Resources Holdings Inc. (formerly Lantis Laser Inc.) acquired an 80.14% controlling equity stake in the Company. In addition to Raptor Resources Holdings Inc. issuing 5 million shares of their common stock to CCE, they were issued 109,928,311 shares in the Company to attain a 55% ownership as of December 31, 2011. The Company filed a Form 14C to amend its charter to increase the authorized shares of common stock of the Company to 500,000,000 shares, and the Company then issued an additional, 79,078,817 shares of common stock to Raptor Resources Holdings Inc. to bring the total percentage equity owned by Raptor Resources Holdings Inc. to 80.14%, and simultaneously issued 13,510,752 shares of common stock to CCE in consideration for the conversion of the convertible notes outstanding to common stock on a post-split basis. The convertible notes previously issued by Raptor Networks Technology, Inc. were converted after the Company then engaged in a 1:10 reverse stock split. Former shareholders of Raptor Networks Technology, Inc. (“RPTN”) were reissued 1 share of Mabwe Minerals Inc. for each 10 shares of RPTN. No fractional shares were issued resulting in a negligible increase to the total outstanding shares on a post-split basis. All shares herein are reflected post-split in accordance with the Staff Accounting Bulletin.

Effective with the change in control and conversion of notes and liabilities to equity, the Company entered the exploration stage on June 29, 2012.

On July 18, 2012 Mabwe Minerals Inc. acquired a 49% interest in Mabwe Minerals Zimbabwe (PVT) LTD ("MAB-Z") with the issuance of 25,000 shares of Raptor Resources Holdings Inc. Series B Preferred Convertible Stock ("Series B Preferred Stock"). Each share of Series B Preferred Stock is convertible into 50 common shares of Raptor Resources Holdings Inc. and 25 common shares of Mabwe Minerals Inc., both subject to a one year holding period. The remaining 51% ownership in MAB-Z is held by a director of the Company, Zimbabwean resident, Tapiwa Gurupira (50% ownership), with the remaining portion owned by Asswell Gurupira (1% ownership). MAB-Z will be the operating arm of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-Z. MAB-Z is a Variable Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and is therefore consolidated.

The Company formally, on September 30, 2012, appointed Tapiwa Gurupira, a 50% stakeholder of MAB-Z as a Director of Mabwe Minerals Inc.

On November 7, 2012 the principals of MAB-Z received approval from the Government of Zimbabwe to form a new parent holding corporation for the purpose of holding MAB-Z and its percentage investment stake in WGB Kinsey & Company (“Kinsey”.) The new company was Mabwe Corporation (PVT) LTD (“MAB-C”.) The new corporation owns 100% of MAB-Z and 25% of Kinsey. The Company owns a 49% stake in MAB-C the newly formed corporation; the remaining 51% ownership in MAB-C held by a director of the Company, Zimbabwean resident, Tapiwa Gurupira (50% ownership), with the remaining portion owned by Asswell Gurupira (1% ownership). MAB-C will be the operating arm of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-C. At this time, the Company determined that MAB-C would be a Variable Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and therefore consolidated the results of that entity into the Company’s financial statements.

On January 6, 2014, MAB-Z completed the process to acquire the mineral and metal rights to 110 hectares (272 acres) contiguous with Dodge Mines.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation (Continued)

On December 28, 2014, the Company removed Tapiwa Gurupira, a 50% stakeholder of MAB-Z as a Director of Mabwe Minerals Inc.

As fully described in Note 3, on December 28, 2014, the Company deconsolidated MAB-C, a VIE due to the fact that the Company no longer has the power to direct the activities that most significantly impact MAB-C’s economic performance.

As a result of the deconsolidation, the Company exited the exploration stage and became a development stage company.

Presentation as a Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has a loss from operations of $790,704 and $1,942,199 for the years ended December 31, 2014 and 2013, respectively. The Company also has an accumulated deficit of $88,297,371 and a working capital deficit of $494,665 at December 31, 2014.

On August 1, 2011 CCE exercised its right as a secured lender against the Company’s assets since the Company was unable to pay its outstanding notes that were due and payable and held a public foreclosure sale of substantially all of the Company’s assets. CCE acquired all of these assets at a price of $100,000, which price was credited against the outstanding notes. As a result of the public sale on August 1, 2011, the Company retained no material assets with which to continue its operations. The Company sought companies or businesses with an interest in utilizing the Company as a public shell vehicle and in August 2011 signed a non-binding Letter of Intent with Raptor Resources Holdings Inc. (formerly Lantis Laser Inc. (OTCQB: RRHI) which on June 28, 2012 consummated the acquisition of an 80.14% controlling equity interest in the Company. Raptor Resources Holdings Inc. issued 5,000,000 shares of their common stock to CCE and itself received 10,992,831 (post reverse split adjusted) shares in the Company to attain a 55.52% ownership as of June 28, 2012. The Company filed a Schedule 14C that was effective June 28, 2012 to amend its charter to increase the authorized shares of common stock of the Company to 500,000,000 shares. The Company issued 79,078,817 additional shares of common stock to Raptor Resources Holdings Inc. to bring the total percentage equity owned by Raptor Resources Holdings Inc. to 80.14%, and issued 13,510,752 shares of common stock to CCE in consideration of the conversion of the convertible notes outstanding to CCE. These convertible notes previously issued to CCE by Raptor Networks Technology, Inc. were converted after the Company engaged in a 1:10 reverse stock split.

