SIGNIFICANT AND CRITICAL ACCOUNTING POLICIESies	6 Months Ended
Jul. 31, 2014
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES	NOTE 2 - SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company's significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles. Basis of Presentation - Unaudited Interim Financial Information The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the financial statements of Tungsten Corp. for the period from October 30, 2012 (inception) through January 31, 2014 and notes thereto contained in the Company's Current Report on Form 10-K filed with the SEC on March 31, 2014. Fiscal Year-End The Company elected January 31st as its fiscal year ending date. Exploration Stage Company The Company has established the existence of mineralized material; however, it has not established proven or probable reserves, as defined by the United States Securities and Exchange Commission (the "SEC") under Industry Guide 7, through the completion of a "final" or "bankable" feasibility study for mineralized material. As a result, the Company remains in the Exploration Stage as defined under Industry Guide 7, and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established. The Company is considered an exploration stage company. The Company has elected to adopt early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. Upon adoption, the Company no longer presents or discloses inception-to-date information and other remaining disclosure requirements of Topic 915. Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s). Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company's critical accounting estimates and assumptions affecting the financial statements were: (i) Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business; (ii) Valuation allowance for deferred tax assets: Management assumes that the realization of the Company's net deferred tax assets resulting from its net operating loss ("NOL") carry-forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors. (iii)Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company's common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments. These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole 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. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Principles of Consolidation The Company applies the guidance of Topic 810 "Consolidation" of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries--all entities in which a parent has a controlling financial interest--shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent's power to control exists. The Company's consolidated subsidiary and/or entity is as follows: Date of incorporation or formation Name of consolidated State or other jurisdiction of (date of acquisition, subsidiary or entity incorporation or organization if applicable) Attributable interest -------------------- ----------------------------- -------------- --------------------- Nevada Tungsten Holdings Ltd. The State of Nevada October 30, 2012 100% (April 8, 2013) These consolidated financial statements include all accounts of the Company as of July 31, 2014 and for the period from April 8, 2013 (date of acquisition) through July 31, 2014; and Nevada Tungsten Holdings Ltd. as of July 31, 2014 and 2013, for the period ended July 31, 2014, and for the period from October 30, 2012 (inception) through July 31, 2014. All inter-company balances and transactions have been eliminated. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses. Fair Value of Financial Instruments The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph 820-10-35-37") to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts of the Company's financial assets and liabilities, such as cash, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments. The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative liability at every reporting period and recognizes gains or losses in the statements of operations that are attributable to the change in the fair value of the derivative warrant liability. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis Level 3 Financial Liabilities - Derivative conversion features The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative liability on the conversion feature at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the derivative liabilities. Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company's long-lived assets, which include mineral properties, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset's expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company's overall strategy with respect to the manner or use of the acquired assets or changes in the Company's overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Management periodically reviews the recoverability of the capitalized mineral properties. Management will take into consideration various information including, but not limited to, historical production records taken from previous mine operations, results of exploration activities conducted to date, estimated future prices and reports and opinions of outside consultants. When a determination has been made that a project or property will be abandoned, or its carrying value has been impaired, a provision is made for any expected loss on the project or property. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Mineral Properties The Company follows Section 930 of the FASB Accounting Standards Codification for its mineral properties. Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves. In accordance with the Disclosure requirements of Section 350-30-50-2, the Company capitalizes costs incurred to renew or extend the term or requirements that need to be met for retention of the mineral properties. If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production. Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value. General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts. The provision for depreciation, depletion and amortization ("DD&A") of mineral properties will be calculated on a property-by-property basis using the unit-of-production method. Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all general exploration costs, if any, are being expensed. Mineral Exploration and Mine Development Costs All mineral exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves. Mine development costs incurred to develop mineral deposits, to expand the capacity of mines or to develop mine areas substantially in advance of production are capitalized once proven and probable reserves exist, and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the cost of mineral rights will be expensed at that time. Costs of abandoned projects, including related property and equipment costs, are charged to mining costs. Restoration Costs (Asset Retirement and Environmental Obligations) Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after the completion of mining. In accordance with ASC 410, Asset Retirement and Environmental Obligations, the Company capitalizes the measured fair value of asset retirement and environmental obligations to mineral rights and properties. ASC 410 requires the Company to record a liability for the present value of the estimated future site restoration and environmental remediation costs with corresponding increase to the carrying amount of the related mineral rights and properties. The asset retirement and environmental obligations are accreted to an undiscounted value until the time at which they are expected to be settled. The accretion expense is charged to earnings and the actual retirement costs are recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement. Environmental expenditures that relate to ongoing environmental and reclamation programs will be charged against statements of operations as incurred or capitalized and amortized depending upon their future economic benefits. Future site restoration and environmental remediation costs, which include extraction equipment removal, site restoration and environmental remediation, are accrued at the end of each reporting period based on management's best estimate of the costs expected to be incurred for each project. Such estimates are determined by the Company's engineering studies which consider the costs of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards. On a quarterly basis, the Company reviews the assumptions used to estimate the expected cash flows required to settle the asset retirement obligations, including changes in estimated probabilities, amounts and timing of the settlement of the asset retirement and environmental obligations, as well as changes in the legal obligation requirements at each of its mineral projects. Changes in any one or more of these assumptions may cause revision of asset retirement obligations for the corresponding assets. The Company does not currently anticipate any material capital expenditures for site restoration costs and considers the estimated future site restoration costs to be minimal and so the present value of the same at October 31, 2013 as all of its mineral properties are at early stages of exploration. Related Parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Derivative Instruments and Hedging Activities The Company accounts for derivative instruments and hedging activities in accordance with paragraph 810-10-05-4 of the FASB Accounting Standards Codification ("Paragraph 810-10-05-4"). Paragraph 810-10-05-4 requires companies to recognize all derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends upon: (i) whether the derivative has been designated and qualifies as part of a hedging relationship, and (ii) the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument based upon the exposure being hedged as either a fair value hedge, cash flow hedge or hedge of a net investment in a foreign operation. Derivative Liability The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations and comprehensive income (loss) as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification ("Section 815-40-15") to determine whether an instrument (or an embedded feature) is indexed to the Company's own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. The adoption of Section 815-40-15 has affected the accounting for (i) certain freestanding warrants that contain exercise price adjustment features and (ii) convertible bonds issued by foreign subsidiaries with a strike price denominated in a foreign currency. The Company marks to market the fair value of the embedded derivative warrants at each balance sheet date and records the change in the fair value of the embedded derivative warrants as other income or expense in the consolidated statements of operations and comprehensive income (loss). The Company utilizes the Lattice model that values the liability of the derivative warrants based on a probability weighted discounted cash flow model with the assistance of the third party valuation firm. The reason the Company picks the Lattice model is that in many cases there may be multiple embedded features or the features of the bifurcated derivatives may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument. Therefore, the fair value may not be appropriately captured by simple models. In other words, simple models such as Black-Scholes may not be appropriate in many situations given complex features and terms of conversion option (e.g., combined embedded derivatives). The Lattice model is based on future projections of the various potential outcomes. The features that were analyzed and incorporated into the model included the exercise and full reset features. Based on these features, there are two primary events that can occur; the Holder exercises the Warrants or the Warrants are held to expiration. The Lattice model analyzed the underlying economic factors that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. stock price, exercise price, volatility, etc.). Projections were then made on the underlying factors which led to potential scenarios. Probabilities were assigned to each scenario based on management projections. This led to a cash flow projection and a probability associated with that cash flow. A discounted weighted average cash flow over the various scenarios was completed to determine the value of the derivative warrants. Beneficial Conversion Feature When the Company issues an debt or equity security that is convertible into common stock at a discount from the fair value of the common stock at the date the debt or equity security counterparty is legally committed to purchase such a security (Commitment Date), a beneficial conversion charge is measured and recorded on the Commitment Date for the difference between the fair value of the Company's common stock and the effective conversion price of the debt or equity security. If the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the debt or equity security, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the debt or equity security. Commitment and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows. Revenue Recognition The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable and, (iv) collectability is reasonably assured. Stock-Based Compensation for Obtaining Employee Services The Company accounts for share-based payment transactions issued to employees under the guidance of the Topic 718 Compensation--Stock Compensation of the FASB Accounting Standards Codification ("ASC Topic 718"). Pursuant to ASC Section 718-10-20 an employee is an individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Internal Revenue Service ("IRS") Revenue Ruling 87-41. A non-employee director does not satisfy this definition of employee. Nevertheless, non-employee directors acting in their role as members of a board of directors are treated as employees if those directors were elected by the employer's shareholders or appointed to a board position that will be filled by shareholder election when the existing term expires. However, that requirement applies only to awards granted to non-employee directors for their services as directors. Awards granted to non-employee directors for other services shall be accounted for as awards to non-employees. Pursuant to ASC Paragraphs 718-10-30-2 and 718-10-30-3 a share-based payment transaction with employees shall be measured based on the fair value of the equity instruments issued and an entity shall account for the compensation cost from share-based payment transactions with employees in accordance with the fair value-based method, i.e., the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or the fair value of the liabilities incurred/settled. Pursuant to ASC Paragraphs 718-10-30-6 and 718-10-30-9 the measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the equity instruments that the entity is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments (for example, to exercise share options). That estimate is based on the share price and other pertinent factors, such as expected volatility, at the grant date. As such, the fair value of an equity share option or similar instrument shall be estimated using a valuation technique such as an option pricing model. For this purpose, a similar instrument is one whose fair value differs from its intrinsic value, that is, an instrument that has time value. If the Company's common shares are traded in one of the national exchanges the grant-date share price of the Company's common stock will be used to measure the fair value of the common shares issued, however, if the Company's common shares are thinly traded the use of share prices established in its most recent private placement memorandum ("PPM"), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. Pursuant to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors: a. The exercise price of the option. b. The expected term of the option, taking into account both the contractual term of the option and the effects of employees' expected exercise and post-vesting employment termination behavior: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original contractual term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. c. The current price of the underlying share. d. The expected volatility of the price of the underlying share for the expected term of the option. Pursuant to ASC Paragraph 718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of similar entities for an appropriate period following their going public. A nonpublic entity might base its expected volatility on the average volatilities of otherwise similar public entities. For purposes of identifying otherwise similar entities, an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage. Because of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted for the average of volatilities of otherwise similar entities in a fair value measurement. Pursuant to paragraph 718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility. e. The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. f. The risk-free interest rate(s) for the expected term of the option. Pursuant to ASC 718-10-55-28 a U.S. entity issuing an option on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option's contractual term. If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model. Pursuant to ASC Paragraphs 718-10-30-11 and 718-10-30-17 a restriction that stems from the forfeitability of instruments to which employees have not yet earned the right, such as the inability either to exercise a non-vested equity share option or to sell non-vested shares, is not reflected in estimating the fair value of the related instruments at the grant date. Instead, those restrictions are taken into account by recognizing compensation cost only for awards for which employees render the requisite service and a non-vested equity share or non-vested equity share unit awarded to an employee shall be measured at its fair value as if it were vested and issued on the grant date. Pursuant to ASC Paragraphs 718-10-35-2 and 718-10-35-3 the compensation cost for an award of share-based employee compensation classified as equity shall be recognized over the requisite service period, with a corresponding credit to equity (generally, paid-in capital). The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. The total amount of compensation cost recognized at the end of the requisite service period for an award of share-based compensation shall be based on the number of instruments for which the requisite service has been rendered (that is, for which the requisite service period has been completed). An entity shall base initial accruals of compensation cost on the estimated number of instruments for which the requisite service is expected to be rendered. That estimate shall be revised if subsequent information indicates that the actual number of instruments is likely to differ from previous estimates. The cumulative effect on current and prior periods of a change in the estimated number of instruments for which the requisite service is expected to be or has been rendered shall be recognized in compensation cost in the period of the change. Previously recognized compensation cost shall not be reversed if an employee share option (or share unit) for which the requisite service has been rendered expires unexercised (or unconverted). Under the requirement of ASC Paragraph 718-10-35-8 the Company made a policy decision to recognize compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification ("Sub-topic 505-50"). Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised. Pursuant to ASC Paragraphs 505-50-30-2 and 505-50-30-11 share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date: (a) The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); or (b) The date at which the counterparty's performance is complete. If the Company's common shares are traded in one of the national exchanges the grant-date share price of the Company's common stock will be used to measure the fair value of the common shares issued, however, if the Company's common shares are thinly traded the use of share prices established in the Company's most recent private placement memorandum ("PPM"), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. Pursuant to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors: a. The exercise price of the option. b. The expected term of the option, taking into account both the contractual term of the option and the effects of employees' expected exercise and post-vesting employment termination behavior: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder's expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder's expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. c. The current price of the underlying share. d. The expected volatility of the price of the underlying share for the expected term of the option. Pursuant to ASC Paragraph 718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of similar entities for an appropriate period following their going public. A nonpublic entity might base its expected volatility on the average volatilities of otherwise similar public entities. For purposes of identifying otherwise similar entities, an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage. Because of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted for the average of volatilities of otherwise similar entities in a fair value measurement. Pursuant to paragraph 718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility. e. The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. f. The risk-free interest rate(s) for the expected term of the option. Pursuant to ASC 718-10-55-28 a U.S. entity issuing an option on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option's contractual term. If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model. Pursuant to ASC paragraph 505-50-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded. Income Tax Provision The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date. The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25") with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management's opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Uncertain Tax Positions The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended July 31, 2014 or 2013. Limitation on Utilization of NOLs due to Change in Control Pursuant to the Internal Revenue Code Section 382 ("Section 382"), certain ownership changes may subject the NOL's to annual limitations which could reduce or defer the NOL. Section 382 imposes limitations on a corporation's ability to utilize NOLs if it experiences an "ownership change." In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs. Earnings per Share Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260-10-55-23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation. The total amount of potentially outstanding dilutive common shares from the conversion of the convertible notes plus accrued interest converted would be 3,962,308 and 0 for the reporting period ended July 31, 2014 and 2013, respectively. Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. Subsequent Events The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR. Recently Issued Accounting Pronouncements In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and "represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results." The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although "major" is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation. The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years. In June 2014, the FASB issued ASU 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. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity's governing documents and contractual arrangements allow additional equity investments. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

