UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A

Amendment No. 1

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

 

For the fiscal year ended May 31, 2013

 

OR

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

 

For the transition period from _______ to ___________.

 

Commission File # 333-151702

 

US TUNGSTEN CORP.

(formerly known as Stealth Resources Inc.)

(Exact name of small business issuer as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

77-0721432

(IRS Employer Identification Number)

 

871 Coronado Centre Drive, Suite 200, Henderson, NV 89052

(Address of principal executive offices)

 

(702) 940-2323

(Issuer’s telephone number)

 

Securities registered pursuant to section 12(b) of the Act:

 

None.

 

Securities registered pursuant to section 12(g) of the Act:

 

Common Stock, Par Value $0.001 per share

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o  Yes     x  No

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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: o  Yes     x  No

 

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day. x  Yes   o  No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x  Yes   o  No

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “ large accelerated filer ,” “ accelerated filer ” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

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

 

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

x  Yes     o  No

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal year end. $3,121,200 .

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The registrant had 75,750,000 shares of common stock issued and outstanding as of September 9, 2013.

 

Documents incorporated by reference: None.

 

US Tungsten Corp. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K for the year ended May 31, 2013, originally filed with the Securities and Exchange Commission (the “SEC”) on September 13, 2013 (the “Original Filing”), to reflect the effect of the compensation agreed upon in the Independent Association Agreement entered into on May 23, 2013 with Barry Wattenberg, appointing him as the Executive of the Company.  During the six months ended November 30, 2013, management of the Company discovered and realized that the effect of the compensation agreed upon in the agreement was not recorded during the year ended May 31, 2013 or the three month period ended August 31, 2013. 

 

Other than as set forth herein, this Amendment does not affect any other parts of or exhibits to the Original Filing, and those unaffected parts or exhibits are not included in this Amendment.  This Amendment continues to speak as of the date of the Original Filing and the Company has not updated the disclosure contained herein to reflect events that have occurred since the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Company’s other filings made with the Securities and Exchange Commission since the filing of the Original Filing, including amendments to those filings, if any.

 

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s chief executive officer and chief financial officer are filed as Exhibits 31.3 and 31.4 to this Form 10-K/A.

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Table of Contents

 

Item       Page
         
Item 1.   Business   1
Item 1A.   Risk Factors   4
Item 1B.   Unresolved Staff Comments   4
Item 2.   Properties   4
Item 3.   Legal Proceedings   10
Item 4.   Mine Safety Disclosure   10
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities   10
Item 6.   Selected Financial Data   11
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operation   11
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk   13
Item 8.   Financial Statements and Supplementary Data   14
Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure   15
Item 9A.   Controls and Procedures   15
Item 9B.   Other Information   15
Item 10.   Directors, Executive Officers and Corporate Governance   16
Item 11.   Executive Compensation   19
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   21
Item 13.   Certain Relationships and Related Transactions and Director Independence   22
Item 14.   Principal Accountant Fees and Services   23
Item 15.   Exhibits and Financial Statement Schedules   24
SIGNATURES   26
 
 

PART I

 

Item 1. Business

 

Forward-looking Statements

 

Statements in this annual report on Form 10-K that are not historical facts constitute forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Those factors include, among other things, those listed in this annual report. In some cases, you can identify forward-looking statements by terminology such as ’‘may,’’ ’‘will,’’ ’’should,’’ ’‘expects,’’ ’‘plans,’’ ’‘anticipates,’’ ’‘believes,’’ ’‘estimates,’’ ’‘predicts,’’ ’‘potential’’ or ’‘continue’’ or the negative of these terms or other comparable terminology; as well as terms such as “is expected to continue to increase over the next several years”, “is increasing at an exponential rate”, and “to take advantage of this anticipated shift”.

 

These statements are only predictions. Actual events or results may differ materially. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform these statements to actual results.

 

DESCRIPTION OF BUSINESS

 

Business Development

 

We are an exploration stage company engaged in the acquisition and exploration of mineral properties with a view to exploiting any mineral deposits we discover. We have an option to acquire three unpatented mineral claims and own a 100% interest in 195 mineral claims located in Calvert, Montana (collectively the “ Calvert Property ”).

 

There is no assurance that a commercially viable mineral deposit exists on the Calvert Property. We do not have any current plans to acquire interests in additional mineral properties, although we may consider such acquisitions in the future.

 

Mineral property exploration is typically conducted in phases. Each phase of exploration work is recommended by a geologist based on the results from the most recent phase of exploration. We have not yet commenced the initial phase of exploration on the Calvert Property. Once we have completed each phase of exploration, we will make a decision as to whether or not we proceed with each successive phase based upon the analysis of the results of that program. Our Board of Directors will make this decision based upon the recommendations of the independent geologist who oversees the program and records the results.

 

Our plan of operation is to conduct exploration work on the Calvert Property in order to ascertain whether it possesses economic quantities of tungsten. There can be no assurance that an economic mineral deposit exists on the Calvert Property until appropriate exploration work is completed.

 

Even if we complete our proposed exploration programs on the Calvert Property and we are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit.

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Calvert Property

 

On August 28, 2012, we entered into an Assignment Agreement dated August 21, 2012 with Mr. John M. Pulos whereby we acquired from Mr. Pulos an option to acquire an undivided 100% right, title and interest in and to three unpatented mineral claims spanning 60 acres, known as the Calvert Property, located in Calvert, Montana (the “ Calvert Claims ”). The Assignment Agreement assigns to us the option to acquire the Calvert Claims held by Mr. Pulos pursuant to a Letter of Intent (“ LOI ”) dated June 18, 2012 with Messrs Paul and Ted Antonioli (the “ Optionors ”).  We paid $5,000 to Mr. Pulos in consideration of the assignment.  

 

Effective October 1, 2012, we entered into a Property Option Agreement with the Optionors to clarify and confirm the rights and obligations of our company and the Optionors pursuant to the terms of the LOI. Pursuant to the terms of the Property Option Agreement we have the following obligations:

 

1. The Optionor grants to us the sole and exclusive right and option to acquire up to an undivided 100% right, title and interest in and to the Calvert Claims, free and clear of all charges, encumbrances, claims, liabilities and adverse interests of any nature or kind, except for the NSR royalty referred to below.

 

2. The option shall be exercisable by us by paying the following amounts to the Optionors:

 

● $5,000 by June 18, 2012 (which amount has been paid by John M. Pulos on behalf of the Company);

 

● $5,000 by October 1, 2012 (paid);

 

● $15,000 by June 18, 2013;

 

● $20,000 by June 18, 2014;

 

● $25,000 by June 18, 2015;

 

● $30,000 by June 18, 2016

 

● $35,000 by June 18, 2017;

 

● $40,000 by June 18, 2018;

 

● $45,000 by June 18, 2019;

 

● $50,000 by June 18, 2020;

 

● $50,000 each subsequent year until an aggregate of $1,000,000 has been paid to Optionor.

 

3. Upon commencement of commercial production on the Calvert Claims, we shall pay the Optionor a net smelter return (“ NSR ”) royalty equal to 2% of net smelter returns.

 

4. We may, within 9 months after commencement of commercial production acquire one point eight percent (1.8% of the total 2%) of the NSR royalty from the Optionor for $1,500,000.

 

On October 9, 2012, we completed the registration and acquisition of 195 newly staked mineral claims located in Calvert, Montana.  The claims were registered on behalf of the Company with the U.S. Department of the Interior, Bureau of Land Management, at a cost of $12,285. The claims span

2
 

approximately 3,900 acres and are contiguous with the Calvert Claims (collectively the “ Calvert Property ”).  

 

Name Change and Share Consolidation

 

On July 19, 2012, our Board of Directors and majority shareholder approved a forward split of our shares on a 1:30 basis, increasing our authorized share capital from 75,000,000 shares of common stock at a par value of $0.001 to 2,250,000,000 shares of common stock at a par value of $0.001. A change of name to US Tungsten Corp. was also approved, the purpose of which was to better reflect the direction of our company. The name change and forward split were filed with the Nevada Secretary of State and were effective on August 9, 2012.

 

Staking Agreement

 

On January 31, 2013, we entered into an agreement with Dykes Geologic Systems Limited (“ Dykes Geologic ”) as a contractor for our Montana tungsten project.  Under the agreement, Dykes Geologic will manage and control the staking of our claims in the Browne Lake and Greenstone areas of Montana.  As consideration, we will pay to Dykes Geologic $27,500 for staking of the Browne Lake area, of which $25,000 has been advanced, with the balance due at completion.  Once completed, and should our company wish to proceed with the staking of the Greenstone area we will be required to pay to Dykes Geologic $15,000.  In addition, we provided for 100,000 shares of our common stock to Dykes Geologic, which are currently reflected in stock payable.

 

Letter of Credit

 

Effective February 2, 2013, we entered into a letter of credit with a non-US person wherein they will loan our company up to $1,000,000 by way of periodic advances at our request for a period of one year. The loan amounts will be convertible into shares of common stock of our company at a rate of $0.30 per common share and shall bear annual interest of 5% per annum. As at May 31, 2013 a total of $4,735 was charged to interest. As of the year ended May 31, 2013, we had received $326,000 and no stock has been issued.

 

Upon full conversion of the amount outstanding under the letter of credit, we will issue to Themis Partners a three year warrant to purchase up to an additional 2,000,000 restricted common shares at an exercise price of $0.80 per warrant share.

 

The Company has determined the value associated with the conversion feature in connection with the convertible note payable.  The Company has determined the note, with a face value of $326,000, to have a beneficial conversion feature of $260,000.  The beneficial conversion feature has been accreted and is being amortized over the life of the note (which is calendar year end December 31 for each year when the advance is received; being the proposed date of conversion).  As at May 31, 2013, $87,033 had been amortized and expensed as interest.  The beneficial conversion feature is valued under the intrinsic value method.

 

Investor Relations Services

 

Effective February 11, 2013, we entered into a letter of engagement with 1830012 Ontario Ltd. (o/a Circadian Group), wherein Circadian Group will provide our company with investor relations services for a period of 12 months.  As consideration for the services, we agreed to pay to Circadian Group $6,000 per month. As of May 31, 2013 a total of $18,000 was expensed under the said agreement.

3
 

Consulting Services Agreement

 

Effective February 11, 2013 we entered into a letter of engagement with Gultig Holdings Ltd., wherein Gultig Holdings agreed to provide our company with consulting services for a period of 3 months.  As consideration for the consulting services, we agreed to issue to Gultig Holdings 150,000 shares of our common stock. Such shares have been reflected under stock payable for a total value of $46,500 as at May 31, 2013.

 

Employees

 

We have no employees as of the date of this filing other than our directors and officers.

 

Research and Development Expenditures

 

We have not incurred any research or development expenditures since our incorporation.

 

Subsidiaries

 

We do not have any subsidiaries.

 

Patents and Trademarks

 

We do not own, either legally or beneficially, any patents or trademarks.

 

Dependence on Major Customers

 

We have no customers.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

Calvert Property

 

The following is an excerpt from the Geological Report on the Calvert Tungsten Property, Beaverhead County, Montana dated March 20, 2013, prepared by Richard (Rick) T. Kemp, P.Geo. attached as an exhibit to our Form 8-K dated June 4, 2013 filed on June 6 th , 2013.

 

The Calvert Property comprises 68 claims covering a total area of 1,404.88 acres.