Simultaneous with the reverse stock split the company was renamed Mabwe Minerals Inc. (“Mabwe” or “the Company”.) Former shareholders of Raptor Networks Technology, Inc. (“RPTN”) were reissued one share of Mabwe Minerals Inc. for each 10 shares of RPTN. No fractional shares were issued resulting in a negligible increase to the total outstanding shares on a post-split basis. All shares herein are reflected post-split in accordance with the Staff Accounting Bulletin.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation (Continued)

Prior to deconsolidation, the Company had classified all of the expenses associated with extraction as period expenses. MAB-Z has yet to realize its first shipment of barite and to date has incurred significant cost relative to a startup mining company. Additionally, the incremental expense of either hiring an additional staff member or contracting with an outside party to have our lots certified and qualified in lots and specific grades of materials would be significant and cost prohibitive. No one in the MAB-Z draws a regular salary and they are not in the position to bring on a staff member or incur the expense of routinely contracting with a qualified geologist or an otherwise expert in the field of classification and certification of barite as related to certain grades of qualities. Overall capital investment to this point has been substantial and until MAB-Z is producing positive operational cash flow it is the intent of management to minimize cash outflow to only critical expenditures.

Additionally, the grade of mineral that MAB-Z currently has stockpiled is not the desired grade of Steinbock, our master distributer and though we believe that the mineral in its current form to be a saleable grade of the commodity MAB-Z neither has the current capacity to further refine the mineral to an acceptable grade nor the ability to find another buyer for the material.

Corporations established under Zimbabwean law, must have a controlling ownership interest held by domestic parties. As a result of this statute, 51% of MAB-C is owned by Tapiwa and Asswell Gurupira (domestic residents of Zimbabwe), and the remaining 49% held by the Company. MAB-C owns 100% of MAB-Z a domestic Zimbabwe corporation. MAB-Z was the owner of the majority of the Company’s assets and obligor of a majority of the Company’s liabilities on a consolidated basis. In late 2013, the ownership of the mining rights on the Dodge Mines came into question, with certain challengers of these rights commencing litigation against MAB-Z. Despite holding legal certificates of ownership of the Dodge Mines claims that MAB-Z has, the legal system in Zimbabwe is not as clear cut as to the ownership. Several of these lawsuits have been heard, with MAB-Z being victorious on each and every count. However, appeals continue to be filed, and the outcome of these appeals are not known, and with the Dodge Mine claims being in question, it has delayed exploration and future revenue streams from the barite that these claims are said to contain. When the Company entered into this industry in Zimbabwe with the clear title to these Dodge Mine claims, the economic conditions in Zimbabwe were not as poor as they are today, and the relationship between the Company and the Gurupira’s was also on much better terms. In fact, Tapiwa up until December 28, 2014, was a director of the Company.

In 2012, despite not having voting control of MAB-C, the entire five member board of directors of MAB-C were acting as a cohesive unit in the best interest of the Company, and the Company had met both conditions of the VIE model, and therefore recognized MAB-C as a VIE and consolidated MAB-C into the Company’s financial statements under ASC 810. During late 2014, culminating on December 28, 2014, it became evident to the Company, that the relationship with the board members located in Africa and the board members located in the USA for MAB-C had soured. The cohesiveness that embodied the prior two years was not there, and the funding of the operations in Africa had stopped. Essentially, the power to direct the activities that most significantly impact MAB-C’s economic performance had terminated. As of December 28, 2014, the Company had considered that the investment of MAB-C was no longer a VIE, and thus would be considered an equity investment under ASC 970-323.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies

These items discussed above raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Exploration Stage Company/Development Stage Company

As of June 29, 2012 the Company moved from an Operating Stage Company to an Exploration Stage Company as a result of the execution of the change in ownership control to the majority controlling interest by Raptor Resources Holdings Inc. This transaction was FINRA deemed effective June 28, 2012 and exploration stage activities commenced on June 29, 2012. In accordance with ASC 915 the Company will be reporting and disclosing additional information in addition to reporting and disclosure requirements otherwise prepared in accordance with U.S. generally accepted accounting principles (GAAP).

As a result of the deconsolidation, the Company exited the exploration stage and became a development stage company.

Principles of Consolidation

Mabwe Minerals Inc. on July 18, 2012, acquired a 49% interest in Mabwe Minerals Zimbabwe (PVT) LTD (MAB-Z) through the issuance of 25,000 shares of Raptor Resources Holdings Inc. Series B Preferred Convertible Stock.

Each share of the Series B Preferred Convertible Stock is convertible into 50 common shares of Raptor Resources Holdings Inc. and 25 common shares of Mabwe Minerals Inc. both subject to a 1 year holding period. The remaining 51% ownership in MAB-Z is held by a Director of the Company, a Zimbabwe resident, Tapiwa Gurupira (50%) with the remaining portion owned by Asswell Gurupira (1%). MAB-Z will be the operating arm of Mabwe Minerals, Inc., with the Company being the primary beneficiary of all the activities of its subsidiary, Mabwe Minerals Zimbabwe (PVT) LTD.

As a result of this investment by Mabwe Minerals Inc. funded by Preferred Convertible Series B Stock of Raptor Resources Holdings Inc., MAB – Z had been identified by the Company as a VIE. The value of the Series B Preferred Convertible Stock is $25,000, which is reflected as Goodwill on the Balance Sheet at December 31, 2013.