SIGNIFICANT AND CRITICAL ACCOUNTING POLICIESies

6 Months Ended

Jul. 31, 2014

SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES

SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES

The  Management  of the  Company is  responsible  for the  selection  and use of

appropriate  accounting  policies and the appropriateness of accounting policies

and their application. Critical accounting policies and practices are those that

are both most  important to the portrayal of the Company's  financial  condition

and results and require  management's  most  difficult,  subjective,  or complex

judgments,  often as a result of the need to make estimates about the effects of

matters that are inherently  uncertain.  The Company's  significant and critical

accounting  policies and practices are disclosed  below as required by generally

accepted accounting principles.

Basis of Presentation - Unaudited Interim Financial Information

The accompanying  unaudited interim financial  statements and related notes have

been prepared in accordance with accounting principles generally accepted in the

United States of America ("U.S.  GAAP") for interim financial  information,  and

with the rules and  regulations  of the United  States  Securities  and Exchange

Commission  ("SEC") to Form 10-Q and Article 8 of Regulation  S-X.  Accordingly,

they do not include all of the information  and footnotes  required by U.S. GAAP

for complete financial  statements.  The unaudited interim financial  statements

furnished  reflect all  adjustments  (consisting of normal  recurring  accruals)

which are, in the opinion of  management,  necessary to a fair  statement of the

results for the interim periods  presented.  Interim results are not necessarily

indicative of the results for the full year. These unaudited  interim  financial

statements  should  be read in  conjunction  with the  financial  statements  of

Tungsten Corp. for the period from October 30, 2012 (inception)  through January

31, 2014 and notes  thereto  contained in the Company's  Current  Report on Form

10-K filed with the SEC on March 31, 2014.

Fiscal Year-End

The Company elected January 31st as its fiscal year ending date.

Exploration Stage Company

The Company has established the existence of mineralized  material;  however, it

has not established proven or probable reserves, as defined by the United States

Securities and Exchange  Commission  (the "SEC") under Industry Guide 7, through

the  completion of a "final" or  "bankable"  feasibility  study for  mineralized

material.  As a result,  the Company remains in the Exploration Stage as defined

under  Industry  Guide 7, and will continue to remain in the  Exploration  Stage

until such time proven or probable reserves have been established.

The Company is considered an exploration stage company.  The Company has elected

to  adopt  early  application  of  Accounting   Standards  Update  No.  2014-10,

Development  Stage  Entities  (Topic  915):  Elimination  of  Certain  Financial

Reporting  Requirements.  Upon  adoption,  the  Company  no longer  presents  or

discloses   inception-to-date   information  and  other   remaining   disclosure

requirements of Topic 915.

Use  of  Estimates  and  Assumptions  and  Critical  Accounting   Estimates  and

Assumptions

The preparation of financial statements in conformity with accounting principles

generally  accepted in the United States of America requires  management to make

estimates  and  assumptions  that  affect  the  reported  amounts  of assets and

liabilities  and disclosure of contingent  assets and liabilities at the date(s)

of the financial  statements  and the reported  amounts of revenues and expenses

during the reporting period(s).