 

Location

 

The Calvert Property is located in Beaverhead County located approximately 40 miles south west of Butte, Montana within Section 12, Township 1 North, Range 13 West.

4
 

(CALVERT PROPERTY MAP)  

 

Access

 

The Calvert Property is located approximately 40 miles to the south west of Butte Montana. The major towns in the area are connected by Federal and State Highways, and good gravel country roads serve the smaller towns and villages. Forest Service logging and mine access roads service the more remote areas. The Calvert Mine site is located approximately 11 miles northwest of the village of Wise River, located on an easterly flowing tributary of Bryant Creek at an elevation of approximately 7,100 feet. The Calvert Mine site can be reached by travelling 8 miles west from Wise River on Montana Highway 43 to the Big Hole River bridge, then left on Bryant Creek road for approximately 1.5 miles which leads directly to the historical workings of the Calvert Mine site. The road is not maintained in the winter or early spring, although access may be gained by 2 wheel drive vehicles during the summer months, 4 wheel drive vehicles are recommended during the spring and late fall.

 

Climate

 

The climate is classified as semiarid with cold dry winters and hot wetter summers. Temperatures range from about 83deg F in the summer months to 13.5deg F in the winter, dropping occasionally to record lows of -40deg F. The driest months of the year are July, August and September with occasional showers. Most of the region’s precipitation falls as snow between September and April; in the higher elevations, snow may not disappear until July. Snow accumulation can frequently reach 6 to 8 feet in depth.

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Physiography and Local Resources

 

The Calvert Property is located in Beaverhead County with the county seat located in the town of Dillon. The county occupies 3.5 million acres of land that is a combination of river valleys and mountain peaks including the Continental Divide that essentially forms the western and southern county boundaries. Drainage to the west of the divide is to the Columbia River and on the east to the Missouri River. Several major valleys traverse the county including the Big Hole Valley, Beaverhead, Centennial, Lima, Prairie and Sweetwater. These valleys, most of which are above 5,000 feet in elevation, are encircled by mountain ranges including the Beaverhead, Pintler, Pioneer, Tendoy Centennials, Ruby and Blacktail. In the valley bottoms and basins there are a variety of soil types that host the substantial agricultural producers that are the backbone of the county economy. Winter and spring wheat, barley, oats and seed potatoes are major crops on irrigated lands. The county ranks first in the state in the production of livestock, mostly cattle and sheep.

 

The county’s major valleys contain rivers that are important sources of water for irrigation and for recreational fishing. The rivers and their tributaries are home to populations of cutthroat, rainbow and brown trout.

 

Wildlife resources are substantial and include grizzly bear, elk, white tail deer, mule deer, antelope, moose, big horn sheep, coyote, fox, wolverine, gray wolf, mountain lions and in some cases lynx. The Centennial Valley’s Red Rock Lakes National Wildlife Refuge encompasses 44,000 acres of land that is home to more than 250 bird species and 30 species of mammals.

 

Other important natural resources are timber, minerals and gemstones. Each of these resources has been an important part of the history of natural resources in the County. Gold has been mined in the area since 1862 and there are deposits of silver and tungsten and a range of other metals. Lodgepole pine and Douglas fir predominate on USFS lands within the County.

 

Infrastructure

 

The nearest community to the project area is the unincorporated community of Wise River, located approximately 40 miles to the southwest of Butte Montana. Wise River has a population of about 306 people (2012), the community has a country school, church, post office, two bars/cafés and a general store. The county seat is located in the town of Dillon with a population of 4,134 people (2010). The community provides banking and health care facilities, food and accommodations, grocery store outlets, an airport and post secondary education at the University of Montana-Western. The largest service centre in the area is the city of Butte Montana with a population of 34,200 people.

 

At the present time the Calvert Mine open pit is flooded to a depth of 70 feet. There is no infrastructure remaining on site. Historic milling of ores from the Calvert Mine were performed off site, waste rock was side cast down slope to the south of the open pit.

 

History and Development

 

Tungsten has been produced in Montana from numerous lode deposits and some alluvial deposits, in part in conjunction with the mining of gold. Until 1954 Montana’s tungsten output was insignificant.

 

In 1952, under the influence of the government buying program and government aid to exploration available through the Defense Minerals Exploration Administration, there was a great increase in the exploration of Montana tungsten deposits. Montana tungsten production between the period from 1954 to 1957 totaled 226,740 short ton units (1 short ton unit = 20 pounds WO3) and Montana became the fourth largest tungsten producing state. Production dropped rapidly at the termination of the Government

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domestic stockpiling program in December 1956 and by the end of 1958 no tungsten mines were operating in Montana.

 

The Calvert Mine was discovered in 1956 by two prospectors, W.I. Ferguson and George Henderson, who located two Lode claims over the original discovery which later became the site of the Calvert Mine open pit.

 

In August 1956, Minerals Engineering Company of Grand Junction Colorado leased the property and started exploration work. A total of sixty (60) wagon drill holes averaging 80 feet in depth and forty (40) drill holes from 140 feet to 500 feet in depth were completed as well as surface trenching totaling several hundred feet in length. Additional mineral claims were located to cover the area of interest and road access to the site was developed.

 

Based on the information gained from the surface exploration and drilling programs, a production decision was made and by September 1956 open pit production began and continued through to August 1957 when the Government purchasing program for tungsten concentrates terminated. During this period, 92,837 tons of ore was mined averaging 1.09% WO3 (Table 1). The ore was shipped to the company concentrator facilities located at Glen, Montana.

 

Waste stripping operations resumed in September 1959 enlarging the open pit to 250 feet by 300 feet in area and deepened to 85 feet. Open pit mining operations resumed in 1960 through to early 1962 (Table 1).

 

Period Tons Ore Wo3 (%) Units of Tungsten*
1956-1957 92,837 1.09 101,192
1960-1962 125,000 1.10 137,610
TOTAL 217,937 1.10 238,802
 
Table 1: Historical Production (Source: Aro 1966). *1 unit of tungsten consists of 1% per ton of material. The system can be applied to both imperial and metric systems.

 

On June 1, 1966, Beaverhead Development Ventures and Minerals Engineering Company initiated a surface exploration program to evaluate the potential for developing additional reserves below the existing open pit. A diamond drilling program was developed to extend laterally and at depth the remaining reserves identified from previous mining operations and to evaluate the medium grade ore which had been exposed on surface to the northwest of the open pit boundary by trenching and limited drilling. The 1966 surface exploration program consisted of 22 – BX sized diamond drill holes totaling 3,318.5 feet and four excavated surface trenches totaling 132 feet in total length (Table 2). Of the 22 holes completed, 12 holes intersected ore grade intersections with widths varying from 0.8 feet to 55.0 feet. The remaining 10 drill holes intersected low grade intervals or waste. The surface exploration program was terminated on November 15, 1966.

 

Based on drill hole results to the end of 1966, a block of ore outlined at the bottom of the pit was estimated to extend 100 feet below the pit floor and further indications suggested the ore block would continue below 100 feet in the vein systems that formed the ore and in extensions of the known ore blocks. Recommendations were made to continue open pit operations to the 6990 ft elevation and ore below this level be mined through underground methods. Underground development would utilize a development drift collared at Calvert Creek at a bearing of N10E at 6900 feet elevation. The proposed drift would be 1200 feet in length to undercut the projected extension of the mineralized horizon below the base of the open pit.

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Trench Year

Length

(ft)

Wo3 (%)
A 1966 20 0.96
C 1966 45 0.80
D 1966 42 1.29
E 1966 25 0.91
       
Table 2: Historical Trenching results (Source: Aro 1966)

 

In 1967, an evaluation by Mining Geologist Norman E. Ebbley for Minerals Engineering Co. reviewed the various proposed mining methods for developing ore below the 6990 ft elevation and determined that the underground tunnel under development should be abandoned at its current position, 225 feet from the tunnel entrance due to difficult ground conditions. In his report Mr. Ebbley proposed several alternative mining methods and the associated costs for the extraction of the ore blocks defined below the bottom of the pit including the sinking of a shaft from surface, spiral berm stripping method and the utilization of a surface tram. Surface diamond drilling continued in 1967 evaluating extensions to the previously defined ore blocks below the open pit.

 

The US Bureau of Mines Mineral Yearbook for 1971 briefly describes the work completed by Minerals Engineering Co. at their Calvert Mine site in 1971. The summary of activities states that more than 2,500 feet of diamond drilling was completed in and adjacent to the Calvert Mine in December 1971. Seven of 10 core holes drilled in the mine intersected ore-grade material. A total of five (5) core holes were located adjacent to the mine, three of which located to the southeast did not encounter ore grade material. The remaining two (2) holes were located to the north-northeast of the mine intersecting high grade tungsten mineralization. Additional holes planned to follow up on these high grade intersections were delayed by heavy snows and further exploration would be delayed until the spring of 1972. This is the last exploration drill program documented on the property.

 

Geological Setting

 

Regional Geology

 

The Calvert area is part of the north western portion of the eastern Pioneer Mountains and is underlain by early Proterozoic crystalline rocks of the belt supergroup associated with roof pendants, thrust blocks of Mississippian to Cretaceous aged sediments and metavolcanics. The entire package has been intruded by Tertiary and late Cretaceous tonalites, granites and andesite dykes. The area lies on the northern edge of the Pioneer batholith, a composite granitic body of late Cretaceous to early Paleocene age that intruded the previously folded and faulted sediments.

 

Several of these faults have been re-activated over different ages. Two major Early Proterozoic rocks consist of various quartzites, metaquartzites and quartzofeldspathic gneiss. The younger sedimentary stratigraphy consists of limestone, mudstone, siltstone, quartzite and shale.

 

Structurally the region is dominated by low angle thrust faults that thrust older rocks over younger rocks and numerous northeast trending strike slip or tear faults that probably acted as pressure release thrust faults are identified within the local region ie the Foolhen thrust and the Calvert thrust.

 

The main units of interest from a tungsten exploration point of view are the late Cretaceous intrusions in contact with the Mississippian to lower Pennsylvanian calcareous sediments and limestone. These units form a narrow northwest trending belt that parallel the regional structures and make an excellent target for additional exploration.

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Local Geology and Mineralization

 

The Calvert property is underlain by strongly faulted and brecciated zones within the Paleozoic sediments of the Amsden and Quadrant formations where they have been intruded by Cretaceous quartz monzonite/tonalite from the Foolhen intrusions. Blocks are separated by thrust faults and north-east trending strike slip faults. The Amsden formation consists primarily of limestone as well as mudstone, siltstone and fine grained sandstone rich horizons. The Quadrant formation consists of mainly quartzite and sandstone sediments. The stratigraphy strikes generally northwest with dips from -40 to -45degrees to the south east. Local folding and contorted stratigraphy are evident.

 

The Calvert Mine ore body is described as being irregular in shape and approximately 200 feet in diameter which plunges to the southeast at approximately -55deg. A smaller ore body is exposed in a pit located to the east of the main workings. The Calvert ore body was mined to the 7040 ft elevation, a vertical distance from the original outcrop surface of 170 feet.

 

Mineralization consists of pyrometasomatic replacement zones in the Amsden formation, where the Cretaceous intrusions cut and intermix with the limestone stratigraphy. Breccia zones show evidence of irregularly mixing between the intrusive and the country rock. General consensus is that the mineralization occurs as the result of deep seated fluids being brought into contact with the sediments and limestones of the Amsden Formation.