On November 7, 2012 the principals of MAB-Z received approval from the Government of Zimbabwe to form a new parent holding corporation for the purpose of holding MAB-Z and its percentage investment stake in WGB Kinsey & Company (“Kinsey”.) The new company was Mabwe Corporation (PVT) LTD (“MAB-C”.) The new corporation owns 100% of MAB-Z and 25% of Kinsey, which as of October 1, 2014, has been returned to Kinsey, as fully described in Note 3. The Company owns a 49% stake in MAB-C the newly formed corporation; the remaining 51% ownership in MAB-C held by a former director of the Company, Zimbabwean resident, Tapiwa Gurupira (50% ownership), with the remaining portion owned by Asswell Gurupira (1% ownership). MAB-C up through December 28, 2014, was the operating arm of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-C.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Principles of Consolidation (Continued)

MAB-C was a Variable Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and was therefore consolidated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s accounts at this institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2014, the Company had bank balances exceeding the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits.

Use of Estimates

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the assets estimated useful lives. Repairs and maintenance of a routine nature are charged as incurred. Significant renewals and betterments are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements of operations.

Revenue Recognition

Prior to the change in business, the Company recorded revenues when the following criteria were met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price to the customer is fixed or determinable; and (iv) collection of the sales price is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss have passed to the customer. Revenue is deferred in all instances where the earnings process is incomplete. The Company recognized revenue from distribution sales when all contingencies were satisfied and upon persuasive evidence of a sale to end users until such time that historical sell through ratios had been developed. Payments received before all of the relevant criteria for revenue recognition were satisfied were recorded as deferred revenue in the accompanying balance sheets. Revenues and costs of revenues from consulting contracts were recognized during the period in which the service was performed. All revenues were reported net of any sales discounts or taxes.

Since the Company entered the Exploration Stage and most recently, the Development Stage, no revenues have been recorded.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Unearned Revenue

Prior to deconsolidation as discussed in Note 3, when the Company was in the Exploration Stage, MAB-Z had yet to realize its first shipment of barite. This shipment to an agreed upon FOB point is the primary hurdle in our recognizing revenue by completing the earning process on the purchase order that was submitted by Steinbock in the third quarter of 2013. A second purchase order was issued by Steinbock in December of 2013 for 10,000 tons of barite but has not been billed by MAB-Z. This delay is due to MAB-Z’s desire to refine the current mineral extraction to a sufficiently high grade of barite to obtain a higher market price. Further delaying the process and adding cost to the process is the search and testing of equipment necessary for this further refinement. Under the terms of the initial purchase order, Steinbock is to pay half of the face value upon delivery of the invoice. As of December 31, 2013, the first half of the initial purchase order was paid in the amount of $105,000, with the second half due upon a vessel being loaded in Beira. This amount will be recorded in MAB-Z as revenue once the initial 2,000 tons of minerals are delivered to the buyer. The second purchase order requires MAB-Z to successfully produce the ordered quantity of an additional 10,000 tons after the jigging operations have been completed to receive the first half of the payment, and the second half to be paid upon a vessel being loaded in Beira. In addition, MAB-Z had recorded $3,740 of unearned revenue in December 2014 for stockpile inventory yet to be delivered to the customer.

Inventory

Prior to deconsolidation as discussed in Note 3, of MAB-C, inventories, including stockpiles and mineralized material are carried at the lower of cost or net realizable value. Cost is comprised of production costs for mineralized material produced and processed. Production costs include the costs of materials, costs of processing, refinement, extraction, direct labor, mine site and processing facility overhead costs and site development cost, depreciation, depletion and amortization.

Stockpile reserves

Prior to deconsolidation as discussed in Note 3, for MAB-C, Stockpiles represent mineralized material that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile. Stockpile tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the material, including applicable overhead, depreciation, and depletion relating to mining operations, and removed at each stockpile’s average cost per ton. Through December 28, 2014, MAB-Z, had approximately 4,000 tons of barite in stockpile. We believe that based on several factors that the associated extraction costs would best be reflected in the financial statements as representing no certain future net realizable value.

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NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Stockpile reserves (Continued)

MAB-Z is extracting API grade barite from the Dodge Mine site and as requested and desired by our master distributor. MAB-Z is actively in the process of trying to obtain necessary equipment whereby they may further refine the mineral to be able to attain and sell chemical grade barite. The additional process crushes and sifts the extracted barite and allows for the removal of silica. The added step involves the process of jigging which separates particles in the raw barite based on specific gravity. This additional step in the process involves a large outlay of capital to acquire additional machinery to further refine the extraction and sift out unwanted minerals.

Site Development Cost

Prior to deconsolidation as discussed in Note 3, for MAB-C, site development costs consist of labor, surveying, mapping, engineering, other site development and licensing as well as any development costs necessary to prepare site Dodge Mine Blocks 1-6 for mining operations.

Extraction Cost

Prior to deconsolidation as discussed in Note 3, for MAB-C, extraction costs consist of the direct expenses of mineral removal from the established site. These costs include drilling, blasting, the loading, hauling and management of stockpiles and waste by-product, mineral refinement and excavation. These direct costs are directly associated with the production of saleable material and the increase of stockpile reserves.

Compensated Absences

The Company does not currently have a policy concerning due to the fact that no full time employees exist under a time based compensation agreement.

Impairment or Disposal of Long-Lived Assets

Income Taxes

The Company records a valuation allowance if based on the weight of available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized. In determining the possible realization of deferred tax assets, the Company considers future taxable income from the following sources: (i) the reversal of taxable temporary differences, (ii) taxable income from future operations and (iii) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into periods in which net operating losses might otherwise expire.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Income Taxes (Continued)

Uncertainty in Income Taxes

Fair Value of Financial Instruments

The Company adopted ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

These inputs are prioritized below:

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company analyzes all financial instruments with features of both liabilities and equity under the FASB’s accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Stock-Based Compensation

There was no stock based compensation recognized for the years ended December 31, 2014 and 2013, respectively. The only common stock equivalents issued by the Company in 2013 were warrants issued with common stock in an equity financing. The warrants have equity classification.