Critical  accounting  estimates  are  estimates  for which (a) the nature of the

estimate is material due to the levels of subjectivity and judgment necessary to

account for highly uncertain  matters or the  susceptibility  of such matters to

change and (b) the impact of the  estimate on  financial  condition or operating

performance  is  material.  The  Company's  critical  accounting  estimates  and

assumptions affecting the financial statements were:

     (i)  Assumption  as a going  concern:  Management  assumes that the Company

          will continue as a going  concern,  which  contemplates  continuity of

          operations,  realization of assets,  and liquidation of liabilities in

          the normal course of business;

     (ii) Valuation  allowance for deferred tax assets:  Management assumes that

          the  realization  of the Company's  net deferred tax assets  resulting

          from its net operating loss ("NOL")  carry-forwards for Federal income

          tax purposes that may be offset  against future taxable income was not

          considered  more likely than not and  accordingly,  the  potential tax

          benefits of the net loss carry-forwards are offset by a full valuation

          allowance.  Management made this  assumption  based on (a) the Company

          has incurred  recurring losses, (b) general economic  conditions,  and

          (c) its  ability  to raise  additional  funds  to  support  its  daily

          operations  by  way of a  public  or  private  offering,  among  other

          factors.

     (iii)Estimates  and  assumptions  used in valuation of equity  instruments:

          Management  estimates  expected  term of  share  options  and  similar

          instruments,  expected  volatility of the Company's  common shares and

          the method  used to estimate  it,  expected  annual rate of  quarterly

          dividends,  and risk free  rate(s) to value share  options and similar

          instruments.

These  significant  accounting  estimates or assumptions bear the risk of change

due to the fact that there are  uncertainties  attached  to these  estimates  or

assumptions,  and certain  estimates or assumptions  are difficult to measure or

value.

Management  bases  its  estimates  on  historical   experience  and  on  various

assumptions  that are  believed to be  reasonable  in relation to the  financial

statements taken as a whole 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.

Management  regularly  evaluates the key factors and assumptions used to develop

the estimates utilizing currently  available  information,  changes in facts and

circumstances,  historical  experience  and reasonable  assumptions.  After such

evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Principles of Consolidation

The  Company  applies  the  guidance  of Topic 810  "Consolidation"  of the FASB

Accounting  Standards  Codification to determine  whether and how to consolidate

another  entity.  Pursuant  to ASC  Paragraph  810-10-15-10  all  majority-owned

subsidiaries--all  entities  in  which  a  parent  has a  controlling  financial

interest--shall  be consolidated  except (1) when control does not rest with the

parent,  the majority  owner;  (2) if the parent is a  broker-dealer  within the

scope of Topic 940 and control is likely to be temporary;  (3)  consolidation by

an investment company within the scope of Topic 946 of a  non-investment-company

investee.  Pursuant  to ASC  Paragraph  810-10-15-8  the usual  condition  for a

controlling financial interest is ownership of a majority voting interest,  and,

therefore,  as a general rule  ownership by one  reporting  entity,  directly or

indirectly,  of more than 50 percent of the outstanding voting shares of another

entity is a condition  pointing toward  consolidation.  The power to control may

also exist with a lesser  percentage  of  ownership,  for example,  by contract,

lease,  agreement  with other  stockholders,  or by court  decree.  The  Company

consolidates  all  less-than-majority-owned  subsidiaries,  if any, in which the

parent's power to control exists.

The Company's consolidated subsidiary and/or entity is as follows:

                                                                   Date of incorporation

                                                                       or formation

Name of consolidated            State or other jurisdiction of     (date of acquisition,

subsidiary or entity            incorporation or organization          if applicable)        Attributable interest

--------------------            -----------------------------          --------------        ---------------------

Nevada Tungsten Holdings Ltd.       The State of Nevada               October 30, 2012               100%

                                                                       (April 8, 2013)

These consolidated  financial  statements include all accounts of the Company as

of July 31,  2014 and for the period  from  April 8, 2013 (date of  acquisition)

through July 31, 2014; and Nevada Tungsten Holdings Ltd. as of July 31, 2014 and

2013,  for the period ended July 31,  2014,  and for the period from October 30,

2012 (inception) through July 31, 2014.

All inter-company balances and transactions have been eliminated.

Reclassification

Certain amounts in the prior period financial  statements have been reclassified

to conform to the current period presentation.  These  reclassifications  had no

effect on reported losses.

Fair Value of Financial Instruments

The Company follows  paragraph  820-10-35-37  of the FASB  Accounting  Standards

Codification  ("Paragraph  820-10-35-37")  to  measure  the  fair  value  of its

financial  instruments  and  paragraph   825-10-50-10  of  the  FASB  Accounting

Standards  Codification  for  disclosures  about  fair  value  of its  financial

instruments.  Paragraph 820-10-35-37  establishes a framework for measuring fair

value in  accounting  principles  generally  accepted  in the  United  States of

America (U.S. GAAP), and expands disclosures about fair value  measurements.  To

increase  consistency and  comparability in fair value  measurements and related

disclosures,  Paragraph  820-10-35-37  establishes a fair value  hierarchy which

prioritizes  the inputs to valuation  techniques used to measure fair value into

three (3) broad levels.  The three (3) levels of fair value hierarchy defined by

Paragraph 820-10-35-37 are described below:

Level 1    Quoted market prices available in active markets for identical assets

           or liabilities as of the reporting date.

Level 2    Pricing inputs other than quoted prices in active markets included in

           Level 1, which are either directly or indirectly observable as of the

           reporting date.

Level 3    Pricing  inputs  that  are  generally   observable   inputs  and  not

           corroborated by market data.

Financial  assets are  considered  Level 3 when their fair values are determined

using pricing models,  discounted cash flow  methodologies or similar techniques

and at least one significant model assumption or input is unobservable.

The  fair  value  hierarchy   gives  the  highest   priority  to  quoted  prices

(unadjusted)  in active  markets for  identical  assets or  liabilities  and the

lowest  priority  to  unobservable  inputs.  If the inputs  used to measure  the

financial  assets and  liabilities  fall  within  more than one level  described

above, the categorization is based on the lowest level input that is significant

to the fair value measurement of the instrument.

The carrying amounts of the Company's financial assets and liabilities,  such as

cash,  accounts  payable  and  accrued  expenses  approximate  their fair values

because of the short maturity of these instruments.

The Company  uses Level 3 of the fair value  hierarchy to measure the fair value

of the derivative  liabilities  and revalues its  derivative  liability at every

reporting  period and recognizes gains or losses in the statements of operations

that are attributable to the change in the fair value of the derivative  warrant

liability.

Transactions  involving  related parties cannot be presumed to be carried out on

an arm's-length basis, as the requisite  conditions of competitive,  free-market

dealings may not exist. Representations about transactions with related parties,

if made, shall not imply that the related party transactions were consummated on

terms equivalent to those that prevail in arm's-length  transactions unless such

representations can be substantiated.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Level 3 Financial Liabilities - Derivative conversion features

The Company  uses Level 3 of the fair value  hierarchy to measure the fair value

of the derivative  liabilities and revalues its derivative warrant liability and

derivative  liability on the conversion  feature at every  reporting  period and

recognizes gains or losses in the consolidated statements of operations that are

attributable to the change in the fair value of the derivative liabilities.

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted paragraph  360-10-35-17 of the FASB Accounting Standards

Codification for its long-lived assets. The Company's  long-lived assets,  which

include  mineral  properties,  are reviewed for  impairment  whenever  events or

changes in  circumstances  indicate that the carrying amount of an asset may not

be recoverable.

The Company assesses the  recoverability  of its long-lived  assets by comparing

the projected undiscounted net cash flows associated with the related long-lived

asset or group of long-lived assets over their remaining  estimated useful lives

against their respective carrying amounts.  Impairment,  if any, is based on the

excess of the carrying amount over the fair value of those assets. Fair value is

generally  determined using the asset's expected future discounted cash flows or

market value, if readily determinable. If long-lived assets are determined to be

recoverable,  but the newly  determined  remaining  estimated  useful  lives are

shorter than originally estimated,  the net book values of the long-lived assets

are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important  indicators

that may trigger an impairment  review:  (i)  significant  under-performance  or

losses of assets relative to expected  historical or projected  future operating

results;  (ii)  significant  changes  in the  manner  or use of assets or in the

Company's  overall  strategy  with  respect to the manner or use of the acquired

assets or changes in the Company's overall business strategy;  (iii) significant

negative industry or economic trends; (iv) increased competitive pressures;  and

(v) regulatory  changes.  The Company  evaluates  acquired  assets for potential

impairment  indicators at least annually and more frequently upon the occurrence

of such events.