 

Scheelite is the primary ore mineral for tungsten found within variations of the metasomatic host rocks. Local workers call the ore bearing material tactite, which is a variable garnet, epidote, chlorite, magnetite calc silicate or possible skarn. A field examination by US Tungsten Co representative reveals that the deposit appears zoned both in mineralogy and economic minerals. Copper in the form of chalcopyrite and its oxides are noted around the edges of the deposit which is not an uncommon feature noted at similar type deposits in the area.

 

Mineralogy varies from low to high temperature assemblages with higher temperature garnetepidote- pyroxene minerals located towards the center of the deposit which grades outward to low temperature garnet epidote chlorite. High temperature assemblages are recognizable by the deep red to brown garnets, while the lower temperature assemblages are identified by the green variety. The various ore types hosting Scheelite mineralization described at the Calvert Mine site are as follows:

 

Garnet-Epidote : Consists of mainly garnet and epidote with a distinctive brown and green coloration with minor associated sulphides. Generally rich in Scheelite.

 

Chlorite-Magnetite : Consists almost entirely of chlorite and magnetite. Generally rich in Scheelite and more common to the upper limits of the ore zone.

 

Quartz-Scheelite : Veins of quartz hosting large crystals of Scheelite > 2 inches in size. The walls of the quartz veins are typically rich in crystalline epidote. Not prevalent in the upper portions of the ore zone.

 

Chlorite-Scheelite : Veins consisting entirely of chlorite and disseminated crystals of Scheelite.

 

Quartz Monzonite : Both altered and unaltered quartz monzonite is mineralized with Scheelite to the extent it is commercial ore.

 

The occurrence of cassiterite, wolframite and beryl within the deposit attests to its deep seated origin.

9
 

Recommendations

 

In the past, exploration programs were directed towards the development of the Calvert Mine deposit with little work being completed outside of the main mineralized zone. A small portion of this work evaluated the projected extension of the Calvert Mine ore zone to depth and this has resulted in a proven and possible reserve. The characteristics of the Calvert Mine mineralization will aid future exploration programs towards the development of additional reserves both along strike and down plunge. The association of magnetite with scheelite mineralization and the density of the Tactite body may be amenable to geophysical survey methods for tracing the tactite body along strike and to depth. The association between the Amsden limestone formation and the Late Cretaceous intrusive defines a corridor for prospective mineralization and well focused exploration campaigns. Mineral and metal zoning patterns may prove useful in directing exploration efforts toward zones of higher grade mineralization.

 

Future exploration efforts should be directed towards verifying the historical insitu reserves and their potential extension to depth and down plunge to the east. A regional exploration program along the potential contact horizon of the Amsden Formation with the Late Cretaceous intrusives will evaluate the potential for discovering additional reserves along strike.

 

Item 3. Legal Proceedings

 

We are not currently a party to any legal proceedings. Our address for service of process in Nevada is 871 Coronado Centre Drive, Suite 200, Henderson, Nevada, 89052.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

PART II

 

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

 

Market Information

 

Our shares of common stock are quoted for trading on the OTC Bulletin Board under the symbol USTU. The following table shows the high and low prices of our common shares on the NASD OTC Bulletin Board. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

 

OTC Bulletin Board (Symbol “USTU”)
Period High
(US $)

Low

(US $)

Three months ended August 31, 2011 0.93 0.71
Three months ended November 30, 2011 (1) (1)
Three months ended February 29, 2012 (1) (1)
Three months ended May 31, 2012 (1) (1)
Three months ended August 31, 2012 (2) 5.25 0.93
Three months ended November 30, 2012 (2) (1) (1)
Three months ended February 29, 2013 (2) 0.74 0.25
Three months ended May 31, 2013 (2) 0.48 0.25

 

(1) No trades.

 

(2) On July 19, 2012, our Board of Directors and majority shareholder approved a forward split of our shares on a 1:30 basis, increasing our authorized share capital from 75,000,000 shares of common stock at a par value of $0.001 to 2,250,000,000 shares of common stock at a par value of $0.001. The name change and forward split were filed with the Nevada Secretary of State and were effective on August 9, 2012.
10
 

 

Holders

 

As of August 29, 2013, there were 8 holders of our common stock.

 

Dividends

 

We have not paid dividends on our common stock, and do not anticipate paying dividends on our common stock in the foreseeable future.

 

Securities authorized for issuance under equity compensation plans

 

We have no compensation plans under which our equity securities are authorized for issuance.

 

Performance graph

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Recent sales of unregistered securities

 

None.

 

Issuer Repurchases of Equity Securities

 

None.

 

Item 6. Selected Financial Data.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

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

 

Forward-looking statements

 

This report contains “ forward-looking statements ” relating to us which represent our current expectations or beliefs, including statements concerning our operations, performance, financial condition and growth. For this purpose, any statement contained in this report that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “ may ”, “ anticipation ”, “ intend ”, “ could ”, “ estimate ”, or “ continue ” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel and variability of quarterly results, our ability to continue our growth strategy and competition, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

11
 

The following discussion and analysis should be read in conjunction with the information set forth in our audited financial statements for the period ended May 31, 2013.

 

Plan of Operation

 

As at May 31, 2013, we had a cash balance of $121,849, compared to $459 as at May 31, 2012. Our plan of operation for the twelve months is to complete the geologist recommended work on the Calvert Property, consisting of verifying the historical insitu reserves and a regional exploration program to evaluate the potential for discovering additional reserves along strike. We estimate that the cost of this program will be approximately $100,000.

 

In addition, we anticipate spending approximately $150,000 on administrative expenses, including fees payable in connection with the filing of our annual and quarterly reports and complying with reporting obligations.

 

Utilizing the letter of credit, we believe that we have sufficient funds to cover the anticipated administrative expenses and work program over the next 12 months.

 

However, we anticipate that we will require additional funding to continue to develop and explore the Calvert Property and to cover our administrative expenses.  We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or from director loans. We do not have any arrangements in place for any future equity financing or loans.

 

Our current cash on hand will not be sufficient to acquire any new assets, should we desire to do so, and additional funds will be required to close any possible acquisition. As a reporting company we will need to maintain our periodic filings with the appropriate regulatory authorities and will incur legal and accounting costs. If no other such opportunities are available and we cannot raise additional capital to sustain minimum operations, we may be forced to discontinue business. We do not have any specific alternative business opportunities in mind and have not planned for any such contingency.

 

Based on the nature of our business, we anticipate incurring operating losses in the foreseeable future. We base this expectation, in part, on the fact that very few mineral claims in the exploration stage ultimately develop into producing, profitable mines. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These factors include the following:

 

● our ability to raise additional funding;
   
● the market price for minerals that may be found on the Calvert Property;
   
● the results of our proposed exploration programs on the Calvert property; and
   
● our ability to find joint venture partners for the development of our property interests

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue exploration activities.  For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern.

12
 

Results of Operations

 

We had no operating revenues during the fiscal year ended May 31, 2013 or for the year ended May 31, 2012. Since our inception on January 10, 2007 through May 31, 2013, we earned no revenues and have incurred operating expenses in the amount of $969,723 for the same period. Our activities have been financed from the proceeds of share subscriptions, related party loans and a letter of credit.

 

For the fiscal year ended May 31, 2013, general and administrative expenses were $64,166, compared to $24,747 for the year ended May 31, 2012; legal and accounting expenses were $31,589, compared to $13,500 for the year ended May 31, 2012; and management fees were $22,500, compared to $Nil for the year ended May 31, 2012; exploration expenses were $15,057, compared to $Nil for the year ended May 31, 2012; amortization was $444, compared to $Nil for the year ended May 31, 2012. During the year ended May 31, 2013, we also incurred stock based compensation of $876,179, compared to $Nil for the year ended May 31, 2012. Interest expense of $91,768 was incurred for the year ended May 31, 2013 as compared to $Nil for the year ended May 31, 2012.

 

For the period from inception on January 10, 2007 through May 31, 2013, general and administrative expenses were $142,061, legal and accounting expenses were $98,198, management fees were $22,500, impairment on mineral claim was $13,512, amortization was $444, exploration costs was $15,057 and stock based compensation was $876,179. Interest expense was $91,768.

 

During our fiscal year ended May 31, 2013, we incurred a net loss of $1,101,703, which resulted in an accumulated deficit of $1,307,469.

 

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles. We have expensed all development costs related to our establishment.

 

Liquidity and Capital Resources

 

We had cash of $121,849 as of May 31, 2013, compared to a cash position of $459 at May 31, 2012. As of the year ended May 31, 2013, we have raised $27,000 through private placements of our common shares and we have received advances from a related party of $106,580 and repaid a loan from a related party of $122,000. We also received $326,000 proceeds from a letter of credit.

 

We expect to run at a loss for the foreseeable future. Other than the letter of credit for up to $1,000,000, we have no agreements for additional financing and cannot provide any assurance that additional funding will be available to finance our operations on acceptable terms in order to enable us to complete our plan of operations. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our exploration of our mineral claims and our venture will fail.

 

Off-balance sheet arrangements

 

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

 

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

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

13
 
Item 8. Financial Statements and Supplementary Data.
14
 

Amended and restated

 

US Tungsten Corp.

(formerly Stealth Resources Inc.)

(An Exploration Stage Company)

Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013 and 2012

F- 1
 
Office Locations
Las Vegas, NV
New York, NY
Pune, India
Beijing, China 		  (DE JOE GRIFFITH LOGO)

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders
US Tungsten, Corp.

 

We have audited the accompanying balance sheets of US Tungsten, Corp. (An Exploration Stage Company) as of May 31, 2013 and 2012, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years ended May 31, 2013 and 2012 and from inception (January 10, 2007) to May 31, 2013. US Tungsten, Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

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

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of US Tungsten, Corp. as of May 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended May 31, 2013 and 2012 and for the period from inception (January 10, 2007) to May 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

 

As described in Note 13, these financial statements has been restated as the Company discovered and realized that Independent Association agreement entered into on May 23, 2013 with Barry Wattenberg, appointing him as the Executive of the Company, was not considered and the effect of the compensation agreed upon in the agreement was not recorded during the audit period May 31, 2013. The Company intends to file an amended 10K/A for the year ended May 31, 2013 correcting the errors and file the financials with corrected numbers.

