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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K/A-1

Commission file number 000-54635

STEALTH TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

801 West Bay Drive, Suite 470

Largo, Florida 33770

(Address of Principal Executive Offices, including zip code)

727-330-2731

(Registrant's telephone number including area code)

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

YES [   ]  NO [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:

YES [X]     NO [   ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 days.   YES [X]     NO [   ]

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

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

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES [   ]     NO [X]

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 June 30, 2016: $1,838,865.

As of April 12, 2017, 96,593,278shares of the registrant's common stock were outstanding.

 

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REASON FOR AMENDMENT

TABLE OF CONTENTS

PART I

ITEM 1.

BUSINESS.

General

We are engaged in the business of identifying and capitalizing on emerging technology and associated markets. Currently, our operations are focused on product development and sales in the security and personal protection businesses. Utilizing our technologies, we plan to expand in this market with additional consumer products and business technologies that provide companies and individuals with new information protection solutions. 

Our Office

We lease space for our offices that are located 801 West Bay Drive, Suite 470, Largo, Florida 33770 and our telephone number is (727) 330-2731. We lease our offices from Candia West Bay LLC pursuant to a written lease dated December 1, 2012. The term of our lease is month-to-month. Our monthly rent is $1,092.

Convertible Promissory Notes

On June 20, 2014, the Company entered into a consulting agreement for consulting services. Pursuant to the agreement, the Company is to pay the consultant a commencement fee of $250,000. On June 23, 2014, the Company issued a $250,000 convertible note which is unsecured, non-bearing interest and due on June 22, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (December 17, 2014) at a conversion rate of 90% of the lowest closing bid prices of the Company's common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $27,461 (2015 - $36,416) has been recorded in accounts payable and accrued liabilities.

On December 17, 2014, the note became convertible resulting in the Company recording a derivative liability of $94,188 with a corresponding adjustment to loss on change in fair value of derivative liabilities of $1,050 as accretion expense. Pursuant to the agreement, the convertible note matured on June 22, 2015 and 150% of the remaining balance in principal and interest is payable. During the year ended December 31, 2015, the Company included a penalty of $125,000 in interest expense for the additional amount payable due to defaulting on the loan. On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $20,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $140,650 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement. During the year ended December 31, 2016, the Company had amortized $nil (2015 - $88,357) of the debt discount to interest expense. During the year ended December 31, 2016, the Company repaid $180,000 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As December 31, 2016, the carrying value of the debenture was $70,000 (2015 - $375,000) and the fair value of the derivative liability was $1,830 (2015 - $304,860).

On June 23, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 22, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 20, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company's common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $nil (2015 - $10,267) has been recorded in accounts payable and accrued liabilities.

On December 20, 2014, the note became convertible resulting in the Company recording a derivative liability of $49,618 with a corresponding adjustment to loss on change in fair value of derivative liabilities. Pursuant to the agreement, the convertible note matured on June 22, 2015 and 150% of the remaining balance in principal and interest is payable. During year ended December 31, 2015, the Company included a penalty of $12,753 in interest expense for the additional amount payable due to defaulting on the loan. During the year ended December 31, 2015, the Company issued 2,001,225 common shares for the conversion of $24,495. On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $5,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $16,820 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement. During the year ended December 31, 2016, the Company had amortized $nil (2015 - $46,652) of the debt discount to interest expense. During the year ended December 31, 2016, the Company repaid $32,514 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As at December 31, 2016, the carrying value of the debenture was $nil (2015 - $38,258) and the fair value of the derivative liability was $nil (2015 - $65,853). During the year ended December 31, 2016, the Company amortized $nil (2015 - $285) in financing costs.

On June 25, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 24, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 22, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company's common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $2,613 (2015 - $13,854) has been recorded in accounts payable and accrued liabilities.