Earnings or Loss per Common Share

Basic earnings or loss per share is computed by dividing the net income or loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded as their effect is anti-dilutive. For the years ended December 31, 2014 and 2013 basic and diluted earnings per share were the same as the Company has a loss.

Goodwill

Effective July 18, 2012, the Company acquired a 49% interest of Mabwe Minerals Zimbabwe (PVT) LTD (MAB-Z) for 25,000 shares of Series B Convertible Preferred Stock of Raptor Resources Holdings Inc. The value of this transaction was $25,000 resulted in the Company recording Goodwill as part of the purchase transaction. MAB-Z is the operating arm of the Company and at the time of the purchase its net assets consisted chiefly of mining rights associated with the main line of business of the company. Management periodically assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Subsequent Events

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements.

In June 2014, the FASB issued an Accounting Standards Update No. 2014-10, "Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASU 2014-10")". The objective of ASU 2014-10 is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company has elected early implementation, as permitted by the standard, for the interim period ending June 30, 2014. All exploration stage language disclosures and amounts have been removed as a result of the adoption of ASU 2014-10.

In July 2012, the FASB issued ASU 2012-02, “Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment”, on testing for indefinite-lived intangible assets for impairment. The new guidance provides an entity to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years starting after September 15, 2012. The Company’s adoption of this accounting guidance does not have a material impact on the consolidated financial statements and related disclosures.

In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU 2013-11 provides guidance on the presentation of unrecognized tax benefits related to any disallowed portion of net operating loss carryforwards, similar tax losses, or tax credit carryforwards, if they exist. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on the Company’s consolidated financial statements.

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

3. Deconsolidation of MAB-C and MAB-Z and Equity Investment

The Company had accounted for the 49% investment in MAB-C under ASC 810-10-5, as a variable interest entity (VIE). There are two primary models for determining whether consolidation is appropriate. These two models are a) the voting interest model; and b) the variable interest model.

Under the variable interest model, a controlling financial interest is assessed differently than under the voting interest model. This difference in assessment is required because a controlling financial interest may be achieved other than by ownership of shares or voting interests. A controlling financial interest in the VIE requires BOTH of the following: a) the power to direct the activities that most significantly impact the VIE’s economic performance; and b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Corporations established under Zimbabwean law, must have a controlling ownership interest held by domestic parties. As a result of this statute, 51% of MAB-C is owned by Tapiwa and Asswell Gurupira (domestic residents of Zimbabwe), and the remaining 49% held by the Company. MAB-C owns 100% of MAB-Z a domestic Zimbabwe corporation. MAB-Z was the owner of the majority of the Company’s assets and obligor of a majority of the Company’s liabilities on a consolidated basis. In late 2013, the ownership of the mining rights on the Dodge Mines came into question, with certain challengers of these rights commencing litigation against MAB-Z. Despite holding legal certificates of ownership of the Dodge Mines claims that MAB-Z has, the legal system in Zimbabwe is not as clear cut as to the ownership. Several of these lawsuits have been heard, with MAB-Z being victorious on each and every count. However, appeals continue to be filed, and the outcome of these appeals are not known, and with the Dodge Mine claims being in question, it has delayed exploration and future revenue streams from the barite that these claims are said to contain. When the Company entered into this industry in Zimbabwe with the clear title to these Dodge Mine claims, the economic conditions in Zimbabwe were not as poor as they are today, and the relationship between the Company and the Gurupiras was also on much better terms. In fact, Tapiwa up until December 28, 2014, was a director of the Company.

In 2012, despite not having voting control of MAB-C, the entire five member board of directors of MAB-C were acting as a cohesive unit in the best interest of the Company, and the Company had met both conditions of the VIE model, and therefore recognized MAB-C as a VIE and consolidated MAB-C into the Company’s financial statements under ASC 810. During late 2014, culminating on December 28, 2014, it became evident to the Company, that the relationship with the board members located in Africa and the board members located in the USA for MAB-C had soured. The cohesiveness that embodied the prior two years was not there, and the funding of the operations in Africa had stopped. Essentially, the power to direct the activities that most significantly impact MAB-C’s economic performance had terminated. As of December 28, 2014, the Company had considered that the investment of MAB-C was no longer a VIE, and thus would be considered an equity investment under ASC 970-323.

On December 28, 2014, the Company deconsolidated MAB-C, a VIE due to the fact that the Company no longer has the power to direct the activities that most significantly impact MAB-C’s economic performance. The following table presents the assets and liabilities of the former VIE controlled company on the date of deconsolidation:

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

3. Deconsolidation of MAB-C and MAB-Z and Equity Investment (Continued)

Assets
Cash	$	12,138
Prepaid expenses		24,902
Fixed assets		4,713
Mining rights		433,000
Goodwill		25,000
Asset retirement obligation		83,350
Total assets	$	583.103

Liabilities
Accounts payable and accrued liabilities	$	222,301
Payable to Mabwe Minerals, Inc.		1,956,036
Due to related parties		426,456
Unearned revenue		108,740
Asset retirement obligation		83,350
Loans payable		129,500
Securitized loan/overdraft default (a)		413,489
Total liabilities	$	(3,339,872	)

As of December 28, 2014, the date of deconsolidation, MAB-C’s net liabilities totaled $2,756,769.