 

The accompanying financial statements have been prepared assuming the company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

De Joya Griffith, LLC
Henderson, Nevada
September 9, 2013 (Except Note 13 as
stated above, for which the date is
February 25, 2014)
F- 2
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Balance Sheets  
(Expressed in U.S. Dollars)  
(Audited)  

 

    May 31,
2013 		    May 31,
2012 		 
ASSETS                
                 
Current assets                
Cash and cash equivalents   $ 121,849     $ 459  
Prepaid expenses     12,753       -  
Advance on mineral claims     67,000       -  
Total current assets     201,602       459  
                 
Other assets                
                 
Mineral claims (Note 5)     50,000       -  
Website – net of amortization (Note 4)     3,556       -  
Total other assets     53,556       -  
                 
Total assets   $ 255,158     $ 459  
                 
LIABILITIES & STOCKHOLDERS’ DEFICIT                
                 
Current liabilities                
Accounts payable and accrued liabilities (Note 6)   $ 34,846     $ 5,877  
Other loans (Note 12 )     11,641       -  
Due to related party (Note 9)     109,178       124,598  
Letter of credit, net of beneficial conversion feature discount of $172,967 and $0, respectively (Note 10)     153,033       -  
Total current liabilities     308,698       130,475  
                 
Total liabilities     308,698       130,475  
                 
Stockholders’ deficit                
Common stock $0.001 par value; authorized 2,250,000,000 shares; issued and outstanding: 75,750,000 and 75,750,000, respectively.     75,750       75,750  
Additional paid-in capital     1,089,679       -  
Stock payable     88,500       -  
Deficit accumulated during the exploration stage     (1,307,469 )     (205,766 )
                 
Total stockholders’ deficit     (53,540 )     (130,016 )
                 
Total liabilities and stockholders’ deficit   $ 255,158     $ 459  

 

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

F- 3
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Statements of Operations  
(Expressed in U.S. Dollars)  
(Audited)  

 

    Year ended
May 31,
2013 		    Year ended
May 31,
2012 		    From
Inception
(January 10,
2007) through
May 31, 2013 		 
                   
Revenue   $ -     $ -     $ -  
                         
                         
Expenses                        
                         
Impairment loss on mineral claim     -       -       13,512  
Legal and accounting     31,589       13,500       98,198  
General and administrative     64,166       24,747       142,061  
Management fees     22,500       -       22,500  
Stock based compensation     876,179       -       876,179  
Exploration costs     15,057       -       15,057  
Amortization     444       -       444  
Total expenses     1,009,935       38,247       1,167,951  
                         
Operating loss     (1,009,935 )     (38,247 )     (1,167,951 )
                         
Other expenses                        
Interest expense     (91,768 )     -       (91,768 )
                         
Net loss   $ (1,101,703 )   $ (38,247 )   $ (1,259,719 )
                         
Basic loss per common share   $ (0.01 )   $ (0.00 )        
                         
Weighted average number of common shares outstanding     75,750,000       75,750,000          

 

The accompanying notes are an integral part of the financial statements

F- 4
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Statement of Stockholders’ Equity/ (Deficit)  
From Inception (January 10, 2007) through May 31, 2013  
(Expressed in U.S. Dollars)  
(Audited)  

 

    Number of
shares issued 		    Common
Stock 		    Additional
paid in
capital 		    Stock
Payable 		    Deficit
accumulated
during the
exploration stage 		    Total
stockholders’
equity/(deficit) 		 
                                                 
Balance at  January 10, 2007     -     $ -     $ -     $ -     $ -     $ -  
                                                 
Common  stock for cash ($.001 per share)     12,000,000       12,000       -       -       (7,500 )     4,500  
                                                 
Common  stock for cash ($.004 per share)     37,500,000       37,500       -       -       (32,500 )     5,000  
                                                 
Common  stock for cash ($.02 per share)     26,250,000       26,250       -       -       (8,750 )     17,500  
                                                 
Contributed capital     -       -       -       -       1,000       1,000  
                                                 
Net loss     -       -       -       -       (3,542 )     (3,542 )
                                                 
Balance at  May 31, 2007     75,750,000       75,750       -       -       (51,292 )     24,458  
                                                 
Net loss     -       -       -       -       (13,324 )     (13,324 )
                                                 
Balance at May 31, 2008     75,750,000       75,750       -       -       (64,616 )     11,134  
                                                 
Net loss     -       -       -       -       (40,446 )     (40,446 )
                                                 
Balance at May 31, 2009     75,750,000       75,750       -       -       (105,062 )     (29,312 )
                                                 
Net loss     -       -       -       -       (26,974 )     (26,974 )
                                                 
Balance at  May 31, 2010     75,750,000       75,750       -       -       (132,036 )     (56,286 )
                                                 
Net loss     -       -       -       -       (35,483 )     (35,483 )
                                                 
Balance at May 31, 2011     75,750,000       75,750       -       -       (167,519 )     (91,769 )

 

Cont’d..

F- 5
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Statement of Stockholders’ Equity/ (Deficit)  
From Inception (January 10, 2007) through May 31, 2013  
(Expressed in U.S. Dollars)  
(Audited)  

 

    Number of
shares issued 		    Common
Stock 		    Additional
paid in
capital 		    Stock
Payable 		    Deficit
accumulated
during the
exploration stage 		    Total
stockholders’
equity/(deficit) 		 
                                                 
Balance at May 31, 2011     75,750,000       75,750       -       -       (167,519 )     (91,769 )
                                                 
Net loss     -       -       -       -       (38,247 )     (38,247 )
                                                 
Balance at May 31, 2012     75,750,000       75,750       -       -       (205,766 )     (130,016 )
                                                 
100,000 common shares issuable for claims staking     -       -       -       42,000       -       42,000  
                                                 
Shares to be issued for consulting services     -       -       -       46,500       -       46,500  
                                                 
Beneficial conversion feature of  line of credit     -       -       260,000       -       -       260,000  
                                                 
Stock based compensation on vested options     -       -       829,679       -       -       829,679  
                                                 
Net loss     -       -       -       -       (1,101,703 )     (1,101,703 )
                                                 
Balance at May 31, 2013     75,750,000     $ 75,750     $ 1,089,679     $ 88,500     $ (1,307,469 )   $ (53,540 )

 

On July 19, 2012, the directors and majority shareholder approved a resolution to forward split the shares on a 1:30 basis, to be effective August 9, 2012. The number of shares has been retroactively restated to reflect the forward split.

 

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

F- 6
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Statement of Cash Flows  
(Expressed in U.S. Dollars)  
(Audited)  

 

    Year ended
May 31, 2013 		    Year ended
May 31, 2012 		    From Inception
(January 10, 2007)
through May 31, 2013 		 
                         
Cash flows from operating activities:                        
Net loss   $ (1,101,703 )   $ (38,247 )   $ (1,259,719 )
Adjustments to reconcile net loss to net cash used in operating activities                        
Amortization     444       -       444  
Amortization of beneficial conversion feature     87,033       -       91,768  
Stock based compensation     876,179       -       876,179  
Changes in operating assets and liabilities:                        
Increase in prepaid expenses     (12,753 )     -       (12,753 )
Increase in accounts payable and accrued liabilities     28,969       636       30,111  
Mineral property expenditures written down     -       -       13,512  
                         
Net cash used in operating activities     (121,831 )     (37,611 )     (260,458 )
                         
Cash flows from investing activities:                        
                         
Purchase of mineral claims     (50,000 )     -       (63,512 )
Advance for claim acquisition     (25,000 )             (25,000 )
Website development cost     (4,000 )     -       (4,000 )
                         
Net cash used in investing activities     (79,000 )     -       (92,512 )
                         
Cash flows from financing activities:                        
Bank overdraft     -       (13 )     -  
Proceeds from sale of common stock     -       -       27,000  
Contributed capital by related party     -       -       1,000  
Proceeds from other loans     11,641       -       11,641  
Repayment of loan from related party     (122,000 )     -       (122,000 )
Proceeds from loan from related party     106,580       38,083       231,178  
Proceeds from letter of credit     326,000               326,000  
                         
Net cash used in financing activities     322,221       38,070       474,819  
                         
(Decrease) increase in cash and cash equivalents     121,390       459       121,849  
                         
Cash and cash equivalents, beginning of year     459       -       -  
                         
Cash and cash equivalents, end of year   $ 121,849     $ 459     $ 121,849  
                         
                         
Non – cash investing and financing activities:                        
Beneficial conversion feature   $ 260,000     $ -     $ 260,000  
                         
Stock payable for advance on acquisition of mineral claim   $ 42,000     $ -     $ 42,000  

 

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

F- 7
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 1: Business and History

 

The Company was incorporated in the State of Nevada on January 10, 2007. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and FASB ASC 915 “Development Stage Entities”. The Company has begun investigating prospective tungsten opportunities. On July 19, 2012, the Company approved a name change to US Tungsten Corp. to better reflect its business direction.

 

The Company is devoting all of its present efforts to securing and establishing new business and its planned principal operations have not commenced. Accordingly, no revenue has been derived during the organization period. The Company has experienced recurring losses and has an accumulated deficit of ($1,259,719) as of May 31, 2013 and has working capital deficit of ($107,096) and ($130,016) as at May 31, 2013 and May 31, 2012 respectively.

 

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management intends to raise additional funding in the form of equity financing from the sale of common stock and/or obtain short-term loans from the directors of the Company. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.

 

At May 31, 2013, the Company was not engaged in a business and had suffered losses from exploration stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions with minimal compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.

 

Note 2: Significant Accounting Policies

 

The following is a summary of significant accounting policies used in the preparation of these financial statements.

 

Basis of presentation

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises, and are expressed in U.S. dollars. The Company’s fiscal year end is May 31.

 

Cash and cash equivalents

 

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

F- 8
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 2: Significant Accounting Policies – ( continued )

 

Mineral property costs

 

The Company has been in the exploration stage since its formation on January 10, 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. In accordance with FASB ASC 932 “Extractive Activities–Oil and Gas”, costs incurred to purchase or acquire a property (whether proved or unproved reserves) shall be capitalized when incurred. This includes acquisition costs associated with mineral claims. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves, currently no property has reached the production stage. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value.

 

Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

 

Environmental expenditures

 

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

 

Impairment of Long-Lived Assets

 

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

F- 9
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  
   
Note 2: Significant Accounting Policies – ( continued )

 

Income taxes

 

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with FASB ASC 740 “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

 

Stock-based compensation

 

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. 

 

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

 

Fair value of financial instruments

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2013 and May 31, 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market.  Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

F- 10
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 2: Significant Accounting Policies – ( continued )

 

Fair value of financial instruments - (continued)

 

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

 

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

 

Basic and diluted net loss per share

 

The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 

Use of estimates

 

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

 

Concentrations of credit risk

 

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts payable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

 

Risks and uncertainties

 

The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

F- 11
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 2: Significant Accounting Policies – ( continued )

 

Website Development Costs

 

Costs incurred in developing and maintaining a website are charged to expense when incurred for the planning, content population, and administration or maintenance of the website. All development costs for the application, infrastructure, and graphics development are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs are amortized using the straight-line basis over a three year estimated economic life of the product.

 

Asset Retirement Obligation

 

The Company follows ASC 410, Asset Retirement and Environmental Obligations, which requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate

 

Note 3: Recent accounting pronouncements

 

The Company has evaluated the recent accounting pronouncements and believes that none of them will have a material effect on the company’s financial statements.

 

Note 4: Website

 

The Company’s website development costs consist of the following:

 

    May 31     May 31  
    2013          2012  
Website   $ 4,000     $ -  
Less - accumulated amortization     (444 )     -  
Net fixed assets   $ 3,556     $ -  

 

Amortization of $444 and $nil is included in general and administrative expenses in the statement of operations for the years ended May 31, 2013 and May 31, 2012, respectively.

F- 12
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 5: Mineral Claim

 

Pursuant to a mineral property purchase agreement dated February 26, 2007, the Company acquired a 100% undivided right, title and interest in a mineral claim, located in the Alberni Mining Division of British Columbia, Canada for a cash payment of $5,129 and delivery of a geological report. The Company has paid an additional $6,098 for a geological report and $2,285 in Mineral right renewal fees. Mineral property acquisition costs are capitalized when incurred. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves, currently no property has reached the production stage. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. During the year ended May 31, 2011, the Company evaluated the mineral claim and determined that the asset has been impaired because the Company could not project any future cash flows or salvage value and the asset was not recoverable.  Consequently, the Company has recorded an impairment loss for the full amount of $13,512 for the year ended May 31, 2011.