On December 22, 2014, the note became convertible resulting in the Company recording a derivative liability of $49,464 with a corresponding adjustment to loss on change in fair value of derivative liabilities. Pursuant to the agreement, the convertible note matured on June 24, 2015 and 150% of the remaining balance in principal and interest is payable. During the year ended December 31, 2015, the Company included a penalty of $25,000 in interest expense for the additional amount payable due to defaulting on the loan.  On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $5,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $30,202 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement.  During the year ended December 31, 2016, the Company had amortized $nil (2015 - $47,044) of the debt discount to interest expense. During the year ended December 31, 2016, the Company repaid $57,486 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As at December 31, 2016, the carrying value of the debenture was $nil (2015 - $75,000) and the fair value of the derivative liability was $114 (2015 - $120,536). During the year ended December 31, 2016, the Company amortized $nil (2015 - $288) in financing costs.

Notes in General

The Convertible Notes are convertible into shares of our common stock based upon a discount to the market price. The conversion terms of these Convertible Notes are based upon a discount to the then-prevailing average of the lowest trading bid prices (as described above for each separate note) and, as a result, the lower the stock price at the time the Holders convert the Convertible Notes, the more shares of our common stock the Holders will receive. The number of shares of common stock issuable upon conversion of these Convertible Notes is indeterminate. If the trading price of our common stock is lower when the conversion price of these Convertible Notes is determined, we would be required to issue a higher number of shares of our common stock, which could cause substantial dilution to our stockholders. In addition, if the Holders opt to convert these Convertible Notes into shares of our common stock and sell those shares it could result in an imbalance of supply and demand for our common stock and resulting in lower trading prices for our common stock as reported by the OTCBB. The further our stock price declines, the further the adjustment of the conversion price will fall and the greater the number of shares we will have to issue upon conversion.

In addition, the number of shares issuable upon conversion of the Convertible Note is potentially limitless. While the overall ownership of each individual Holder at any one moment may be limited to 9.99% of the issued and outstanding shares of our common stock, each Holder may be free to sell any shares into the market that have previously been issued to them, thereby enabling them to convert the remaining portion of these Convertible Notes.

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 under this item.

ITEM 1B.

UNRESOLVED STAFF COMMENTS.

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

ITEM 2.

PROPERTIES.

We own no properties.

ITEM 3.

LEGAL PROCEEDINGS.

On February 1, 2016, a suit was filed in the United States District Court for the Eastern District of Pennsylvania, captioned Scanner Guard Corporation, plaintiff vs. Excelsis Investments, Inc., International Marketing Group, Inc., and Mobile Dynamic Marketing, Inc., defendants, Case No. 2:16-cv-00516-JCJ alleging that the defendants violated portions of the Lanham Act and Florida's Deceptive and Unfair Trade Practices Act by dissemination false advertising and misrepresentations regarding certain products.  We have retained counsel in this matter and intend to defend the same.

On February 22, 2016, a suit was filed in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida, captioned The Marketing Source, Inc., plaintiff vs. Mobile Dynamic Marketing Inc. and Excelsis Investments, Inc. Case No. 2016-000823-CI alleging that we breached the terms of an agreement and seeks damages, an accounting, and an injunction.  We have retained counsel in this matter and intend to defend the same vigorously.

ITEM 4.

MINE SAFETY DISCLOSURES.

None.

PART II

ITEM 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our stock is listed for trading on the Bulletin Board operated the Financial Industry Regulatory Authority (FINRA) on OTCBB under the symbol "STTH". The shares of common stock began trading in the first quarter of 2011. There are no outstanding options or warrants to purchase, or securities convertible into, our common stock.

Holders

On April 12, 2017, we had 23 shareholders of record of our common stock.

Dividend Policy

We have not declared any cash dividends on our common stock since our inception. There are no dividend restrictions that limit our ability to pay cash dividends on our common stock in our Articles of Incorporation or Bylaws. Our governing statute, Chapter 78 – "Private Corporations" of the Nevada Revised Statutes (the "NRS"), does provide limitations on our ability to

declare cash dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring cash dividends where, after giving effect to the distribution of the dividend:

Penny Stock Regulations and Restrictions on Marketability

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling their shares of our common stock.

Securities authorized for issuance under equity compensation plans

We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.

Transfer Agent

Action Stock Transfer Inc.