(a)

In addition, MAB-Z the wholly-owned subsidiary of MAB-C entered into a securitized loan with a financial institution in May 2013 in the amount of $420,000. Payments were being made in accordance with the term of the agreement, however, the financial institution automatically withdrew funds from MAB-Z’s bank accounts as payments were due, despite the fact that available funds were not in the account causing significant overdrafts. The overdrawn account as of December 28, 2014 amounted to $378,489. MAB-Z recorded all of the default interest and fees related to this loan, and carries the $35,000 balance of the loan as a liability. Since the security on the loan agreement calls for unlimited guarantees to the shareholders, which is MAB-C as it owns 100% of MAB-Z, by virtue of the 49% investment, the Company has recognized the $413,489 as a liability on their balance sheet as guarantor in accordance with ASC 460-10. The Company believes that the other guarantees of this debt will be sufficient to cover any outstanding obligation prior to the financial institution coming after the shareholders of MAB-Z, however has recorded the liability.

As a result of the deconsolidation, the Company will treat their 49% investment in accordance with ASC 970-323 as an equity method investment. Investments in less than 50% interest in the voting securities of the investee company are accounted for using the equity method of accounting. Investment in equity investee is increased by additional investments and earnings and decreased by dividends and losses. The Company reviews such investment in equity investee for impairment whenever events and circumstances indicate a decline in the recoverability of its carrying value.

Effective December 28, 2014, the Company’s deconsolidated MAB-C as a result of no longer having the power to direct the activities that most significantly impact MAB-C’s economic performance. The Company’s retained non-controlling investment in MAB-C at fair value at the date of deconsolidation amounted to $2,756,769, net of the loss related to the write-off of $1,965,036 and the recognition of liabilities related to the guarantee of the debt of MAB-C in the amount of $413,489, which nets to a gain of $387,244. The Company’s share of the earnings or losses of the equity investee is reflected in the caption “Gain on deconsolidation, net of impairment of loan from MAB-C” in the statements of operations.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

3. Deconsolidation of MAB-C and MAB-Z and Equity Investment (Continued)

The following table sets forth certain information about the Company’s Investment in MAB-C:

	% of Outstanding Shares	Carrying Amount of Investment

MAB-C at December 31, 2014	49%	$	-

Gain on deconsolidation, net of impairment of loan from MAB-C

		Years Ended December 31,
		2014		2013

MAB-C	$	387,244	$	-

4. Equity Investment - Kinsey

On October 29, 2012, the Company, MAB-C, and Kinsey entered into an Equity Exchange Agreement (“Equity Exchange Agreement”). In accordance with the Equity Exchange Agreement, the Company issued 5,000,000 shares of their common stock to Kinsey in exchange for a 25% ownership for MAB-C in Kinsey. Originally, under the contract should the value of the 5,000,000 shares of common stock fail to be valued at $5,000,000 on December 31, 2013, the Company would have issued additional shares of common stock to achieve that value for Kinsey. The Equity Exchange Agreement was later revised on December 5, 2013 to exclude this provision of the issuance of the additional shares. The common shares issued have been initially valued at $500,000, as the price of MBMI common stock was trading at $0.10 per share.

The investment has been accounted for as an equity investment under ASC 323. In accordance with the ASC, the investment will be maintained at fair value, and increased or decreased based upon the net income or loss of Kinsey as well as any contributions made and dividends paid. The Company’s investment decreased $542,908 to $12,367 as a result of the incremental loss of Kinsey for the year ended December 31, 2013 at 25% ownership by MAB-C, and then reduced by $12,367 during the year ended December 31, 2014.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

4. Equity Investment – Kinsey (Continued)

The Kinsey investment was treated as an equity investment under ASC 970-323. In accordance with ASC 970-323 as an equity method investment, investments in less than 50% interest in the voting securities of the investee company in which the Company has significant influence are accounted for using the equity method of accounting. Investment in equity investee is increased by additional investments and earnings and decreased by dividends and losses. The Company reviews such Investment in equity investee for impairment whenever events and circumstances indicate a decline in the recoverability of its carrying value. As there was no value in this investment, and the Company had built up extensive accrued costs related to the exploration of the Dodge Mines and Kinsey’s business was failing due to the economic condition in Africa, effective October 1, 2014, MAB-C and Kinsey agreed to exchange the 25% ownership in Kinsey back to Kinsey in exchange for the accrued exploration costs (net of prepaid withholding fees) in the amount of $478,014. In this transaction, Kinsey gets to keep the 5,000,000 shares of the Company. As a result of the transaction, Kinsey is no longer an investment on the books of MAB-C.

5. Related Party Transactions

With the acquisition of MAB-Z, the chief revenue producing asset (the mining rights of the Dodge Mine Blocks 1-6 and the associated note payable) was transferred from a fully-consolidated subsidiary of Raptor Resources Holdings Inc. TAG-Z to MAB-Z, at the time of the transfer, a fully-consolidated variable interest entity of the Company, which is a majority-owned subsidiary of Raptor Resources Holdings Inc. The value transferred to MAB-Z for the mining rights had a book value of $433,000 offset by a note payable of $57,000 at the time of transfer. This value of $376,000 in related party loans was further offset by net payment of expenses incurred by and paid on behalf of consolidating parent Raptor Resources Holdings Inc. Though the balance in the related party payable is nearly identical to that of the Dodge Mine Blocks Net asset there have been several invoices flow through the account in either direction. Subsequent to this initial transaction, there have been several transactions flowing through MAB-Z and MAB-C to and from Raptor Resources Holdings Inc. and there subsidiary TAG Minerals and TAG-Z. On December 28, 2014, the date of deconsolidation, $426,456 was due to these related entities by MAB-C/MAB-Z.