 

Pursuant to a mineral property assignment agreement dated August 21, 2012, the Company acquired an option to acquire a 100% interest in 3 mineral claims in Calvert, Montana, subject to a 2% Net Value Royalty. Consideration for the property was as follows:

 

Cash payments totalling $1,000,000 payable as follows:

 

- $5,000 upon the execution of an assignment agreement, (paid);
- $5,000 on or before October 1, 2012, (paid);
- $15,000 on or before June 18, 2013;
- $20,000 on or before June 18, 2014;
- $25,000 on or before June 18, 2015;
- $30,000 on or before June 18, 2016;
- $35,000 on or before June 18, 2017;
- $40,000 on or before June 18, 2018;
- $45,000 on or before June 18, 2019;
- $50,000 on or before June 18, 2020
- $50,000 every year until $1,000,000 is paid.

 

The Company has the right to purchase up to 1.8% of the Net Value Royalty for $1,500,000.

 

On October 9, 2012 the Company completed the registration and acquisition of 195 newly staked mineral claims located in Calvert, Montana.  The claims were registered on behalf of the Company with the U.S. Department of the Interior, Bureau of Land Management, at a cost of $12,285.  The claims span approximately 3,900 acres and are contiguous with the three claims that constitute the Company’s recently optioned Calvert Property. The newly acquired claims will form part of the Calvert Property for the purposes of that Option Agreement and will be subject to a 2% net smelter royalty.

 

On January 31, 2013 the Company entered into an agreement to stake additional claims in Montana. The Company has advanced $25,000 to stake additional mineral claims located in Calvert, Montana.  Once completed, and should our company wish to proceed with the staking of the Greenstone area we will be required to pay to Dykes Geologic $15,000. The Company also has an obligation to issue 100,000 shares as part of the acquisition which has been valued at $42,000 and accrued as stock payable.

F- 13
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 5: Mineral Claim (cont’d)

 

On June 6, 2013, the Company filed its geological report on the Property in an 8K.

 

Note 6: Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

 

Note 7: Common Stock

 

On July 19, 2012, the directors and majority shareholder passed a resolution to forward split the Company’s shares on a 1:30 basis, to be effective August 9, 2012. The number of shares has been retroactively restated to reflect the forward split.

 

a. Authorized - The total authorized capital is 2,250,000,000 common shares with a par value of $0.001.
   
b. Issued and outstanding - The total issued and outstanding capital stock is 75,750,000.

 

  On February 8, 2007, 135,000,000 common shares of the Company were subscribed for cash proceeds of $4,500. Out of these 123,000,000 shares were subsequently cancelled during the year ended May 31, 2013. (Note 8)
   
  On February 21, 2007, 37,500,000 common shares of the Company were subscribed for cash proceeds of $5,000.
   
  On March 19, 2007, 26,250,000 common shares of the Company were subscribed for cash proceeds of $17,500.
   
  As of March 19, 2007, the Company received a total of $27,000 for 75,750,000 shares of common stock.
   
  On February 19, 2013, Company entered into a share cancellation/return to treasury agreement with Matthew Markin, president, wherein Matthew Markin has agreed to the cancellation and return to treasury of 123,000,000 share of common stock of Company held by Matthew Markin.
   
  On April 4, 2013, the Board of Directors of the Company ratified, approved and adopted a Stock Option Plan for the Company in the amount of 8,000,000 shares with an exercisable period up to 5 years. In the event an optionee ceases to be employed by or to provide services to the Company for reasons other than cause, any Stock Option that is vested and held by such optionee may be exercisable within up to three months after the effective date that his position ceases. No Stock Option granted under the Stock Option Plan is transferable. Any Stock Option held by an optionee at the time of his death may be
F- 14
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 7: Common Stock (cont’d)

 

exercised by his estate within one year of his death or such longer period as the Board of Directors may determine.

 

On May 10, 2013, the Company granted 200,000 fully vested stock options to a director of the Company at $0.30 per share expiring May 10, 2018.

 

On May 14, 2013, the Company granted 150,000 fully vested stock options to directors of the Company at $0.30 per share expiring May 14, 2018.

 

On May 23, 2013, the Company granted 2,000,000 fully vested stock options to a director of the Company at $0.30 per share expiring May 23, 2018.

 

On May 24, 2013, the Company granted 50,000 fully vested stock options to a director of the Company at $0.30 per share expiring May 24, 2018.

 

On May 31, 2013, the Company granted 118,022 fully vested stock options to directors of the Company at $0.31 per share expiring May 31, 2018.

 

During the year ended May 31, 2013, a total of 2,758,022 options were granted. The Company recognized stock based consulting expenses totalling $876,179 which was charged to operations. The fair value of each option granted is estimated at the respective grant date using the Black-Scholes Option Model. The following assumptions were made in estimating the fair value:

 

Expected volatility      381% - 382%
Expected life   5 years
Risk-free interest rate   0.90 – 1.05
Dividend yield   -

 

At May 31, 2013, the following stock options were outstanding:

 

Number of        Exercise          
Shares     Price     Expiry Date
  240,000     $ 0.30     March 01, 2018
  200,000     $ 0.30     May 10, 2018
  150,000     $ 0.30     May 14, 2018
  2,000,000     $ 0.30     May 23, 2018
  50,000     $ 0.30     May 24, 2018
  118,022     $ 0.31     May 31, 2018
  2,758,022              

 

At May 31, 2013, no warrants were outstanding.

F- 15
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 7: Common Stock (cont’d)

 

c. Stock payable – The Company has accrued for various obligations to issue shares.

 

On January 31, 2013, the Company has an obligation to issue 100,000 shares in accordance with an agreement to stake additional claims in Montana. This obligation to issue shares has been accrued at $42,000 and has been recorded as an exploration advance.

 

On February 11, 2013, the Company entered into an agreement for consulting services with an unrelated party in an arm’s length transaction. The terms of the agreement is 12 months and requires the issuance of 150,000 restricted common shares after the first three months. The Company has recognized the shares payable under the contract to May 31, 2013 and has accrued $46,500 as stock payable.

 

On February 8, 2013, the Company recorded the fair value of the beneficial conversion feature of funds received from the line of credit (see note 10), total beneficial conversion feature was recorded to additional paid - in capital in the amount of $160,000.

 

On February 19, 2013, the Company recorded the fair value of the beneficial conversion feature of funds received from the line of credit (see note 10), total beneficial conversion feature was recorded to additional paid - in capital in the amount of $100,000.

 

Note 8: Reclassification : Stock Split Adjustment

 

Effective February 19, 2013, the President voluntarily cancelled 123,000,000 shares of his outstanding common stock of the Company which were cancelled and returned to the pool of the Company’s authorized and unissued shares of common stock.  These cancelled shares were previously recorded in the financials at a total of pre-split 135,000,000.  Since the shares under this agreement have been cancelled without the exchange of consideration to reduce number of shares outstanding, the Company considered the change in capital structure from the cancellation agreement in substance a reverse stock split.  In accordance with SAB Topic 4-C, the Company recorded the cancellation retroactively as a reduction to the par value of common stock with a corresponding increase to additional accumulated deficit.

 

Note 9: Related Party Transactions

 

As of May 31, 2013 and May 31, 2012, total advances from a director of the Company were $22,663 and $38,083, respectively and advances from a former director of the Company were $86,515 and $86,515, respectively. The amounts are unsecured, non interest bearing and are due on demand.

 

On January 15, 2013 and subsequently amended on May 23, 2013, the Company entered into an employment agreement with a director and senior officer. Terms of employment include monthly payments of $2,500, payment of a signing bonus in the amount of $5,000 cash (paid) and the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $290,000 for the options granted

F- 16
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 9: Related Party Transactions (cont’d)

 

upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $1,143. The Company also entered into an independent association agreement dated May 23, 2013 which called for the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. The Company has recognized a value of $289,995 for the options granted upon agreement date.

 

On February 21, 2013 and subsequently amended on May 10, 2013, the Company entered into a director’s association agreement with a new director. Terms of the agreement include the issuance of 200,000 options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $62,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $1,200.

 

On March 1, 2013 and subsequently amended on May 14, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 50,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $15,500 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $971.

 

On May 14, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 100,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $31,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $971.

 

On May 24, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 50,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $14,500 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $400.

 

On March 1, 2013, the Company entered into an employment agreement with a senior officer. Terms of the agreement include the issuance of 200,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 100,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $80,000 for the options granted

F- 17
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 9: Related Party Transactions (cont’d)

 

upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $26,000.

 

Note 10: Line of Credit

 

On February 2, 2013, the Company entered into an agreement for a $1,000,000 line of credit which is convertible into shares of the Company with an unrelated third party in an arm’s length transaction. The loan is convertible into shares at a price of $0.30 until February 2, 2014 and bears interest of 5% per year. As at May 31, 2013 a total of $4,735 was charged to interest. Upon conversion the Company will issue up to 2,000,000 share purchase warrants to purchase 2,000,000 restricted common shares at $0.80 per shares for a period of three years. The Company and lender have agreed to convert the outstanding balance and interest into shares at the end of the calendar year.

 

As at May 31, 2013, the Company has received $326,000. The Company has determined the value associated with the conversion feature in connection with the convertible note payable. The Company has determined the note, with a face value of $326,000, to have a beneficial conversion feature of $260,000. The beneficial conversion feature has been accreted and is being amortized over the life of the note (which is calendar year end December 31 for each year when the advance is received; being the proposed date of conversion). As at May 31, 2013, $87,033 had been amortized and expensed as interest. The beneficial conversion feature is valued under the intrinsic value method.

 

Note 11: Income Taxes

 

From the Company’s inception (January 10, 2007) through the year ended May 31, 2013 and 2012, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. As of May 31, 2013 and 2012, the Company had approximately $296,507 and $158,016 of federal and state operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2031.

 

The components of the Company’s deferred tax asset are as follows:

 

    May  
    2013     2012  
Deferred tax assets:                
Net operating loss carry forwards     103,778       55,306  
Valuation allowance     (103,778 )     (55,306 )
Total deferred tax assets   $ -     $ -  

 

The valuation allowance for deferred tax assets as of May 31, 2013 and 2012 was $103,778 and $55,306, respectively.  In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets

F- 18
 
US Tungsten Corp. Amended and Restated
(fka Stealth Resources Inc.)  
(An Exploration Stage Company)  
Notes to Audited Financial Statements  
(Expressed in U.S. Dollars)  
May 31, 2013  

 

Note 11: Income Taxes (cont’d)

 

will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.  Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  As a result, management determined it was more likely than not the deferred tax assets would not be realized as of May 31, 2013 and 2012, and recorded a full valuation allowance.

 

Reconciliation between the statutory rate and the effective tax rate is as follows at May 31:

 

      2013 & 2012  
         
Federal statutory tax rate     (35.0)%  
Permanent difference and other     35.0%  

 

Note 12: Other

 

On February 21, 2013, Company entered in to insurance agreement with a third party. As per agreement the Company needs to pay an annual premium of $17,500.

 

As a parallel arrangement, Company entered in to a financing arrangement with IPFS Corporation. As per terms of financing agreement the company paid a cash down payment of $1,493 on signing of the agreement and the balance amount in 11 monthly installments. As on May 31, 2013, $11,641 is payable to IPFS Corporation, which is reflected in other loans.