2469 E. Fort Union Blvd, Suite 214

Salt Lake City, UT 84121

(801) 274-1088 voice

(801) 274-1099 fax

Recent Sales of Unregistered 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 under this item.

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

Cash Flows

Operating Revenues

During the year ended December 31, 2016, the Company recorded revenues of $5,675,657 compared to revenues of $2,254,318 for the year ended December 31, 2015. The increase is due to the fact that the Company increased its revenue from the sale of its stealth cards from prior year and also earned revenues from a new product, 911 Help Now, which is an emergency two way voice system that connects users to 911.  For the year ended December 31, 2016, the Company earned gross margin of $3,116,384 or 54.91% compared to $1,827,184 or 81.05% during the year ended December 31, 2015. The decrease in gross margin is due to the fact that the new 911 product earns a lower overall gross margin as compared to stealth cards.

Operating Expenses and Net Loss

During the year ended December 31, 2016, the Company incurred operating expenses of $3,835,257 compared to operating expenses of $1,693,442 for the year ended December 31, 2015. The increase in operating expenses is attributed to the fact that the Company increased operations during the year and required more overhead costs to support operations including an increase in general and administrative costs of $1,047,799, research and development costs of $96,877, and consulting expense of $634,386.  Furthermore, the Company had an increase in labor costs with a payroll expense increase of $248,618 from fiscal 2015.  The Company also recorded an increase in professional fees of $113,731 related to increases in accounting and audit fees for the increase in operations during the year, and in legal fees with respect to responses to SEC comment letters and for litigation claims against the Company.

For the year ended December 31, 2016, the Company recorded a net loss of $73,655 or $0.00 loss per share, compared with a net loss of $1,055,350 or $0.02 loss per share for the year ended December 31, 2015.  In addition to revenues and operating expenses, the Company recorded a gain of $489,305 (2015 – loss of $341,192) relating to the change in fair value of the derivative liabilities with respect to the conversion feature of the Company's outstanding convertible debentures. The Company also incurred interest expense of $26,981 (2015 - $535,931) relating to interest costs on the Company's short-term and long-term debt financings which decreased in fiscal 2016 as the convertible debentures and loans were either forgiven, repaid or converted into common shares of the Company. In addition, the Company also recorded a gain on forgiveness of debt of $187,672 (2015 - $25,863) for the forgiveness of debt. The amount forgiven in fiscal 2016 included $30,202 of principal and interest on the June 25, 2014 convertible debenture, $16,820 of principal and interest on the June 23, 2014 convertible debenture, and $140,650 of principal and interest on the June 20, 2014 convertible debenture.  The amount forgiven in fiscal 2015 related to accrued interest forgiven on convertible debentures dated January 23, 2014, March 25, 2014, June 13, 2014, and June 23, 2014. In addition, the Company recorded $12,383 (2015 - $318,132) for make whole expenses related to shares to be issued to a related party in respect to the acquisition of intangible assets.

Liquidity and Capital Resources

As at December 31, 2016, the Company had cash of $456,967 and total current assets of $1,929,891 compared with cash of $388,183 and total current assets of $1,193,612 at December 31, 2015. The increase in cash is attributed to revenue from general operations and sales as well as financing activities. In addition to the increase in cash, the increase in total current assets is due to an increase in $501,450 in accounts receivable which is due to an increase in overall sales revenue during fiscal 2016, and an increase in inventory of $302,934 to account for an increase in the amount of stealth cards on hand.  The increases were offset by a decrease of $136,889 in prepaid expenses and deposits related mainly for inventory items purchased in fiscal 2015 that were prepaid by the Company but had not been received.

As at December 31, 2016, the Company had total current liabilities of $2,475,947 compared to $2,801,238 at December 31, 2015.  The decrease in total current liabilities were attributed to decreases of $489,305 in derivative liabilities as the Company either repaid or converted the majority of outstanding convertible debentures during the year, a decrease of $418,258 in outstanding carrying values of convertible debentures, and a decrease of $19,491 in current loans payable due.  The decreases were offset by increases of $327,360 in accounts payable and accrued liabilities to third parties and related parties due to an overall increase in operating activity during the year, an increase of $146,370 for deferred revenue relating to payments received by the Company for transactions that have not met the revenue recognition criteria, and an increase of $115,650 in amounts due to related parties for outstanding management fees and compensation bonus owed to officers and directors of the Company.