Additionally, the Company has a payable due to Raptor Resources Holdings Inc. of $26,228 as of December 31, 2014 for various expenses paid on behalf of the Company by Raptor Resources Holdings Inc.

On November 27, 2013 the Company paid $30,000 as a year-end bonus to Lion Capital Group LLC (“LION”), a Wyoming LLC. Lion is equally owned by Tapiwa Gurupira, Al Pietrangelo, Dean Harrison and J. Louis Schlegel IV all of whom are directors and or officers of MAB-C.

Effective July 19, 2013 majority owner Raptor Resources Holdings Inc. issued 75,000 Preferred Series B to LION. This was awarded for the milestone achievement of obtaining the EIA license which provided for the commencement of mining operations at Dodge Mines.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

6. Loan Payable – Related Party

Prior to deconsolidation as discussed in Note 3, for MAB-C, effective July 26, 2012 MAB-Z entered into a one year financing short term loan agreement with OVERSEAS TRADE AND FINANCING LIMITED (“OTF”) for an amount of $40,000 with accrued interest at an original rate of 12%. The balance with interest and fees of $48,026 ($8,026) of accrued interest which is included in accounts payable and accrued expenses) was due at December 31, 2013. Under the original terms of the contract the loan was to have been fully repaid within 360 days of the effective date. Failure to pay as prescribed or duly extend loan period will result in the accrual of late charges at a rate of 6% per annum. Extension and drawdown fees are 1% and 2% respectively. OTF is owned and controlled by a current director of MAB-C and was recently registered with the Reserve Bank of Zimbabwe, External Loans Co-coordinating Committee. In accordance with the newly registered loan, the interest rate will now be 8% per annum, and no default rate is in place.

On April 5, 2014, MAB-Z, received confirmation of its registration and acceptance of terms for the loan from OTF in the amount of $40,000 and 8% per annum due in 360 days. As of December 31, 2014 the balance with interest and fees was $48,990 ($8,990 of accrued interest) and is included in MAB-C’s records.

On April 28, 2014 Woolmoon Investments advanced MAB-Z $10,000 for current working capital at a rate 12% per annum. During July, 2014 Woolmoon Investments advanced MAB-Z $1,000. As of December 31, 2014 the balance with interest and fees was $11,859 ($859 of accrued interest)and is included in MAB-C’s records.

7. Loan Payable – Other

Prior to deconsolidation as discussed in Note 3, for MAB-C, on May 2, 2014 MAB-Z entered into an open ended loan agreement with Gary Booth. The Company received an advance of $10,000 for working capital and short-term cash requirement which carries an interest rate of 12%. As of December 31, 2014 the balance due was $10,810 and is included in MAB-C’s records.

On July 31, 2014 MAB-Z entered into and open ended loan agreement with Antony Kinsey and Kevin Hegarty. The Company received an advance of $20,000 for working capital and short-term cash requirement which carries an interest rate of 12%. As of December 31, 2014 the balance due was $21,027 and is included in MAB-C’s records.

In July 2014 advance payments were made by Graham Roberts on behalf of MAB-Z in the amount of $6,000. This loan is currently undocumented but is expected to be formalized in Q1 of 2015. Interest is currently being accrued at an annual rate of 12%. The balance due without accrued interest was $6,000 and is included in MAB-C’s records.

In October 2014, MAB-Z, was advanced $2,500 from a group known as the Advisory Board. This loan has is due on demand and is accruing interest at an annual rate of 12%. The balance at December 31, 2014 was $2,549 and is included in MAB-C’s records.

On December 10, 2014, MAB-Z, was advanced $40,000 from Wimfair Investments (PVT) Ltd. t/a Derbyshire Stone. This loan is due on demand and is accruing interest at an annual rate of 12%. The balance at December 31, 2014 was $40,015 and is included in MAB-Z’s records.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

8. Warrants

Warrants granted to investors, brokers and other service providers are summarized as follows:

		Exercise		Date
Warrants		Price		Issued	Term
	1,505,000	$	0.15	Feb - Mar 2013	2 Years
	1,600,000	$	0.15	Apr - May 2013	2 Years

Total: 3,105,000

9. Acquisition

Prior to deconsolidation as discussed in Note 3, for MAB-C, effective July 18, 2012, the Company acquired a 49% interest of Mabwe Minerals Zimbabwe (PVT) LTD (MAB-Z) for 25,000 shares of Series B Convertible Preferred Stock of Raptor Resources Holdings Inc. The value of this transaction was $25,000.

MAB – Z was essentially a newly formed entity. The $25,000 was recorded as Goodwill.