Management  periodically  reviews the recoverability of the capitalized  mineral

properties.   Management  will  take  into  consideration   various  information

including, but not limited to, historical production records taken from previous

mine operations,  results of exploration activities conducted to date, estimated

future  prices  and  reports  and  opinions  of  outside  consultants.   When  a

determination has been made that a project or property will be abandoned, or its

carrying value has been  impaired,  a provision is made for any expected loss on

the project or property.

Cash Equivalents

The Company  considers  all highly liquid  investments  with a maturity of three

months or less when purchased to be cash equivalents.

Mineral Properties

The Company follows Section 930 of the FASB  Accounting  Standards  Codification

for its  mineral  properties.  Mineral  properties  and related  mineral  rights

acquisition costs are capitalized pending  determination of whether the drilling

has found proved  reserves.  In accordance  with the Disclosure  requirements of

Section  350-30-50-2,  the Company capitalizes costs incurred to renew or extend

the  term or  requirements  that  need to be met for  retention  of the  mineral

properties.  If a mineral  ore body is  discovered,  capitalized  costs  will be

amortized  on  a   unit-of-production   basis  following  the   commencement  of

production.  Otherwise,  capitalized  acquisition  costs are expensed when it is

determined  that the mineral  property  has no future  economic  value.  General

exploration  costs and costs to maintain rights and leases,  including rights of

access to lands for geophysical work and salaries,  equipment,  and supplies for

geologists and geophysical crews are expensed as incurred. When it is determined

that a mining  deposit can be  economically  and legally  extracted  or produced

based on established proven and probable reserves, further exploration costs and

development  costs  as  well as  interest  costs  relating  to  exploration  and

development  projects that require greater than six (6) months to be readied for

their intended use incurred after such  determination  will be capitalized.  The

establishment  of proven  and  probable  reserves  is based on  results of final

feasibility studies which indicate whether a property is economically  feasible.

Upon   commencement  of  commercial   production,   capitalized  costs  will  be

transferred   to  the   appropriate   asset   categories   and  amortized  on  a

unit-of-production  basis. Capitalized costs, net of salvage values, relating to

a deposit which is abandoned or considered uneconomic for the foreseeable future

will be written  off.  The sale of a partial  interest  in a proved  property is

accounted  for as a cost  recovery and no gain or loss is  recognized as long as

this treatment does not significantly affect the unit-of-production amortization

rate. A gain or loss will be recognized for all other sales of proved properties

and will be classified in other operating revenues.  Maintenance and repairs are

charged  to  expense,  and  renewals  and  betterments  are  capitalized  to the

appropriate property and equipment accounts.

The provision for depreciation,  depletion and amortization  ("DD&A") of mineral

properties  will  be  calculated  on  a  property-by-property  basis  using  the

unit-of-production  method.  Taken into consideration in the calculation of DD&A

are estimated future dismantlement, restoration and abandonment costs, which are

net of estimated salvage values. Upon becoming fully amortized, the related cost

and accumulated amortization are removed from the accounts.

To date,  the Company has not  established  the  commercial  feasibility  of any

exploration  prospects;  therefore,  all general  exploration costs, if any, are

being expensed.

Mineral Exploration and Mine Development Costs

All mineral exploration and pre-extraction expenditures are expensed as incurred

until such time the Company exits the Exploration  Stage by establishing  proven

or  probable  reserves.  Mine  development  costs  incurred  to develop  mineral

deposits, to expand the capacity of mines or to develop mine areas substantially

in advance of  production  are  capitalized  once proven and  probable  reserves

exist,  and the property is determined to be a commercially  mineable  property.

Costs incurred to maintain current production or to maintain assets on a standby

basis  are  charged  to  operations.  If the  Company  does  not  continue  with

exploration  after the completion of the feasibility  study, the cost of mineral

rights will be expensed at that time.  Costs of  abandoned  projects,  including

related property and equipment costs, are charged to mining costs.

Restoration Costs (Asset Retirement and Environmental Obligations)

Various  federal and state  mining laws and  regulations  require the Company to

reclaim the surface  areas and restore  underground  water  quality for its mine

projects to the  pre-existing  mine area average quality after the completion of

mining.

In accordance with ASC 410, Asset Retirement and Environmental Obligations,  the

Company   capitalizes   the  measured  fair  value  of  asset   retirement   and

environmental obligations to mineral rights and properties. ASC 410 requires the

Company to record a liability for the present value of the estimated future site

restoration and environmental  remediation costs with corresponding  increase to

the carrying  amount of the related  mineral  rights and  properties.  The asset

retirement and environmental  obligations are accreted to an undiscounted  value

until the time at which they are expected to be settled.  The accretion  expense

is charged to earnings and the actual  retirement costs are recorded against the

asset retirement  obligations when incurred. Any difference between the recorded

asset  retirement  obligations and the actual  retirement costs incurred will be

recorded as a gain or loss in the period of settlement.

Environmental  expenditures that relate to ongoing environmental and reclamation

programs  will be charged  against  statements  of  operations  as  incurred  or

capitalized and amortized depending upon their future economic benefits.  Future

site restoration and environmental  remediation  costs, which include extraction

equipment removal, site restoration and environmental  remediation,  are accrued

at the end of each reporting  period based on management's  best estimate of the

costs expected to be incurred for each project. Such estimates are determined by

the Company's engineering studies which consider the costs of future surface and

groundwater  activities,  current  regulations,  actual expenses  incurred,  and

technology and industry standards.

On a quarterly  basis,  the Company reviews the assumptions used to estimate the

expected  cash  flows  required  to  settle  the asset  retirement  obligations,

including  changes  in  estimated  probabilities,  amounts  and  timing  of  the

settlement of the asset  retirement and  environmental  obligations,  as well as

changes in the legal  obligation  requirements at each of its mineral  projects.

Changes  in any one or more of these  assumptions  may cause  revision  of asset

retirement obligations for the corresponding assets.

The Company does not currently  anticipate any material capital expenditures for

site restoration costs and considers the estimated future site restoration costs

to be minimal and so the present value of the same at October 31, 2013 as all of

its mineral properties are at early stages of exploration.

Related Parties

The  Company  follows   subtopic   850-10  of  the  FASB  Accounting   Standards

Codification for the identification of related parties and disclosure of related

party transactions.

Pursuant to Section  850-10-20 the Related  parties include a. affiliates of the

Company;  b. Entities for which  investments in their equity securities would be

required,  absent the  election  of the fair value  option  under the Fair Value

Option Subsection of Section 825-10-15, to be accounted for by the equity method

by the investing entity; c. trusts for the benefit of employees, such as pension

and  profit-sharing  trusts  that are  managed  by or under the  trusteeship  of

management; d. principal owners of the Company; e. management of the Company; f.

other  parties  with which the  Company  may deal if one party  controls  or can

significantly  influence the management or operating policies of the other to an

extent  that one of the  transacting  parties  might  be  prevented  from  fully

pursuing its own separate interests; and g. Other parties that can significantly

influence the  management or operating  policies of the  transacting  parties or

that  have an  ownership  interest  in one of the  transacting  parties  and can

significantly  influence  the  other  to an  extent  that  one  or  more  of the

transacting  parties  might be  prevented  from fully  pursuing its own separate

interests.

The financial  statements  shall include  disclosures of material  related party

transactions,  other than compensation  arrangements,  expense  allowances,  and

other similar items in the ordinary course of business.  However,  disclosure of

transactions  that are eliminated in the preparation of consolidated or combined

financial statements is not required in those statements.  The disclosures shall

include: a. the nature of the relationship(s)  involved; b. a description of the

transactions, including transactions to which no amounts or nominal amounts were

ascribed, for each of the periods for which income statements are presented, and

such other  information  deemed  necessary to an understanding of the effects of

the  transactions  on  the  financial  statements;  c.  the  dollar  amounts  of

transactions  for each of the periods for which income  statements are presented

and the effects of any change in the method of establishing  the terms from that

used in the preceding  period;  and d. amounts due from or to related parties as

of the date of each balance sheet presented and, if not otherwise apparent,  the

terms and manner of settlement.

Derivative Instruments and Hedging Activities

The Company  accounts  for  derivative  instruments  and hedging  activities  in

accordance  with  paragraph   810-10-05-4  of  the  FASB  Accounting   Standards

Codification ("Paragraph 810-10-05-4"). Paragraph 810-10-05-4 requires companies

to recognize all  derivative  instruments as either assets or liabilities in the

balance sheet at fair value.  The  accounting for changes in the fair value of a

derivative  instrument  depends  upon:  (i)  whether  the  derivative  has  been

designated and qualifies as part of a hedging relationship, and (ii) the type of

hedging relationship.  For those derivative  instruments that are designated and

qualify as hedging instruments,  a company must designate the hedging instrument

based upon the exposure  being  hedged as either a fair value  hedge,  cash flow

hedge or hedge of a net investment in a foreign operation.

