WORLDSTAR ENERGY, CORP.

Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses since inception (three months ended June 30, 2011 - $18,538; 2010 - $85), is currently unable to self-finance its operations, has a working capital deficiency of $5,286,371 (March 31, 2011 - $5,267,833), a deficit accumulated during the development stage of $11,907,345 (March 31, 2011 - $11,888,807), limited resources, no source of operating cash flow, no assurance that sufficient funding will be available to conduct further operations, debts comprised of accounts payable,

amounts due to related companies, a director and short-term loans totaling $5,422,224 currently due or considered delinquent, no assurance that the Company will not face additional legal actions from creditors regarding delinquent other payables and accrued expenses, loans from directors, amounts due to , related companies, and short-term loans, and there is no assurance that the Company’s business plans will become commercially viable or profitable. Any one or a combination of these above conditions could result in failure of the business and require the Company to cease operations The Company's ability to continue as a going-concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to repay its current obligations, fund working capital and overhead requirements, fund the development of the Company’s mineral exploration rights and the Company’s ability to achieve profitable operations. Management plans to obtain financing through future common share private placements. The Company’s continued existence is dependent upon its ability to achieve its operating plan. There can be no assurance provided the Company will be able to raise sufficient debt or equity capital from the sources described above, on satisfactory terms. If management is unsuccessful in obtaining financing or in achieving long-term profitable operations, the Company will be required to cease operations.

In February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which amends ASC Topic 855 to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent events procedures. The amendments in ASU 2010-09 remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. The new guidance did not have an impact on the Company’s consolidated financial statements. In April 2010, the FASB issued ASU 2010-13, “Compensation—Stock Compensation (ASC Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). ASU 2010-13 provides amendments to ASC Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance or service condition. Therefore, an entity would not classify such an award as liability if it otherwise qualifies as equity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company’s adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

The consolidated statements of operations and cash flows for the nine months ended December 31, 2007, onward are those of National Base to the date of the reverse takeover when operations were combined. The consolidated balance sheets at June 30 and March 31, 2011, statements of operations and cash flows for the nine and three months ended June 30, 2011 and 2010, include National Base’s operations and cash flows for the three months ended June 30, 2011 and the three months ended June 30, 2010 and the Company’s operations and cash flows for the three months ended June 30, 2011 and for the three months ended June 30, 2010. The number of common shares outstanding as at June 30, 2011 are those of the Company.

On August 14, 2007, we completed the acquisition of all of the issued and outstanding shares of National Base, a company incorporated pursuant to the laws of the British Virgin Islands on November 28, 2006, from Jewel, also incorporated pursuant to the laws of the British Virgin Islands and the principal of which was our then President and Chief Executive Officer. The acquisition was completed in accordance with the Share Purchase Agreement dated February 12, 2007 among our Company, Jewel and National Base. At the time of the acquisition, National Base owned interests in 50 mineral exploration licenses in Mongolia. National Base owns 98% of BGI, a Hong Kong corporation, which in turn owns 52% of BGHK. The other 48% of BGHK shares are owned by a Hong Kong businessman as to 18% and a Mongolian businessman as to 30%. They currently remain minority shareholders in the Company. BGHK owns 100% of BGL, a Mongolian corporation. BGL owned the 50 mineral exploration licenses over properties in Mongolia.