The overall working capital deficit decreased from $1,607,626 at December 31, 2015 to $546,056 at December 31, 2016. The decrease in working capital deficit is mainly due to the settlement and forgiveness of outstanding loans payable and convertible debentures during the year, as well as the effects of the decrease in derivative liabilities as the Company had lower amounts of convertible debentures.

During the year ended December 31, 2016, the Company issued 4,650,000 common shares for the settlement of outstanding debt, issued 9,465,558 common shares for consulting services, and issued 23,166,555 common shares for employee bonuses to the President of the Company and the Chief Financial Officer of the Company.

Cashflow from Operating Activities

During the year ended December 31, 2016, the Company received cash proceeds of $360,522 from operating activities compared to proceeds received of $179,588 from operating activities for the year ended December 31, 2015. The increase in cash from operating activities was due to the fact that the Company increased operating activities during fiscal 2016 and has generated positive gross margins from the sale of stealth cards and other products.

Cashflow from Investing Activities

During the year ended December 31, 2016, the Company had $2,247 in investing activities. During the year ended December 31, 2015, the Company did not have any investing activities.

Cashflow from Financing Activities

During the year ended December 31, 2016, the Company used $289,491 for financing activities which included $270,000 for the repayment of convertible debentures and $19,491 for the repayment of loans payable.  During the year ended December 31, 2015, the Company received $67,000 of proceeds from a loan payable to an unrelated party and repaid $47,509 to an outstanding loan.

We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical accounting policies:

The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and convertible debentures. Pursuant to ASC 820, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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 under this item.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

STEALTH TECHNOLOGIES, INC.

(formerly Excelsis Investments, Inc.)

Consolidated Financial Statements

For the years ended December 31, 2016 and 2015

Consolidated Financial Statement Index

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of

Stealth Technologies, Inc.

Largo, Florida

We have audited the accompanying consolidated balance sheets of Stealth Technologies, Inc. and its subsidiaries (collectively the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders' deficit and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an 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 audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Stealth Technologies, Inc. and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit and an accumulated deficit as of December 31, 2016. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in this regard are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

www.malonebailey.com

Houston, Texas

April 25, 2017

F-1

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Consolidated Balance Sheets

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Consolidated Statements of Operations

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Consolidated Statements of Cashflows

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

STEALTH TECHNOLOGIES INC.

Consolidated Statements of Stockholders' (Deficit)

For the years ended December 31, 2016 and 2015

(The accompanying notes are an integral part of these consolidated financial statements)

F-5

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

1.    Nature of Operations and Continuance of Business

Stealth Technologies, Inc. (formerly Excelsis Investments, Inc.) (the "Company") was incorporated in the state of Nevada on May 27, 2010 under the name "Pub Crawl Holdings, Inc". On June 14, 2010, the Company entered into an Assignment Agreement (the "Acquisition") with PB PubCrawl.com LLC ("PubCrawl"), a California limited liability company, whereby the Company acquired a 100% interest in the member shares of PubCrawl in exchange for 500,000 common shares of the Company. The Acquisition was accounted for in accordance with ASC 805-50, Related Issues, as the companies were under common control prior to acquisition. On September 3, 2012, the Company sold their rights to PubCrawl to the former President and Director of the Company.

On November 28, 2012, the Company acquired 100% of the members' shares of Stealth Card Inc. (formerly Mobile Dynamic Marketing, Inc.) ("Stealth Card"), a company incorporated in the state of Florida on November 6, 2012, in exchange for the issuance of 1,000,000 common shares.  As part of the acquisition, the Company cancelled 15,000,000 issued and outstanding common shares held by the former President and Director of the Company and the management and directors of Stealth Card acquired 7,500,000 common shares of the Company in a private transaction with the former President and Director of the Company. Effectively, Stealth Card held 73% of the issued and outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Stealth Card is deemed to be the acquirer for accounting purposes.