 

As of May 31, 2013 and 2012, the Company had prepaid insurance totaling $12,753 and $NIL, respectively.  The prepaid insurance will be expensed on a straight line basis over the remaining life of the insurance policy.  During the years ended May 31, 2013 and 2012, the Company recorded $4,746 and $NIL of insurance expenses.

 

 

Note 13: Restatement

 

During the six months ended November 30, 2013, the management of the Company discovered and realized that the Independent Association agreement entered into on May 23, 2013 with Barry Wattenberg, appointing him as the Executive of the Company, was not considered and the effect of the compensation agreed upon in the agreement was not recorded during the audit period May 31, 2013 and three month period ended August 31, 2013. The Company intends to file an amended 10KA for the year ended May 31, 2013 correcting the errors and file the financials with corrected numbers. The Company also intends to file an amended 10QA for the three month period ended August 31, 2013 to correct the errors and file financials with the corrected numbers.

F- 19
 
US Tungsten Corp.   Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Balance Sheet   As Originally     Adjustments     As  
As of May 31, 2013   Filed     Increase/(Decrease)     Restated  
                   
ASSETS                        
                         
Current assets                        
Cash and cash equivalents   $ 121,849     $ -     $ 121,849  
Prepaid expenses     12,753       -       12,753  
Advance on mineral claims     67,000       -       67,000  
Total current assets     201,602       -       201,602  
                         
Other assets                        
                         
Mineral claims (Note 5)     50,000       -       50,000  
Website – net of amortization (Note 4)     3,556       -       3,556  
Total other assets     53,556       -       53,556  
                         
Total assets   $ 255,158     $ -     $ 255,158  
                         
LIABILITIES & STOCKHOLDERS’ DEFICIT                        
                         
Current liabilities                        
Accounts payable and accrued liabilities (Note 6)   $ 34,846     $ -     $ 34,846  
Other loans (Note 12)     11,641       -       11,641  
Due to related party (Note 9)     109,178       -       109,178  
                         
 Letter of credit, net of beneficial conversion feature discount of $172,967 respectively (Note 10)     153,033       -       153,033  
Total current liabilities     308,698       -       308,698  
                         
Total liabilities     308,698       -       308,698  
                         
Stockholders’ deficit                        
                         
Common stock $0.001 par value; authorized 2,250,000,000 shares; issued and outstanding: 75,750,000.     75,750       -       75,750  
Additional paid-in capital     799,684       289,995       1,089,679  
Stock payable     88,500       -       88,500  
Deficit accumulated during the exploration stage     (1,017,474 )     (289,995 )     (1,307,469 )
                         
Total stockholders’ deficit     (53,540 )     -       (53,540 )
                         
Total liabilities and stockholders’ deficit   $ 255,158     $ -     $ 255,158  
F- 20
 

US Tungsten Corp.   Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statements of Operations                  
(Expressed in U.S. Dollars)                  
For the year ended May 31, 2013                  
                   
    As Originally     Adjustments     As  
    Filed     Increase/(Decrease)     Restated  
                         
Revenue   $ -     $ -     $ -  
                         
Expenses                        
                         
Impairment loss on mineral claim   $ -     $ -     $ -  
Legal and accounting     31,589       -       31,589  
General and administrative     64,166       -       64,166  
Management fees     22,500       -       22,500  
Stock based compensation     586,184       289,995       876,179  
Exploration costs     15,057       -       15,057  
Amortization     444       -       444  
Total expenses     719,940       289,995       1,009,935  
                         
Operating loss     (719,940 )     -       (1,009,935 )
                         
Other expenses                        
Interest expense     (91,768 )     -       (91,768 )
                         
Net loss   $ (811,708 )   $ (289,995 )   $ (1,101,703 )
F- 21
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statements of Operations                  
(Expressed in U.S. Dollars)                  
From Inception (January 10, 2007) through May 31, 2013                  
                   
    As Originally     Adjustments     As  
    Filed     Increase/(Decrease)     Restated  
                         
Revenue   $ -     $ -     $ -  
                         
Expenses                        
                         
Impairment loss on mineral claim   $ 13,512     $ -     $ 13,512  
Legal and accounting     98,198       -       98,198  
General and administrative     142,061       -       142,061  
Management fees     22,500       -       22,500  
Stock based compensation     586,184       289,995       876,179  
Exploration costs     15,057       -       15,057  
Amortization     444       -       444  
Total expenses     877,956       289,995       1,167,951  
                         
Operating loss     (877,956 )     (289,995 )     (1,167,951 )
                         
Other expenses                        
Interest expense     (91,768 )     -       (91,768 )
                         
Net loss   $ (969,724 )   $ (289,995 )   $ (1,259,719 )
F- 22
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statement of Cash Flows                  
For the year ended May 31, 2013                  
(Audited)                  
                   
    As Originally
Filed 		    Adjustments
Increase/(Decrease) 		    As
Restated 		 
Cash flows from operating activities:                        
Net loss   $ (811,708 )   $ (289,995 )   $ (1,101,703 )
Adjustments to reconcile net loss to net cash used in operating activities                        
Amortization     444       -       444  
Amortization of beneficial conversion feature     87,033       -       87,033  
Stock based compensation     586,184       289,995       876,179  
Changes in operating assets and liabilities:                        
Increase in prepaid expenses     (12,753 )     -       (12,753 )
Increase in accounts payable and accrued liabilities     28,969       -       28,969  
                         
Net cash used in operating activities     (121,831 )     -       (121,831 )
                         
Cash flows from investing activities:                        
Purchase of mineral claims     (50,000 )     -       (50,000 )
Advance for claim acquisition     (25,000 )     -       (25,000 )
Website development cost     (4,000 )     -       (4,000 )
                         
Net cash used in investing activities     (79,000 )     -       (79,000 )
                         
Cash flows from financing activities:                        
Bank overdraft     -       -       -  
Proceeds from sale of common stock     -       -       -  
Contributed capital by related party     -       -       -  
Proceeds from other loans     11,641       -       11,641  
Repayment of loan from related party     (122,000 )     -       (122,000 )
Proceeds from loan from related party     106,580       -       106,580  
Proceeds from letter of credit     326,000               326,000  
                         
Net cash used in financing activities     322,221       -       322,221  
                         
(Decrease) increase in cash and cash equivalents     121,390       -       121,390  
                         
Cash and cash equivalents, beginning of year     459       -       459  
                         
Cash and cash equivalents, end of year   $ 121,849     $ -     $ 121,849  
                         
Non – cash investing and financing activities:                        
Beneficial conversion feature   $ 260,000     $ -     $ 260,000  
                         
Stock payable for advance on acquisition of mineral claim   $ 42,000     $ -     $ 42,000  
F- 23
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statement of Cash Flows                  
From Inception (January 10, 2007) through May 31, 2013                  
(Audited)                  
                   
    As Originally
Filed 		    Adjustments
Increase/(Decrease) 		    As
Restated 		 
Cash flows from operating activities:                        
Net loss   $ (969,723 )   $ (289,995 )   $ (1,259,719 )
Adjustments to reconcile net loss to net cash used in operating activities                        
Amortization     444       -       444  
Amortization of beneficial conversion feature     91,768       -       91,768  
Stock based compensation     586,184       289,995       876,179  
Changes in operating assets and liabilities:                        
Increase in prepaid expenses     (12,753 )     -       (12,753 )
Increase in accounts payable and accrued liabilities     30,111       -       30,111  
Mineral property expenditures written down     13,512       -       13,512  
                         
Net cash used in operating activities     (260,458 )     -       (260,458 )
                         
Cash flows from investing activities:                        
Purchase of mineral claims     (63,512 )     -       (63,512 )
Advance for claim acquisition     (25,000 )     -       (25,000 )
Website development cost     (4,000 )     -       (4,000 )
                         
Net cash used in investing activities     (92,512 )     -       (92,512 )
                         
Cash flows from financing activities:                        
Bank overdraft     -       -       -  
Proceeds from sale of common stock     27,000       -       27,000  
Contributed capital by related party     1,000       -       1,000  
Proceeds from other loans     11,641       -       11,641  
Repayment of loan from related party     (122,000 )     -       (122,000 )
Proceeds from loan from related party     231,178       -       231,178  
Proceeds from letter of credit     326,000               326,000  
                         
Net cash used in financing activities     474,819       -       474,819  
                         
(Decrease) increase in cash and cash equivalents     121,849       -       121,849  
                         
Cash and cash equivalents, beginning of year     -       -       -  
                         
Cash and cash equivalents, end of year   $ 121,849     $ -     $ 121,849  
                         
Non – cash investing and financing activities:                        
Beneficial conversion feature   $ 260,000     $ -     $ 260,000  
                         
Stock payable for advance on acquisition of mineral claim   $ 42,000     $ -     $ 42,000  
F- 24
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Balance Sheet   As Originally     Adjustments     As  
As of August 31, 2013   Filed     Increase/(Decrease)     Restated  
                         
ASSETS                        
                         
Current assets                        
Cash and cash equivalents   $ 89,403     $ -     $ 89,403  
Prepaid expenses     9,702       -       9,702  
Advance on mineral claims     67,000       -       67,000  
Total current assets     166,105       -       166,105  
                         
Other assets                        
                         
Mineral claims (Note 5)     83,480       -       83,480  
Website – net of amortization (Note 4)     3,222       -       3,222  
Total other assets     86,702       -       86,702  
Total assets   $ 252,807     $ -     $ 252,807  
                         
                         
LIABILITIES & STOCKHOLDERS’ DEFICIT                        
                         
Current liabilities                        
Accounts payable and accrued liabilities (Note 6)   $ 29,510     $ -     $ 29,510  
Accrued Management fee due to related party     87,500       -       87,500  
Other loans (Note 11)     7,266       -       7,266  
Due to related party (Note 9)     109,178       -       109,178  
Letter of credit, net of beneficial conversion feature discount of $98,607, respectively (Note 10)     352,393       -       352,393  
Total current liabilities     585,847       -       585,847  
                         
Total liabilities     585,847       -       585,847  
                         
Stockholders’ deficit                        
Common stock $0.001 par value; authorized 2,250,000,000 shares; issued and outstanding: 75,750,000, respectively.     75,750       -       75,750  
Additional paid-in capital     1,004,350       300,512       1,304,862  
Stock payable     88,500       -       88,500  
Deficit accumulated during the exploration stage     (1,501,640 )     (300,512 )     (1,802,152 )
                         
Total stockholders’ deficit     (333,040 )     -       (333,040 )
                         
Total liabilities and stockholders’ deficit   $ 252,807     $ -     $ 252,807  
F- 25
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statements of Operations                  
(Expressed in U.S. Dollars)                  
For the three months ended August 31, 2013                  
                   
    As Originally     Adjustments     As  
    Filed     Increase/(Decrease)     Restated  
Revenue   $ -     $ -     $ -  
Expenses                        
Impairment loss on mineral claim   $ -     $ -     $ -  
Legal and accounting     6,900       -       6,900  
General and administrative     19,370       -       19,370  
Management fees     161,500       -       161,500  
Stock based compensation     204,666       10,517       215,183  
Exploration costs     12,655       -       12,655  
Amortization     333       -       333  
Total expenses     405,424       10,517       415,941  
                         
Operating loss     (405,424 )     -       (415,941 )
                         
Other expenses                        
                         
Interest expense     (78,742 )     -       (78,742 )
                         
Net loss   $ (484,166 )   $ (10,517 )   $ (494,683 )

 