Derivative Liability

The  Company  evaluates  its  convertible  debt,  options,   warrants  or  other

contracts,  if any, to determine if those  contracts or embedded  components  of

those  contracts  qualify  as  derivatives  to be  separately  accounted  for in

accordance  with  paragraph  810-10-05-4  and  Section  815-40-25  of  the  FASB

Accounting  Standards  Codification.  The result of this accounting treatment is

that the fair value of the embedded derivative is marked-to-market  each balance

sheet date and recorded as either an asset or a liability. In the event that the

fair value is recorded as a  liability,  the change in fair value is recorded in

the  consolidated  statement of operations  and  comprehensive  income (loss) as

other  income  or  expense.  Upon  conversion,  exercise  or  cancellation  of a

derivative  instrument,  the  instrument  is marked to fair value at the date of

conversion,  exercise or  cancellation  and then that the related  fair value is

reclassified to equity.

In  circumstances   where  the  embedded  conversion  option  in  a  convertible

instrument  is  required  to be  bifurcated  and there are also  other  embedded

derivative  instruments in the  convertible  instrument  that are required to be

bifurcated, the bifurcated derivative instruments are accounted for as a single,

compound derivative instrument.

The classification of derivative instruments, including whether such instruments

should be recorded as  liabilities  or as equity,  is  re-assessed at the end of

each  reporting  period.  Equity  instruments  that are initially  classified as

equity that become subject to reclassification  are reclassified to liability at

the fair  value  of the  instrument  on the  reclassification  date.  Derivative

instrument  liabilities  will be  classified  in the balance sheet as current or

non-current  based on  whether  or not  net-cash  settlement  of the  derivative

instrument is expected within 12 months of the balance sheet date.

The  Company  adopted  Section  815-40-15  of  the  FASB  Accounting   Standards

Codification  ("Section  815-40-15")  to determine  whether an instrument (or an

embedded  feature)  is indexed to the  Company's  own stock.  Section  815-40-15

provides  that an entity should use a two-step  approach to evaluate  whether an

equity-linked  financial  instrument (or embedded feature) is indexed to its own

stock, including evaluating the instrument's  contingent exercise and settlement

provisions.  The adoption of Section  815-40-15 has affected the  accounting for

(i)  certain  freestanding  warrants  that  contain  exercise  price  adjustment

features and (ii) convertible bonds issued by foreign subsidiaries with a strike

price denominated in a foreign currency.

The Company marks to market the fair value of the embedded  derivative  warrants

at each  balance  sheet  date and  records  the  change in the fair value of the

embedded  derivative  warrants  as other  income or expense in the  consolidated

statements of operations and comprehensive income (loss).

The  Company  utilizes  the  Lattice  model  that  values the  liability  of the

derivative  warrants based on a probability  weighted discounted cash flow model

with the  assistance of the third party  valuation  firm. The reason the Company

picks the Lattice  model is that in many cases  there may be  multiple  embedded

features or the features of the bifurcated  derivatives may be so complex that a

Black-Scholes  valuation  does not consider all of the terms of the  instrument.

Therefore, the fair value may not be appropriately captured by simple models. In

other words,  simple models such as Black-Scholes may not be appropriate in many

situations given complex features and terms of conversion option (e.g., combined

embedded  derivatives).  The Lattice model is based on future projections of the

various  potential  outcomes.  The features that were analyzed and  incorporated

into the model  included the exercise  and full reset  features.  Based on these

features,  there are two primary events that can occur; the Holder exercises the

Warrants or the Warrants are held to expiration.  The Lattice model analyzed the

underlying  economic  factors that influenced which of these events would occur,

when they were likely to occur,  and the specific  terms that would be in effect

at the time (i.e. stock price, exercise price,  volatility,  etc.).  Projections

were then made on the  underlying  factors  which  led to  potential  scenarios.

Probabilities  were assigned to each scenario  based on management  projections.

This led to a cash flow  projection and a probability  associated with that cash

flow. A discounted  weighted  average cash flow over the various  scenarios  was

completed to determine the value of the derivative warrants.

Beneficial Conversion Feature

When the Company  issues an debt or equity  security  that is  convertible  into

common  stock at a discount  from the fair value of the common stock at the date

the debt or equity security counterparty is legally committed to purchase such a

security  (Commitment  Date),  a  beneficial  conversion  charge is measured and

recorded on the Commitment Date for the difference between the fair value of the

Company's common stock and the effective  conversion price of the debt or equity

security. If the intrinsic value of the beneficial conversion feature is greater

than the proceeds  allocated to the debt or equity  security,  the amount of the

discount assigned to the beneficial  conversion feature is limited to the amount

of the proceeds allocated to the debt or equity security.

Commitment and Contingencies

The  Company  follows   subtopic   450-20  of  the  FASB  Accounting   Standards

Codification  to report  accounting for  contingencies.  Certain  conditions may

exist as of the date the consolidated financial statements are issued, which may

result in a loss to the Company but which will only be resolved when one or more

future  events  occur or fail to occur.  The Company  assesses  such  contingent

liabilities, and such assessment inherently involves an exercise of judgment. In

assessing  loss  contingencies  related to legal  proceedings  that are  pending

against the Company or  unasserted  claims that may result in such  proceedings,

the  Company  evaluates  the  perceived  merits  of  any  legal  proceedings  or

unasserted claims as well as the perceived merits of the amount of relief sought

or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material

loss has been incurred and the amount of the  liability  can be estimated,  then

the estimated liability would be accrued in the Company's consolidated financial

statements.  If the  assessment  indicates  that  a  potentially  material  loss

contingency  is not  probable  but is  reasonably  possible,  or is probable but

cannot  be  estimated,  then the  nature  of the  contingent  liability,  and an

estimate of the range of possible losses, if determinable and material, would be

disclosed.

Loss  contingencies  considered  remote are generally not disclosed  unless they

involve guarantees, in which case the guarantees would be disclosed.  Management

does not believe,  based upon  information  available  at this time,  that these

matters  will  have a  material  adverse  effect on the  Company's  consolidated

financial position,  results of operations or cash flows.  However,  there is no

assurance  that such  matters  will not  materially  and  adversely  affect  the

Company's business, financial position, and results of operations or cash flows.

Revenue Recognition

The Company follows  paragraph  605-10-S99-1  of the FASB  Accounting  Standards

Codification for revenue recognition. The Company will recognize revenue when it

is realized or realizable and earned.  The Company considers revenue realized or

realizable and earned when all of the following criteria are met: (i) persuasive

evidence of an  arrangement  exists,  (ii) the  product has been  shipped or the

services have been  rendered to the customer,  (iii) the sales price is fixed or

determinable and, (iv) collectability is reasonably assured.

Stock-Based Compensation for Obtaining Employee Services

The Company accounts for share-based  payment  transactions  issued to employees

under the guidance of the Topic 718 Compensation--Stock Compensation of the FASB

Accounting Standards Codification ("ASC Topic 718").

Pursuant to ASC Section  718-10-20  an employee is an  individual  over whom the

grantor  of a  share-based  compensation  award  exercises  or has the  right to

exercise sufficient control to establish an employer-employee relationship based

on common law as  illustrated  in case law and  currently  under  U.S.  Internal

Revenue Service  ("IRS") Revenue Ruling 87-41. A non-employee  director does not

satisfy this definition of employee. Nevertheless, non-employee directors acting

in their role as members of a board of  directors  are treated as  employees  if

those  directors were elected by the employer's  shareholders  or appointed to a

board  position  that will be filled by  shareholder  election when the existing

term  expires.  However,  that  requirement  applies  only to awards  granted to

non-employee  directors  for their  services  as  directors.  Awards  granted to

non-employee  directors for other  services  shall be accounted for as awards to

non-employees.

Pursuant to ASC Paragraphs  718-10-30-2  and  718-10-30-3 a share-based  payment

transaction  with  employees  shall be  measured  based on the fair value of the

equity  instruments issued and an entity shall account for the compensation cost

from share-based payment transactions with employees in accordance with the fair

value-based  method,  i.e.,  the cost of services  received  from  employees  in

exchange  for awards of  share-based  compensation  generally  shall be measured

based on the grant-date fair value of the equity  instruments issued or the fair

value of the liabilities incurred/settled.

Pursuant to ASC Paragraphs 718-10-30-6 and 718-10-30-9 the measurement objective

for equity instruments awarded to employees is to estimate the fair value at the

grant date of the equity  instruments that the entity is obligated to issue when

employees have rendered the requisite service and satisfied any other conditions

necessary to earn the right to benefit from the  instruments  (for  example,  to

exercise  share  options).  That  estimate is based on the share price and other

pertinent factors, such as expected volatility,  at the grant date. As such, the

fair value of an equity  share option or similar  instrument  shall be estimated

using a valuation technique such as an option pricing model. For this purpose, a

similar  instrument is one whose fair value  differs from its  intrinsic  value,

that is, an instrument that has time value.