Net Assets Purchased
Goodwill		25,000

Purchase Price	$	25,000

10. Mining rights

After to deconsolidation as discussed in Note 3, for MAB-C, as of December 31, 2014 and 2013, the Company had the following in mining rights:

	2014		2013
Dodge Mines	$	0	$	433,000
Mining Development Cost		-		-
Less amortization and accretion expense		-		-

Total Mining Rights	$	0	$	433,000

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

11. Asset Retirement Obligations

Prior to deconsolidation as discussed in Note 3, as of December 31, 2014, MAB-Z had recognized the following asset and liability for reclamation relative to the mining activities at the Dodge Mine:

Long-Term Reclamation Liability and Retirement Obligation Asset

Following is a reconciliation of the aggregate reclamation liability associated with MAB-Z's reclamation plan for our mining projects:

	December 31,		December 31,
	2014		2013
Long-term reclamation liability — beginning of period	$	-	$	-
Additional obligations incurred		83,350		-
Accretion of reclamation liability		-		-
Long-term reclamation liability — end of period	$	83,350	$	-

Following is a reconciliation of the aggregate retirement obligation asset associated with our reclamation plan for our mining projects:

	December 31,		December 31,
	2014		2013
Retirement obligation asset — beginning of period	$	-	$	-
Additional obligations incurred		83,350		-
Amortization of retirement obligation asset		-		-
Retirement obligation asset — end of period	$	83,350	$	-

12. Stockholders’ Deficit

The Company’s authorized capital consists of 500,000,000 shares of common stock, par value $0.001 per share and 5,000,000 shares of preferred stock, no par value per share.

During the year ended December 31, 2014 the Company issued 110,000 shares of common stock for investor relations and accounting services rendered and to be rendered at a value of $7,300. The Company also sold through private placement 100,000 common shares for a cash price of $5,000 ($.05/share.) The controlling interest of Raptor Resources Holdings Inc. was diluted to 64.13% based on new issuances of common stock that year.

During the year ended December 31, 2013, the Company issued 6,677,642 shares of stock through private placement for cash in the amount of $880,500. 3,105,000 warrants were issued with these placements, exercisable for 1 year at a price of $.15 per share. The Company also issued 1,590,000 shares of its common stock for accounting, promotional and public relation services rendered and to be rendered at a value of $187,487. The controlling interest of Raptor Resources Holdings Inc. was diluted to 64.22% based on new issuances of common stock that year.

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MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

12. Stockholders’ Deficit (Continued)

During the year ended December 31, 2012, the Company issued: 5,000,000 shares of common stock through private placement for cash in the amount of $250,000; 5,000,000 shares of common stock valued at $500,000 to purchase for MAB-C, a 25% ownership in Kinsey per the Equity Exchange Agreement; 6,590,000 shares of common stock valued at $152,375 for services rendered and to be rendered; and 3,000,000 shares of common stock to two former officers of Raptor Resources Holdings Inc. to offset the related party debt outstanding with Raptor Resources Holdings Inc. The controlling interest percentage of Raptor Resources Holdings Inc, was 68.25%.

During 2012, the Company executed a 1:10 reverse stock split where every ten (10) shares of stock was converted to one (1) share. No fractional shares were issued resulting in a negligible increase to the total outstanding shares on a post-split basis. All shares are reflected on a post-split basis unless indicated.

On June 29, 2012, the Company issued 79,078,817 shares of common stock to Raptor Resources Holdings Inc. to bring the total percentage equity owned by Raptor Resources Holdings Inc. to 80.14%, and simultaneously issued 13,510,752 shares of common stock to CCE in consideration for the conversion of the convertible notes outstanding to common stock. During 2011, the Company issued 10,992,831 shares of common stock (on a post-split basis) to Raptor Resources Holdings Inc.(f/k/a Lantis Laser Inc.) representing 55% of the Company. The transaction was treated as an equity transaction, and Raptor Resources Holdings Inc. issued 5,000,000 shares of their common stock to CCE in exchange for the guaranty to convert their debt to common stock of the Company post-split, upon the Company’s successful amendment to their charter which enabled them to increase the authorized shares to 500,000,000 allowing the issuance to CCE of 13,510,752 shares of the Company’s stock.

As of December 31, 2014, the Company has 140,458,392 shares issued and outstanding.

13. Income Taxes

The Company computes and records taxes payable based upon determination of taxable income which is different from pre-tax financial statement income. Such differences arise from the reporting of financial statement amounts in different periods for tax purposes. The timing differences are a result of different accounting methods being used for financial and tax reporting.

The Company’s total deferred tax assets and deferred tax liabilities were as follows at December 31:

	2014			2013
Deferred tax assets:
Non-benefited tax losses and credits	$	28,024,755		$	27,738,000
Total deferred tax assets		28,024,755			27,738,000
Deferred tax liabilities		-			-
Net book value of assets		-			-
Total deferred tax liabilities		-			-
Total net deferred tax assets		28,024,755			27,738,000
Valuation allowance		(28,024,755	)		(27,738,000	)
Net deferred tax assets	$	-		$	-

A valuation allowance has been established against the realization of the deferred tax assets since the Company has determined that the operating loss carryforwards may not be realized.

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Table of Contents

MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

The Company has federal and state net operating loss carryforwards of approximately $46,137,134 and $45,430,000, respectively expiring between 2026 and 2034, respectively.

Internal Revenue Code Section 382 imposes limitation on our ability to utilize net operating losses if we experience an ownership change and for the NOL’s acquired in the acquisitions of subsidiaries. An ownership change may result from transactions increasing the ownership percentage of 5% or greater stockholders in the stock of the corporation by more than 50 percentage points over a three-year period. The value of the stock at the time of an ownership change is multiplied by the applicable long-term tax exempt interest rate to calculate the annual limitation. Any unused annual limitation may be carried over to later years. The Company in June 2012 experienced a greater than 50% ownership change, so the rules of IRC section 382 apply.

At December 31, 2014 and 2013, the amount of gross unrecognized tax benefits before valuation allowances and the amount that would favorably affect the effective income tax rate in future periods after valuation allowances were zero.