Statements of Operations                  
(Expressed in U.S. Dollars)                  
From Inception (January 10, 2007) through August 31, 2013  
                   
    As Originally     Adjustments     As  
      Filed       Increase/(Decrease)       Restated  
Revenue   $ -     $ -     $ -  
Expenses                        
Impairment loss on mineral claim   $ 13,512     $ -     $ 13,512  
Legal and accounting     105,098       -       105,098  
General and administrative     161,430       -       161,430  
Management fees     184,000       -       184,000  
Stock based compensation     790,850       300,512       1,091,362  
Exploration costs     27,712       -       27,712  
Amortization     777       -       777  
Total expenses     1,283,379       300,512       1,583,891  
                         
Operating loss     (1,283,379 )     (300,512 )     (1,583,891 )
                         
Other expenses                        
Interest expense     (170,510 )     -       (170,510 )
Net loss   $ (1,453,889 )   $ (300,512 )   $ (1,754,401 )
F- 26
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statement of Cash Flows                  
For the period ended August 31, 2013                  
                   
    As Originally
Filed 		    Adjustments
Increase/(Decrease) 		    As
Restated 		 
                         
Cash flows from operating activities:                        
Net loss   $ (484,166 )   $ (10,517 )   $ (494,683 )
Adjustments to reconcile net loss to net cash used in operating activities                        
Amortization     334       -       334  
Amortization of beneficial conversion feature     74,360       -       74,360  
Stock based compensation     204,666       10,517       215,183  
Changes in operating assets and liabilities:                        
Increase in prepaid expenses     3,051       -       3,051  
Increase in accrued management fee due to related party     87,500       -       87,500  
Increase in accounts payable and accrued liabilities     (5,336 )     -       (5,336 )
                         
Net cash used in operating activities     (119,591 )     -       (119,591 )
                         
Cash flows from investing activities:                        
Purchase of mineral claims     (33,480 )     -       (33,480 )
Advance for claim acquisition     -       -       -  
Website development cost     -       -       -  
                         
Net cash used in investing activities     (33,480 )     -       (33,480 )
                         
Cash flows from financing activities:                        
Bank overdraft     -       -       -  
Proceeds from sale of common stock     -       -       -  
Contributed capital by related party     -       -       -  
Payments to other loans     (4,375 )     -       (4,375 )
Repayment of loan from related party     -       -       -  
Proceeds from loan from related party     -       -       -  
Proceeds from letter of credit     125,000       -       125,000  
                         
Net cash used in financing activities     120,625       -       120,625  
                         
(Decrease) increase in cash and cash equivalents     (32,446 )     -       (32,446 )
                         
Cash and cash equivalents, beginning of year     121,849       -       121,849  
                         
Cash and cash equivalents, end of year   $ 89,403     $ -     $ 89,403  
                         
Non – cash investing and financing activities:                        
Beneficial conversion feature   $ -     $ -     $ -  
                         
Stock payable for advance on acquisition of mineral claim   $ -     $ -     $ -  

 

F- 27
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 13: Restatement (cont’d)

 

Statement of Cash Flows                  
From Inception (January 10, 2007) through August 31, 2013  
                   
    As Originally
Filed 		    Adjustments
Increase/(Decrease) 		    As
Restated 		 
                         
Cash flows from operating activities:                        
Net loss   $ (1,453,889 )   $ (300,512 )   $ (1,754,401 )
Adjustments to reconcile net loss to net cash used in operating activities                        
Impairment loss on mineral claim     13,512       -       13,512  
Amortization     778       -       778  
Amortization of beneficial conversion feature     161,393       -       161,393  
Stock based compensation     790,850       300,512       1,091,362  
Changes in operating assets and liabilities:                        
Increase in prepaid expenses     (9,702 )     -       (9,702 )
Increase in accrued management fee due to related party     87,500       -       87,500  
Increase in accounts payable and accrued liabilities     29,510       -       29,510  
                         
Net cash used in operating activities     (380,049 )     -       (380,049 )
Cash flows from investing activities:                        
Purchase of mineral claims     (96,992 )     -       (96,992 )
Advance for claim acquisition     (25,000 )     -       (25,000 )
Website development cost     (4,000 )     -       (4,000 )
                         
Net cash used in investing activities     (125,992 )     -       (125,992 )
                         
Cash flows from financing activities:                        
Proceeds from sale of common stock     27,000       -       27,000  
Contributed capital by related party     1,000       -       1,000  
Proceeds to other loans     7,266       -       7,266  
Repayment of loan from related party     (122,000 )     -       (122,000 )
Proceeds from loan from related party     231,178       -       231,178  
Proceeds from letter of credit     451,000       -       451,000  
                         
Net cash used in financing activities     595,444       -       595,444  
                         
(Decrease) increase in cash and cash equivalents     89,403       -       89,403  
                         
Cash and cash equivalents, beginning of period     -       -       -  
                         
Cash and cash equivalents, end of period   $ 89,403     $ -     $ 89,403  
                         
Non – cash investing and financing activities:                        
Beneficial conversion feature   $ 260,000     $ -     $ 260,000  
                         
Stock payable for advance on acquisition of mineral claim   $ 42,000     $ -     $ 42,000  
F- 28
 
US Tungsten Corp. Amended and Restated

(fka Stealth Resources Inc.)

(An Exploration Stage Company)

Notes to Audited Financial Statements

(Expressed in U.S. Dollars)

May 31, 2013

 

Note 14: Subsequent Event

 

On October 2, 2013, Matthew Markin resigned as President and Director of the Company and, Barry Wattenberg was appointed was President of the Company.

F- 29
 
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 

There have been no changes in and disagreements with our accountants on accounting and financial disclosure from the inception of our company through to the date of this Report.

 

Item 9A. Controls and Procedures.

 

(a) Evaluation of disclosure controls and procedures

 

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our management, with participation of our Chief Executive Officer and our Chief Financial Officer as of the end of the period covered by this report, our Chief Executive Officer, and our Chief Financial Officer concluded that our disclosure controls and procedures are not effective in ensuring that material information relating to us, is made known to the certifying officers by others within our company during the period covered by this report.

 

As used herein, “ disclosure controls and procedures ” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

(b) Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities Exchange Act of 1934 . Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”). Based on our evaluation under the framework, management has concluded that our internal control over financial reporting was not effective as of May 31, 2013. Management has identified that there was insufficient segregation of duties in certain areas of the reporting process. Management is currently implementing changes in the financial reporting process to ensure improved communication and timely reporting of transactions.

 

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

 

(c) Changes in Internal Control over Financial Reporting
15
 

There have not been any changes in our internal controls or in other factors that occurred during our last fiscal year ended May 31, 2013 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

Item 9B. Other Information.

 

None.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

Our officers and directors and their age and titles as of the date of this report are as follows:

 

  Name     Age     Position
  Michael Olsher     67     Chief Executive Officer
             
  Barry Wattenberg     57     President, Treasurer, Chief Financial Officer and director
  Norman Marcus     61     Director

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board.

 

Biographical information

 

Michael Olsher, PhD

 

Michael Olsher has been our Chief Executive Officer since March 1, 2013. He is a well-known international steel and minerals senior executive, with expertise in management, transactional financing, economic decision-making, budgeting, sales and purchasing. His most recent experiences have been in industrial minerals and mining in South America, partnering with large international metals and mining companies, investigating new mineral supplies in these emerging markets. Having been employed by major metals and minerals companies, as well as having created his own steel and mineral enterprises, Dr. Olsher has over 30 years of seasoning as a senior executive in the metals and minerals businesses.

 

He has been a division head at ACLI International ($2Billion) and Considar, now Traxys ($6 Billion), and has served as a director of Andal Corp. (American Stock Exchange) as head of their Steel Group. Having earned a B.A. in Economics from the University of Pittsburgh, and an M.B.A. in Economics and Finance from N.Y.U. Graduate School of Business, he completed his Ph.D from Fordham University, studying under the world-famous industrial economist, Father William T. Hogan. Dr. Olsher has taught at Columbia University Graduate School of Business and at Fordham University Graduate School of Business.

 

Dr. Olsher intends to devote approximately 50% of his business time to our affairs.

16
 

Matthew Markin

 

Matthew Markin was President and a director since April 12, 2011 until October 2, 2013. Mr. Markin is currently a majority shareholder of the Company.  He holds degrees in science from Capilano College and the University of British Columbia. Since 1999, Mr. Markin has served as President of The Markin Group of Companies in Los Angeles, California, where he consults to large and small businesses in the areas of strategic planning, business development, capital formation, mergers and acquisitions, and related matters.

 

Mr. Markin intends to devote approximately 85% of his business time to our affairs.

 

Barry Wattenberg

 

Barry Wattenberg was appointed as a director on January 8, 2013 and was appointed as Chief Financial Officer on February 1, 2013. On October 2, 2013 Mr. Wattenberg was appointed as President. He has served in various capacities within the securities industry, including chief compliance officer, chief operating officer, head Trader/market maker at several different NASD member broker/dealers from 1988 to 2008.  Currently, Mr. Wattenberg is a private investor. Mr. Wattenberg is past president of a local Kiwanis chapter. He has a B.S. Economics and Management Science, Carnegie-Mellon University, Pittsburgh, Pennsylvania.

 

Mr. Wattenberg intends to devote approximately 50% of his business time to our affairs.

 

Norman Marcus

 

Norman Marcus has been a director since February 27, 2013. He graduated with a Bachelor of Arts from Tulane University, and earned a Juris Doctor from the University of Miami. Mr. Marcus was licensed to practice law in the State of Florida in 1975, and he has continuously engaged in the private practice of law since that time, operating his own firm since 1978. Mr. Marcus is also certified by the Florida Supreme Court as a family mediator and he is a qualified arbitrator under Florida law.

 

Mr. Marcus intends to devote approximately 5% of his business time to our affairs.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 , as amended (“ Section 16 ”), requires that reports of beneficial ownership of capital stock and changes in such ownership be filed with the SEC by Section 16 “ reporting persons ,” including directors, certain officers, and holders of more than 10% of the outstanding common shares. We are required to disclose in this Annual Report on Form 10-K each reporting person whom we know to have failed to file any required reports under Section 16 on a timely basis during the fiscal year ended May 31, 2013.

 

To our knowledge, based solely on a review of copies of Forms 3, 4 and 5 furnished to us and written representations that no other reports were required, during the fiscal year ended May 31, 2013, our officers, directors and 10% shareholders complied with all Section 16(a) filing requirements applicable to them.

17
 

Significant Employees and Consultants

 

Roger Haskins has been appointed as Chairman of our Board of Advisors.  

 

Mr. Haskins worked as Bureau Program Manager for Mining Law Administration (1872 Mining Law) on Federal lands.  As manager for the National Mineral Program, both technical and administrative, Roger Haskins managed a budget of $35m and 250 positions.

 

He authored numerous regulations in the Code of Federal Regulations (CFR). Mr. Haskins is a Certified Professional Geologist. He has served in the state of California and Reno, Nevada where he was with the Surface Management Program of the Bureau of Land Management (mining reclamation and operations approval areas). Roger Haskins worked for the Bureau of Land Management for over 30 years achieving status as a Certified Review Mineral Examiner, as well as an instructor at the agency’s National Training Center.

 

As a mining law specialist he served for 14 years as Bureau Program Manager for Mining Law Administration (1872 Mining Law) on federal lands. Mr. Haskins is also a specialist in arcane and extinct federal land and mineral laws. Roger Haskins was educated at University of Manitoba, Economic Geology 1973 – 1974 and Grand Valley State University BS, Geology, Anthropology 1969 – 1973, emphasis in economic geology (mineral exploration and development).