If the Company's  common shares are traded in one of the national  exchanges the

grant-date share price of the Company's common stock will be used to measure the

fair value of the common shares issued,  however, if the Company's common shares

are thinly traded the use of share prices established in its most recent private

placement  memorandum  ("PPM"),  or weekly or monthly price  observations  would

generally be more appropriate  than the use of daily price  observations as such

shares could be artificially inflated due to a larger spread between the bid and

asked quotes and lack of consistent trading in the market.

Pursuant to ASC  Paragraph  718-10-55-21  if an  observable  market price is not

available  for a share  option or  similar  instrument  with the same or similar

terms and conditions, an entity shall estimate the fair value of that instrument

using a valuation  technique or model that meets the  requirements  in paragraph

718-10-55-11 and takes into account, at a minimum, all of the following factors:

     a.   The exercise price of the option.

     b.   The  expected  term  of the  option,  taking  into  account  both  the

          contractual term of the option and the effects of employees'  expected

          exercise  and  post-vesting   employment   termination  behavior:  The

          expected life of options and similar instruments represents the period

          of time the option  and/or  warrant are  expected  to be  outstanding.

          Pursuant to paragraph  718-10-S99-1,  it may be appropriate to use the

          simplified  method,  i.e.,  expected term = ((vesting  term + original

          contractual  term) / 2),  if (i) A  company  does not have  sufficient

          historical  exercise data to provide a reasonable  basis upon which to

          estimate  expected  term due to the limited  period of time its equity

          shares have been publicly traded; (ii) A company significantly changes

          the terms of its share option  grants or the types of  employees  that

          receive share option grants such that its historical exercise data may

          no longer provide a reasonable  basis upon which to estimate  expected

          term; or (iii) A company has or expects to have significant structural

          changes in its business such that its historical  exercise data may no

          longer  provide a  reasonable  basis upon which to  estimate  expected

          term.  The Company uses the  simplified  method to calculate  expected

          term of share options and similar  instruments as the company does not

          have sufficient historical exercise data to provide a reasonable basis

          upon which to estimate expected term.

     c.   The current price of the underlying share.

     d.   The expected  volatility of the price of the underlying  share for the

          expected term of the option.  Pursuant to ASC Paragraph 718-10-55-25 a

          newly  publicly  traded  entity might base  expectations  about future

          volatility  on the average  volatilities  of similar  entities  for an

          appropriate  period  following their going public.  A nonpublic entity

          might base its  expected  volatility  on the average  volatilities  of

          otherwise  similar  public  entities.   For  purposes  of  identifying

          otherwise   similar   entities,   an  entity  would  likely   consider

          characteristics  such as  industry,  stage of life  cycle,  size,  and

          financial leverage. Because of the effects of diversification that are

          present in an industry sector index, the volatility of an index should

          not be  substituted  for the  average  of  volatilities  of  otherwise

          similar  entities in a fair value  measurement.  Pursuant to paragraph

          718-10-S99-1  if shares  of a company  are  thinly  traded  the use of

          weekly  or  monthly  price   observations   would  generally  be  more

          appropriate than the use of daily price observations as the volatility

          calculation  using  daily   observations  for  such  shares  could  be

          artificially inflated due to a larger spread between the bid and asked

          quotes and lack of consistent  trading in the market. The Company uses

          the average historical volatility of the comparable companies over the

          expected  term of the share  options  or  similar  instruments  as its

          expected volatility.

     e.   The expected  dividends on the underlying  share for the expected term

          of the option.  The expected  dividend yield is based on the Company's

          current  dividend  yield as the best  estimate of  projected  dividend

          yield for periods  within the expected  term of the share  options and

          similar instruments.

     f.   The  risk-free  interest  rate(s) for the expected term of the option.

          Pursuant to ASC  718-10-55-28  a U.S.  entity issuing an option on its

          own shares must use as the risk-free interest rates the implied yields

          currently  available from the U.S.  Treasury  zero-coupon  yield curve

          over the  contractual  term of the  option  if the  entity  is using a

          lattice  model  incorporating  the option's  contractual  term. If the

          entity is using a closed-form  model,  the risk-free  interest rate is

          the implied yield  currently  available on U.S.  Treasury  zero-coupon

          issues with a remaining  term equal to the  expected  term used as the

          assumption in the model.

Pursuant to ASC Paragraphs  718-10-30-11  and  718-10-30-17  a restriction  that

stems from the  forfeitability  of instruments  to which  employees have not yet

earned the right,  such as the inability either to exercise a non-vested  equity

share option or to sell  non-vested  shares,  is not reflected in estimating the

fair  value  of the  related  instruments  at the  grant  date.  Instead,  those

restrictions  are taken into account by recognizing  compensation  cost only for

awards for which employees render the requisite  service and a non-vested equity

share or non-vested  equity share unit awarded to an employee  shall be measured

at its fair value as if it were vested and issued on the grant date.

Pursuant to ASC Paragraphs 718-10-35-2 and 718-10-35-3 the compensation cost for

an award of  share-based  employee  compensation  classified  as equity shall be

recognized  over the requisite  service period,  with a corresponding  credit to

equity (generally,  paid-in capital). The requisite service period is the period

during  which an  employee is  required  to provide  service in exchange  for an

award,  which often is the vesting period. The total amount of compensation cost

recognized  at  the  end  of the  requisite  service  period  for  an  award  of

share-based  compensation  shall be based on the number of instruments for which

the  requisite  service  has been  rendered  (that is,  for which the  requisite

service  period has been  completed).  An entity shall base initial  accruals of

compensation cost on the estimated number of instruments for which the requisite

service is expected to be rendered. That estimate shall be revised if subsequent

information  indicates that the actual number of instruments is likely to differ

from previous estimates. The cumulative effect on current and prior periods of a

change in the estimated number of instruments for which the requisite service is

expected to be or has been rendered shall be recognized in compensation  cost in

the period of the change.  Previously recognized  compensation cost shall not be

reversed if an  employee  share  option (or share unit) for which the  requisite

service has been rendered expires unexercised (or unconverted).

Under the  requirement  of ASC Paragraph  718-10-35-8  the Company made a policy

decision  to  recognize  compensation  cost  for  an  award  with  only  service

conditions that has a graded vesting schedule on a straight-line  basis over the

requisite service period for the entire award.

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or

Services

The  Company  accounts  for  equity  instruments  issued to  parties  other than

employees for acquiring goods or services under the guidance of Sub-topic 505-50

of the FASB Accounting Standards Codification ("Sub-topic 505-50").

Pursuant to ASC paragraph 505-50-25-7,  if fully vested,  non-forfeitable equity

instruments  are  issued  at the date the  grantor  and  grantee  enter  into an

agreement  for goods or services  (no  specific  performance  is required by the

grantee to retain those equity instruments), then, because of the elimination of

any obligation on the part of the counterparty to earn the equity instruments, a

measurement  date has  been  reached.  A  grantor  shall  recognize  the  equity

instruments  when they are issued (in most cases,  when the agreement is entered

into). Whether the corresponding cost is an immediate expense or a prepaid asset

(or  whether  the  debit  should be  characterized  as  contra-equity  under the

requirements  of  paragraph  505-50-45-1)  depends  on the  specific  facts  and

circumstances.  Pursuant to ASC  paragraph  505-50-45-1,  a grantor may conclude

that an asset (other than a note or a  receivable)  has been  received in return

for fully vested, non-forfeitable equity instruments that are issued at the date

the grantor and grantee  enter into an agreement  for goods or services  (and no

specific  performance is required by the grantee in order to retain those equity

instruments).  Such an asset  shall not be  displayed  as  contra-equity  by the

grantor of the equity instruments.  The transferability (or lack thereof) of the

equity instruments shall not affect the balance sheet display of the asset. This

guidance is limited to transactions in which equity  instruments are transferred

to other than employees in exchange for goods or services.

Pursuant to Paragraphs  505-50-25-8 and  505-50-25-9,  an entity may grant fully

vested,  non-forfeitable  equity instruments that are exercisable by the grantee

only after a specified period of time if the terms of the agreement  provide for

earlier exercisability if the grantee achieves specified performance conditions.

Any measured cost of the  transaction  shall be recognized in the same period(s)

and in the same  manner as if the entity had paid cash for the goods or services

or used cash rebates as a sales discount  instead of paying with, or using,  the

equity instruments.  A recognized asset, expense, or sales discount shall not be

reversed  if a stock  option  that the  counterparty  has the right to  exercise

expires unexercised.