14. Commitments

Current Litigation

Prior to deconsolidation as fully described in Note 3, MAB-C and MAB-Z identified the following legal matters:

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Table of Contents

MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

14. Commitments (Continued)

Current Litigation (continued)

Land Lease Agreement

Prior to deconsolidation as discussed in Note 3, on May 13, 2013, MAB-Z entered into a 20 year agreement with Ettie Magadzire, owner of Palm Grove Farm whereby rights of unrestricted access to claims of MAB-Z were granted (“Land Lease Agreement”). Magadzire possessing surface rights to the property on which the claims were located under this agreement conveyed the right of use for MAB-Z to explore, test, sample, verify, assess the full nature and extent of the deposit, and to develop the mineral resources of aforesaid claims. In consideration for those rights MAB-Z agreed to pay to Magadzire $70,000 payable quarterly in arrears after the first annual installment is paid in the following manner: (a) $17,500 payable in $5,000 cash (paid), $5,000 for a vehicle (paid by officer of MAB-Z and included in related party payable) and $7,500 in fuel (paid); (b) $17,500 payable six months after commencement of mining operations at the Claims; (c) $17,500 payable nine months after commencement of mining operations; and (d) $17,500 payable one-year after commencement of mining operations. Then payments by MAB-Z will be made in quarterly installments of $17,500 (or $70,000 per year). The agreement has a total value of $1,400,000.

Letter of Credit

Prior to deconsolidation as discussed in Note 3, on February 8, 2013, MAB-Z was issued as beneficiary an irrevocable documentary letter of credit from Baker Hughes Oilfield Operations, Inc. in the documentary credit amount of $3,000,000 per lot of crude barite (or a total of $9,000,000) to pay for shipments from Beira, Mozambique to any U.S. Gulf port of three lots of barite meeting the specifications set forth in the letter of credit. The first shipment was to be made between June 1, 2013 and August 31, 2013, the second shipment was to be made between September 1, 2013 and November 30, 2013 and the third shipment must be made between December 1, 2013 and March 1, 2014. MAB-Z was discussing with Baker Hughes Oilfield Operations revised shipment dates in light of the delays experienced in obtaining the Environmental Impact Assessment Certificate dated July 4, 2013 from the Environmental Management Agency of Zimbabwe to allow it to commence mining operations for barite. No update on these discussions are available as of the date of this filing.

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Table of Contents

MABWE MINERALS INC.

NOTES TO FINANCIAL STATEMENTS

15. Securitized Loans

Prior to deconsolidation as discussed in Note 3, effective May 16, 2013 MAB-Z entered into a one year securitized financing short term agreement with CBZ Bank Limited in the amount of $420,000. As security under this agreement Kinsey pledged two Bell HD2045 Hydraulic Excavators appraised at a combined value of $739,000, further guaranteed by the shareholders of MAB-Z. The loan originally was to be paid in monthly installments commencing in December 2013 in the amount of $35,000 plus interest expiring on June 30, 2014 upon which time all monies were due and payable in full. The interest rate on the loan is 15% per year. Upon funding of this loan a 3% establishment fee was charged and deducted from the proceeds. MAB-Z may in the future obtain funding through securitizations and other attempts to raise capital until cash flow operations are self-sustaining in the support of continuing operations.

This agreement was subsequently modified in January 2014 to adjust the payment schedule whereby payments of $35,000 per month plus full to date interest is due and payable commencing February 2014 and will continue each month there after including interest with the last payment due January 31, 2015.

Subsequent to the restructuring, the account was over-drafted due to withdrawal of timely interest and principal payments as well as miscellaneous bank fees. The overdraft position as provided for in the agreement carries the banks minimum lending rate plus a 12% margin agreed to on the original loan upon acceptance. Additionally, as provided in our agreement this overdraft position not being previously agreed and authorized carries a penalty interest rate of an additional 10%. Additionally the bank reserves the right to increase or change the minimum rate during the term of this line at its sole discretion. Currently the bank has assigned an additional premium of 3%. This rate is a floating rate and is assigned at the discretion of the bank. MAB-Z continues to try to renegotiate the terms of this loan.

As of December 31, 2014, MAB-Z has reflected the entire amount in current liabilities. MAB-Z has expensed $110,862 for interest on this loan and the associated overdraft line of credit for the year ended December 31, 2014. The interest charged on the loan in the amount of $110,862 consists of $74,652 of standard loan interest and $36,210 of overdraft interest. MAB-Z paid $104,870 in interest during the year ended December 31, 2014, most of which was reclassified as overdraft, leaving an interest payable balance of $5,991.

The overdrawn account as of December 28, 2014 amounted to $378,489. MAB-Z recorded all of the default interest and fees related to this loan as described above, and carry the $35,000 balance of the loan as a liability. Since the security on the loan agreement calls for unlimited guarantees to the shareholders, which is MAB-C as it owns 100% of MAB-Z, by virtue of the 49% investment; the Company has recognized the $413,489 as a liability on their balance sheet as guarantor in accordance with ASC 460-10. The Company believes that the other guarantees of this debt will be sufficient to cover any outstanding obligation prior to the financial institution coming after the shareholders of MAB-Z, however has recorded the liability.

This current overdraft position puts MAB-Z in default of that obligation which they continue to aggressively renegotiate.

16. Subsequent Events

On January 22, 2015 the Company filed a Form 8-K stating that it had entered into a Letter of Intent to acquire the assets of Fonon Technologies, Inc., a diversified laser based system solutions private company providing comprehensive design, manufacturing, and technology products and services to aerospace, medical, defense, automotive, government, and Fortune 500 customers worldwide for over a quarter century.

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Fonon Corp - FORM 10-K - March 27, 2015

Attached files

Fonon Corp Reports