 

We have no significant employees other than the officers and directors described above.

 

Conflicts of Interest

 

We do not have any written procedures in place to address conflicts of interest that may arise between our business and the future business activities of our officers or directors.

 

Audit Committee Financial Expert

 

We do not have a financial expert serving on an audit committee as we do not have an audit committee because Board of Directors determined that as a start-up exploration company with no revenues it would be too expensive to have one.

 

Role and Responsibilities of the Board

 

The Board of Directors oversees the conduct and supervises the management of our business and affairs pursuant to the powers vested in it by and in accordance with the requirements of the Revised Statutes of Nevada. The Board of Directors holds regular meetings to consider particular issues or conduct specific reviews whenever deemed appropriate.

 

Our Board of Directors considers good corporate governance to be important to our effective operations. Our directors are elected at the annual meeting of the stockholders and serve until their successors are elected or appointed. Officers are appointed by the Board of Directors and serve at the discretion of the Board of Directors or until their earlier resignation or removal.

 

As we have only one director and executive officer, there are no arrangements or understandings pursuant to which a director or executive officer was selected to be a director or executive officer.

18
 

Code of Ethics

 

We have adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934 . The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions.

 

Item 11. Executive Compensation.

 

Summary Compensation Table

 

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers for all services rendered in all capacities to us for the period from our inception through the fiscal periods ended May 31, 2013, May 31, 2012 and May 31, 2011.

 

Name and
Principal
Position 		Year

Salary
($)

Bonus
($)

Stock
Awards
($)

Option
Awards
($)

Non-Equity
Incentive
Plan
Compen-
sation

($)

Change in Pension
Value and
Nonqualified
Deferred
Compensation
($)

All Other
Compen-
sation
($)

Total
($)

Matthew Markin ,
President,
former CEO,
and director

2013

2012

2011

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Olsher, Michael
CEO

2013 7,500 0 0 106,000 0 0 - 113,500

Wattenberg, Barry
CFO

2013 12,500 0 0 581,138 0 0 -

593,638

 

 

Option/SAR Grants

 

On April 4, 2013, our Board of Directors ratified, approved and adopted a Stock Option Plan in the amount of 8,000,000 shares with an exercisable period up to 5 years. In the event an optionee ceases to be employed by or to provide services to us for reasons other than cause, any stock option that is vested and held by such optionee may be exercisable within up to three months after the effective date that his position ceases. No stock option granted under the Stock Option Plan is transferable. Any Stock Option held by an optionee at the time of his death may be exercised by his estate within one year of his death or such longer period as the Board of Directors may determine.

 

The following table sets forth certain information concerning grants of stock options to the directors and officers during the year ended May 31, 2013.

19
 
OPTION/SAR GRANTS IN LAST FISCAL YEAR
    Individual Grants    
    Number of
Securities
Underlying
Options/SARs
Granted 		  % of Total
Options/SARs
Granted to
Employees in
Fiscal Year 		  Exercise
Price
($/Share) 		  Market
Price on
Date of
Grant
($/Share) 		   
                     
Olsher, Michael   300,000   11%   0.30   0.40    
                     
Wattenberg, Barry   2,004,396   73%   0.30   0.40    
                     
Marcus, Norman   204,615   7%   0.30   0.40    

 

Compensation of Directors

 

On February 21, 2013 and amended on May 10, 2013, we entered into a director’s association agreement with Norman Marcus. Terms of the agreement include the issuance of 200,000 options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%.

 

On January 15, 2013 and amended on May 23, 2013, we entered into an employment agreement with Barry Wattenberg, a director of our company, wherein Mr. Wattenberg agreed to act as chief financial officer. Pursuant to the agreement, terms of employment include monthly payments of $2,500, payment of a signing bonus in the amount of $5,000 cash (paid) and the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company also entered into an independent association agreement dated May 23, 2013 which called for the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years.

 

Employment contracts and termination of employment and change-in-control arrangements

 

On January 15, 2013 and amended on May 23, 2013, we entered into an employment agreement with Barry Wattenberg, a director of our company, wherein Mr. Wattenberg agreed to act as chief financial officer. Pursuant to the agreement, terms of employment include monthly payments of $2,500, payment of a signing bonus in the amount of $5,000 cash (paid) and the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $62,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $1,200. The Company also entered into an independent association agreement dated May 23, 2013 which called for the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. The Company has recognized a value of $289,995 for the options granted upon agreement date.

 

On March 1, 2013, the Company entered into an employment agreement with a senior officer. Terms of the agreement include the issuance of 200,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 100,000 options at the end of each fiscal quarter at an exercise

20
 

price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $80,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $26,000.

 

There are no other employment agreements between our company and other directors and officers. We do not pay our directors any amount for acting as director of the Company.

 

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

 

The following table sets forth certain information regarding the beneficial ownership of our common stock, as of the date of this registration statement, by (i) each person (including any group) who is known by us to beneficially own more than 5% of any class of the voting securities of our company; (ii) each of our directors, and (iii) officers and directors as a group.

 

Each common share entitles the holder thereof to one vote in respect of any matters that may properly come before our stockholders. To the best of our knowledge, there exist no arrangements that could cause a change in voting control of our company. Unless otherwise indicated, the persons named below have sole voting and investment power with respect to all shares beneficially owned by them, subject to community property laws where applicable.

 

Title of Class Name and Address Of Owner Relationship to Company Number of Shares

Percent
Owned (1)

Common Stock Matthew Markin 5% Shareholder (2) 12,000,000 15.84%
Common Stock All directors and executive officers as a group (one individual)   12,000,000 15.84%

 

(1) The percent ownership of class is based on 75,750,000 shares of common stock issued and outstanding as of the date of this report (after completion of forward split of shares on a 1:30 basis, effective August 9, 2012).
   
(2) Effective February 19, 2013, we entered into a share cancellation/return to treasury agreement with Matthew Markin, wherein Matthew Markin agreed to the cancellation and return to treasury of 123,000,000 share of common stock of our company held by Matthew Markin. The cancellation of these shares has not yet been effected.

 

Under the rules of the Commission, a person (or group of persons) is deemed to be a “ beneficial owner ” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

21
 
Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Transactions with related persons

 

Except as disclosed below, none of the following parties has, since our inception, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

 

● any of our directors or executive officers;

 

● any person proposed as a nominee for election as a director;

 

● any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

 

● any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son- in-law, daughter-in-law, brother-in-law or sister-in-law of any of the foregoing persons; or

 

● any person sharing the household of any director, executive officer, nominee for director or 5% shareholder of our company.

 

As of May 31, 2013 and May 31, 2012, total advances from a director were $22,663 and $38,083, respectively and advances from a former director were $86,515 and $86,515, respectively. The amounts are unsecured, non interest bearing and are due on demand.

 

On January 15, 2013 and subsequently amended on May 23, 2013, the Company entered into an employment agreement with a director and senior officer. Terms of employment include monthly payments of $2,500, payment of a signing bonus in the amount of $5,000 cash (paid) and the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $290,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $1,143. The Company also entered into an independent association agreement dated May 23, 2013 which called for the issuance of 1,000,000 stock options at a price of $0.30 exercisable for a period of five years. The Company has recognized a value of $289,995 for the options granted upon agreement date.

 

On February 21, 2013 and subsequently amended on May 10, 2013, the Company entered into a director’s association agreement with a new director. Terms of the agreement include the issuance of 200,000 options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $62,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $1,200.

 

On March 1, 2013 and subsequently amended on May 14, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 50,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 50,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $15,500 for the options

22
 

granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $971.

 

On May 14, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 100,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $31,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $971.

 

On May 24, 2013 the Company entered into a director’s advisory agreement with a new director. Terms of the agreement include the issuance of 50,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 20,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $14,500 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $400.

 

On March 1, 2013, the Company entered into an employment agreement with a senior officer. Terms of the agreement include the issuance of 200,000 stock options at a price of $0.30 exercisable for a period of five years and payment of $500 per directors’ meeting attended. In addition, the Company will grant 100,000 options at the end of each fiscal quarter at an exercise price fixed at the previous 10 day trading average plus 10%. The Company has recognized a value of $80,000 for the options granted upon agreement date and has accrued a proportionate amount of quarterly options to be valued at $26,000. The Company also agreed to issue a recruitment fee of 40,000 options to purchase shares of common stock at the price of $0.30 for a period of 5 years at the time of agreement date. The Company has recognized a value of $16,000 for the options granted upon agreement date.

 

Promoters and control persons

 

The promoter of our company is Matthew Markin.

 

There is nothing of value to be received by the promoter, either directly or indirectly, from us. Additionally, there have been no assets acquired nor are there any assets to be acquired from the promoter, either directly or indirectly, from us.

 

Item 14. Principal Accountant Fees and Services.

 

The following table shows the fees billed by De Joya Griffith LLC, Certified Public Accountants & Consultants, our current auditors, for the fiscal year ended May 31, 2013 and May 31, 2012:

23
 
    Fiscal year ended
May 31, 2013 		    Fiscal year ended
May 31, 2012 		 
Audit Fees   $ 13,500     $ 13,500  
Audit Related Fees     -       -  
Tax Fees     -       -  
All Other Fees     -       -  

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a) Financial Statements

 

The following documents are filed under “ Item 8. Financial Statements and Supplementary Data, ” pages F-1 through F-11, and are included as part of this report:

 

Financial Statements for the fiscal year ended May 31, 2013 and 2012

Report of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations

Statement of Stockholders’ Equity (Deficit)

Statements of Cash Flows

Notes to Financial Statements

 

(b) Exhibits

 

The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 10 of this report, and are incorporated herein by this reference.

 

(c) Financial Statement Schedules

 

We are not filing any financial statement schedules as part of this report as such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

24
   

INDEX TO EXHIBITS

 

Number   Exhibit Description
     
3.1   Articles of Incorporation (1)
     
3.2   Bylaws (1)
     
10.1   Mineral property agreement dated February 26, 2007 (1)
     
14.1   Code of Ethics (2)

 

31.1 Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1 Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101 Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.

 

  101.INS   XBRL Instance Document
       
  101.SCH   XBRL Taxonomy Extension Schema Document
       
  101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
       
  101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
       
  101.LAB   XBRL Taxonomy Extension Label Linkbase Document
       
  101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

(1) Filed as an exhibit to our registration statement on Form S-1 filed June 17, 2008 and incorporated herein by this reference

 

(2) Filed as an exhibit to our Form 10-K Annual Report for the year ended May 31, 2010 filed July 9, 2010 and incorporated herein by this reference.
25
   

SIGNATURES

 

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

 

US TUNGSTEN CORP.

 

/s/ Michael Olsher
Michael Olsher
Chief Executive Officer

 

September 9, 2013

 

Pursuant to the requirements of the Securities Exchange Act of 1934 , this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature   Title   Date
         

/s/ Michael Olsher

  Chief Executive Officer   September 9, 2013
Michael Olsher        
         

/s/ Matthew Markin

  President and Director   September 9, 2013
Matthew Markin        
         

/s/ Barry Wattenberg

  Chief Financial Officer and Director   September 9, 2013
Barry Wattenberg        
         

/s/ Norman Marcus

  Director   September 9, 2013
Norman Marcus        
26
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