Pursuant to ASC Paragraphs  505-50-30-2  and  505-50-30-11  share-based  payment

transactions  with  nonemployees  shall be  measured  at the  fair  value of the

consideration  received  or the fair  value of the  equity  instruments  issued,

whichever is more reliably  measurable.  The issuer shall measure the fair value

of the equity  instruments in these transactions using the stock price and other

measurement assumptions as of the earlier of the following dates, referred to as

the measurement  date: (a) The date at which a commitment for performance by the

counterparty   to  earn  the  equity   instruments  is  reached  (a  performance

commitment);  or (b)  The  date  at  which  the  counterparty's  performance  is

complete.  If the  Company's  common  shares are  traded in one of the  national

exchanges the grant-date  share price of the Company's common stock will be used

to measure the fair value of the common shares issued, however, if the Company's

common  shares are  thinly  traded the use of share  prices  established  in the

Company's most recent private placement memorandum ("PPM"), or weekly or monthly

price  observations  would generally be more  appropriate  than the use of daily

price observations as such shares could be artificially inflated due to a larger

spread  between the bid and asked quotes and lack of  consistent  trading in the

market.

Pursuant to ASC  Paragraph  718-10-55-21  if an  observable  market price is not

available  for a share  option or  similar  instrument  with the same or similar

terms and conditions, an entity shall estimate the fair value of that instrument

using a valuation  technique or model that meets the  requirements  in paragraph

718-10-55-11 and takes into account, at a minimum, all of the following factors:

     a.   The exercise price of the option.

     b.   The  expected  term  of the  option,  taking  into  account  both  the

          contractual term of the option and the effects of employees'  expected

          exercise and post-vesting employment termination behavior: Pursuant to

          Paragraph   718-10-50-2(f)(2)(i)  of  the  FASB  Accounting  Standards

          Codification   the  expected   term  of  share   options  and  similar

          instruments  represents  the period of time the  options  and  similar

          instruments are expected to be outstanding  taking into  consideration

          of the  contractual  term of the  instruments  and  holder's  expected

          exercise  behavior  into the fair value (or  calculated  value) of the

          instruments.  The Company uses  historical  data to estimate  holder's

          expected  exercise  behavior.   If  the  Company  is  a  newly  formed

          corporation or shares of the Company are thinly traded the contractual

          term of the  share  options  and  similar  instruments  is used as the

          expected term of share options and similar  instruments as the Company

          does  not  have  sufficient  historical  exercise  data to  provide  a

          reasonable basis upon which to estimate expected term.

     c.   The current price of the underlying share.

     d.   The expected  volatility of the price of the underlying  share for the

          expected term of the option.  Pursuant to ASC Paragraph 718-10-55-25 a

          newly  publicly  traded  entity might base  expectations  about future

          volatility  on the average  volatilities  of similar  entities  for an

          appropriate  period  following their going public.  A nonpublic entity

          might base its  expected  volatility  on the average  volatilities  of

          otherwise  similar  public  entities.   For  purposes  of  identifying

          otherwise   similar   entities,   an  entity  would  likely   consider

          characteristics  such as  industry,  stage of life  cycle,  size,  and

          financial leverage. Because of the effects of diversification that are

          present in an industry sector index, the volatility of an index should

          not be  substituted  for the  average  of  volatilities  of  otherwise

          similar  entities in a fair value  measurement.  Pursuant to paragraph

          718-10-S99-1  if shares  of a company  are  thinly  traded  the use of

          weekly  or  monthly  price   observations   would  generally  be  more

          appropriate than the use of daily price observations as the volatility

          calculation  using  daily   observations  for  such  shares  could  be

          artificially inflated due to a larger spread between the bid and asked

          quotes and lack of consistent  trading in the market. The Company uses

          the average historical volatility of the comparable companies over the

          expected  term of the share  options  or  similar  instruments  as its

          expected volatility.

     e.   The expected  dividends on the underlying  share for the expected term

          of the option.  The expected  dividend yield is based on the Company's

          current  dividend  yield as the best  estimate of  projected  dividend

          yield for periods  within the expected  term of the share  options and

          similar instruments.

     f.   The  risk-free  interest  rate(s) for the expected term of the option.

          Pursuant to ASC  718-10-55-28  a U.S.  entity issuing an option on its

          own shares must use as the risk-free interest rates the implied yields

          currently  available from the U.S.  Treasury  zero-coupon  yield curve

          over the  contractual  term of the  option  if the  entity  is using a

          lattice  model  incorporating  the option's  contractual  term. If the

          entity is using a closed-form  model,  the risk-free  interest rate is

          the implied yield  currently  available on U.S.  Treasury  zero-coupon

          issues with a remaining  term equal to the  expected  term used as the

          assumption in the model.

Pursuant  to ASC  paragraph  505-50-S99-1,  if the  Company  receives a right to

receive   future   services  in  exchange  for  unvested,   forfeitable   equity

instruments,  those equity  instruments  are treated as unissued for  accounting

purposes until the future  services are received (that is, the  instruments  are

not  considered  issued  until  they  vest).  Consequently,  there  would  be no

recognition at the measurement date and no entry should be recorded.

Income Tax Provision

The Company  accounts  for income  taxes  under  Section  740-10-30  of the FASB

Accounting  Standards  Codification,  which requires recognition of deferred tax

assets and liabilities  for the expected future tax  consequences of events that

have been  included  in the  financial  statements  or tax  returns.  Under this

method, deferred tax assets and liabilities are based on the differences between

the financial  statement and tax bases of assets and  liabilities  using enacted

tax rates in effect for the fiscal year in which the differences are expected to

reverse.  Deferred tax assets are reduced by a valuation allowance to the extent

management  concludes  it is more  likely  than not that the assets  will not be

realized.  Deferred tax assets and  liabilities  are measured  using enacted tax

rates  expected  to apply to taxable  income in the fiscal  years in which those

temporary  differences  are expected to be  recovered or settled.  The effect on

deferred tax assets and  liabilities  of a change in tax rates is  recognized in

the  Statements of Income and  Comprehensive  Income in the period that includes

the enactment date.

The  Company  adopted  section  740-10-25  of  the  FASB  Accounting   Standards

Codification  ("Section  740-10-25")  with regards to uncertainty  income taxes.

Section 740-10-25 addresses the determination of whether tax benefits claimed or

expected  to be claimed  on a tax return  should be  recorded  in the  financial

statements.  Under Section 740-10-25,  the Company may recognize the tax benefit

from an uncertain  tax position  only if it is more likely than not that the tax

position will be sustained on  examination by the taxing  authorities,  based on

the  technical  merits  of the  position.  The tax  benefits  recognized  in the

financial  statements  from  such a  position  should be  measured  based on the

largest benefit that has a greater than fifty percent (50%)  likelihood of being

realized upon ultimate  settlement.  Section 740-10-25 also provides guidance on

de-recognition,   classification,   interest  and  penalties  on  income  taxes,

accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary  differences between the tax basis

of assets and liabilities are reported in the accompanying  consolidated balance

sheets,  as well as tax  credit  carry-backs  and  carry-forwards.  The  Company

periodically  reviews the  recoverability of deferred tax assets recorded on its

consolidated  balance  sheets and provides  valuation  allowances  as management

deems necessary.

Management makes judgments as to the  interpretation  of the tax laws that might

be  challenged  upon an audit and cause  changes to  previous  estimates  of tax

liability.   In  addition,   the  Company   operates   within   multiple  taxing

jurisdictions  and is subject to audit in these  jurisdictions.  In management's

opinion,  adequate  provisions for income taxes have been made for all years. If

actual  taxable income by tax  jurisdiction  varies from  estimates,  additional

allowances or reversals of reserves may be necessary.

Uncertain Tax Positions

The Company did not take any uncertain tax positions and had no  adjustments  to

unrecognized  income tax  liabilities or benefits  pursuant to the provisions of

Section 740-10-25 for the reporting period ended July 31, 2014 or 2013.

Limitation on Utilization of NOLs due to Change in Control

Pursuant to the  Internal  Revenue  Code Section 382  ("Section  382"),  certain

ownership changes may subject the NOL's to annual limitations which could reduce

or defer the NOL. Section 382 imposes limitations on a corporation's  ability to

utilize NOLs if it  experiences  an  "ownership  change." In general  terms,  an

ownership  change may result  from  transactions  increasing  the  ownership  of

certain  stockholders  in the stock of a corporation  by more than 50 percentage

points  over  a  three-year  period.  In  the  event  of  an  ownership  change,

utilization of the NOLs would be subject to an annual  limitation  under Section

382  determined  by  multiplying  the  value  of its  stock  at the  time of the

ownership change by the applicable  long-term tax-exempt rate. Any unused annual

limitation may be carried over to later years. The imposition of this limitation

on its ability to use the NOLs to offset future  taxable  income could cause the

Company to pay U.S.  federal income taxes earlier than if such  limitation  were

not in  effect  and  could  cause  such  NOLs  to  expire  unused,  reducing  or

eliminating the benefit of such NOLs.

Earnings per Share

Earnings per share ("EPS") is the amount of earnings  attributable to each share

of common stock. For  convenience,  the term is used to refer to either earnings

or loss per share.  EPS is computed  pursuant to section  260-10-45  of the FASB

Accounting  Standards  Codification.  Pursuant  to ASC  Paragraphs  260-10-45-10

through 260-10-45-16 Basic EPS shall be computed by dividing income available to

common  stockholders  (the numerator) by the  weighted-average  number of common

shares  outstanding  (the  denominator)  during the period.  Income available to

common  stockholders  shall be computed by deducting both the dividends declared

in the  period on  preferred  stock  (whether  or not  paid)  and the  dividends

accumulated for the period on cumulative preferred stock (whether or not earned)

from income from  continuing  operations  (if that amount  appears in the income

statement) and also from net income.  The  computation of diluted EPS is similar

to the  computation  of basic EPS except that the  denominator  is  increased to

include the number of additional  common shares that would have been outstanding

if the dilutive  potential  common  shares had been issued  during the period to

reflect the  potential  dilution  that could occur from common  shares  issuable

through contingent shares issuance arrangement, stock options or warrants.

Pursuant to ASC Paragraphs  260-10-45-45-21  through 260-10-45-45-23 Diluted EPS

shall be based on the most  advantageous  conversion rate or exercise price from

the standpoint of the security  holder.  The dilutive effect of outstanding call

options and warrants  (and their  equivalents)  issued by the  reporting  entity

shall be reflected in diluted EPS by  application  of the treasury  stock method

unless the provisions of paragraphs  260-10-45-35  through 45-36 and 260-10-55-8

through 55-11 require that another method be applied. Equivalents of options and

warrants  include   non-vested  stock  granted  to  employees,   stock  purchase

contracts,  and partially paid stock subscriptions (see paragraph 260-10-55-23).

Anti-dilutive  contracts,  such as  purchased  put  options and  purchased  call

options, shall be excluded from diluted EPS. Under the treasury stock method: a.

Exercise of options and warrants shall be assumed at the beginning of the period

(or at time of  issuance,  if later)  and common  shares  shall be assumed to be

issued.  b. The proceeds from  exercise  shall be assumed to be used to purchase

common  stock at the average  market price  during the period.  (See  paragraphs

260-10-45-29  and  260-10-55-4  through  55-5.) c. The  incremental  shares (the

difference  between the number of shares assumed issued and the number of shares

assumed  purchased)  shall be  included  in the  denominator  of the diluted EPS

computation.

The total amount of  potentially  outstanding  dilutive  common  shares from the

conversion of the  convertible  notes plus accrued  interest  converted would be

3,962,308  and 0 for  the  reporting  period  ended  July  31,  2014  and  2013,

respectively.

Cash Flows Reporting

The Company adopted  paragraph  230-10-45-24  of the FASB  Accounting  Standards

Codification  for cash flows  reporting,  classifies  cash receipts and payments

according  to  whether  they  stem  from  operating,   investing,  or  financing

activities and provides  definitions of each category,  and uses the indirect or

reconciliation  method ("Indirect method") as defined by paragraph  230-10-45-25

of the FASB  Accounting  Standards  Codification  to  report  net cash flow from

operating  activities  by adjusting  net income to reconcile it to net cash flow

from  operating  activities by removing the effects of (a) all deferrals of past

operating  cash  receipts  and  payments  and all  accruals of  expected  future

operating  cash receipts and payments and (b) all items that are included in net

income that do not affect  operating  cash  receipts and  payments.  The Company

reports the reporting currency  equivalent of foreign currency cash flows, using

the  current  exchange  rate at the time of the cash  flows  and the  effect  of

exchange  rate  changes  on cash held in foreign  currencies  is  reported  as a

separate item in the reconciliation of beginning and ending balances of cash and

cash  equivalents  and  separately  provides  information  about  investing  and

financing  activities  not  resulting in cash receipts or payments in the period

pursuant  to   paragraph   830-230-45-1   of  the  FASB   Accounting   Standards

Codification.

Subsequent Events

The Company  follows the guidance in Section  855-10-50  of the FASB  Accounting

Standards Codification for the disclosure of subsequent events. The Company will

evaluate  subsequent events through the date when the financial  statements were

issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards  Codification,

the Company as an SEC filer considers its financial  statements issued when they

are widely distributed to users, such as through filing them on EDGAR.

Recently Issued Accounting Pronouncements

In April  2014,  the FASB  issued ASU No.  2014-08,  Presentation  of  Financial

Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting

Discontinued Operations and Disclosures of Disposals of Components of an Entity.

The amendments in this Update change the requirements for reporting discontinued

operations in Subtopic 205-20.

Under the new guidance,  a discontinued  operation is defined as a disposal of a

component or group of  components  that is disposed of or is  classified as held

for sale and  "represents  a  strategic  shift  that has (or will  have) a major

effect on an entity's  operations and financial  results." The ASU states that a

strategic  shift could  include a disposal of (i) a major  geographical  area of

operations,  (ii) a  major  line  of  business,  (iii)  a  major  equity  method

investment,  or (iv) other  major  parts of an entity.  Although  "major" is not

defined,  the  standard  provides  examples  of when a disposal  qualifies  as a

discontinued operation.

The ASU also requires additional disclosures about discontinued  operations that

will provide more information about the assets, liabilities, income and expenses

of  discontinued  operations.  In addition,  the ASU requires  disclosure of the

pre-tax profit or loss attributable to a disposal of an individually significant

component  of an  entity  that  does not  qualify  for  discontinued  operations

presentation in the financial statements.

The ASU is effective for public business  entities for annual periods  beginning

on or after December 15, 2014, and interim periods within those years.

In June 2014, the FASB issued ASU 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.

The  amendments  in this Update remove the  definition  of a  development  stage

entity  from the  Master  Glossary  of the  Accounting  Standards  Codification,

thereby removing the financial  reporting  distinction between development stage

entities  and  other  reporting  entities  from  U.S.  GAAP.  In  addition,  the

amendments  eliminate the  requirements  for  development  stage entities to (1)

present  inception-to-date  information in the statements of income, cash flows,

and  shareholder  equity,  (2)  label  the  financial  statements  as those of a

development  stage entity,  (3) disclose a description of the development  stage

activities in which the entity is engaged, and (4) disclose in the first year in

which the entity is no longer a development  stage entity that in prior years it

had been in the development stage.

The  amendments  also  clarify  that  the  guidance  in  Topic  275,  Risks  and

Uncertainties,  is  applicable  to  entities  that  have not  commenced  planned

principal operations.

Finally, the amendments remove paragraph  810-10-15-16.  Paragraph  810-10-15-16

states that a development  stage entity does not meet the condition in paragraph

810-10-15-14(a)  to  be a  variable  interest  entity  if  (1)  the  entity  can

demonstrate that the equity invested in the legal entity is sufficient to permit

it to  finance  the  activities  that  it is  currently  engaged  in and (2) the

entity's  governing  documents and  contractual  arrangements  allow  additional

equity investments.

The  amendments  in  this  Update  also  eliminate  an  exception   provided  to

development stage entities in Topic 810, Consolidation,  for determining whether

an entity is a variable interest entity on the basis of the amount of investment

equity that is at risk. The amendments to eliminate that exception simplify U.S.

GAAP by reducing  avoidable  complexity in existing  accounting  literature  and

improve the relevance of information  provided to financial  statement  users by

requiring the  application of the same  consolidation  guidance by all reporting

entities.  The  elimination  of  the  exception  may  change  the  consolidation

analysis,  consolidation  decision, and disclosure  requirements for a reporting

entity that has an interest in an entity in the development stage.

The amendments related to the elimination of  inception-to-date  information and

the other  remaining  disclosure  requirements  of Topic 915  should be  applied

retrospectively  except  for the  clarification  to Topic  275,  which  shall be

applied  prospectively.  For public  business  entities,  those  amendments  are

effective for annual  reporting  periods  beginning after December 15, 2014, and

interim periods therein.

Early  application  of each  of the  amendments  is  permitted  for  any  annual

reporting period or interim period for which the entity's  financial  statements

have not yet been  issued  (public  business  entities)  or made  available  for

issuance  (other  entities).  Upon adoption,  entities will no longer present or

disclose any information required by Topic 915.

Management  does not believe that any  recently  issued,  but not yet  effective

accounting  pronouncements,  if  adopted,  would have a  material  effect on the

accompanying consolidated financial statements.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details

Tungsten Corp. 10-Q