On July 13, 2013, the Company entered into a share exchange agreement with Career Start, Inc. ("Career"), a private corporation formed under the state of Florida on February 4, 2013.  Under the terms of the agreement, the Company acquired the net assets of Career in exchange for 4,714,286 common shares of the Company. The acquisition was between two related parties and has been accounted on a cost basis. On October 24, 2013, the Company effected a corporation name change to Excelsis Investments Inc.

On March 11, 2014, the Company announced its name change from Pub Crawl Holdings to Excelsis Investments, Inc.

On September 1, 2014, the Company entered into a purchase agreement with a non-related party to purchase intangible assets by issuing 30% of the outstanding common shares of the Company as determined on an as-converted, fully-diluted basis, which shall not be subject to dilution by any future issuances for the purchase of 3,000 customer accounts. The Company is recognizing the revenue generated from the intangible asset on a net basis.

On November 5, 2014, the Company entered into share exchange agreement with a former officer of the Company in regards to common shares in the Company's wholly-owned subsidiaries, Career Start, Inc ("CSI") and Career Start Management ("CSM"), private corporations incorporated in the state of Florida and New York, respectively. Under the terms of the agreement, the Company received 3,111,429 shares of the Company held by the former officer in exchange for 100% of the issued and outstanding common shares of CSI and CSM. Subsequent to the disposal of the subsidiaries, the Company has turned its focus on the development and retail of stealth cards, a product meant to block RFID (Radio Frequency Identifier Signal) chipped cards from being read when placed in the correct orientation to help users secure their personal information.

On March 14, 2016, the Company incorporated a new wholly owned subsidiary, Safety Technologies Inc., a Nevada company. The Company's intention is to sell products other than the stealth cards, through the subsidiary. As at December 31, 2016, there has been no activity within the subsidiary.

On May 19, 2016, the Company's wholly-owned subsidiary, Mobile Dynamic Marketing, Inc. changed its name to Stealth Card Inc.

On May 26, 2016, the Company changed its name from Excelsis Investments Inc. to Stealth Technologies, Inc.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2016, the Company has a working capital deficit of $546,056 and an accumulated deficit of $3,028,028. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company's future operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-6

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

2.    Summary of Significant Accounting Policies

a)   Basis of Presentation and Principles of Consolidation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") and are expressed in U.S. dollars. These consolidated financial statements comprise the accounts of the Company and its wholly-owned subsidiaries, Stealth Card Inc., a Florida company, and Safety Technologies Inc., a Nevada company. All intercompany transactions have been eliminated on consolidation.  The Company's fiscal year end is December 31.

b)   Use of Estimates

The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to fair value of share-based payments, collectability of accounts receivable, net realizable value of inventory, useful life, impairment, and valuation of intangible assets, and the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c)   Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.  As at December 31, 2016 and 2015, the Company had no cash equivalents.

d)   Accounts Receivable

Accounts receivable represents amounts owed from customers for contracting employees and from consulting services. Amounts are presented net of the allowance for doubtful accounts, which represents the Company's best estimate of the amount of probable credit losses in the existing accounts receivable balance. The Company determines allowance for doubtful accounts based upon historical experience and current economic conditions.  The Company reviews the adequacy of its allowance for doubtful accounts on a regular basis.  As of December 31, 2016 and 2015, the Company had no allowances for doubtful accounts.

e)   Inventory

Inventory is comprised of stealth cards purchased for resell, and is recorded at the lower of cost or net realizable value on a first-in first-out basis.  The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future and market conditions.

f)    Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are comprised of customer accounts acquired with an useful life of three years and amortized straight line over three years and patent and trademark development costs, which are currently being developed and has not been placed in use. During the year ended December 31, 2016, the Company incurred $147,564 (2015 - $147,160) in amortization expense.

F-7

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

2.    Summary of Significant Accounting Policies (continued)

g)   Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at December 31, 2016, the Company had 3,617,571 (2015 – 28,280,185) potentially dilutive common shares from potential shares issuable for outstanding convertible debentures.

h)   Long-Lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

i)    Revenue Recognition

The Company recognizes and accounts for revenue in accordance with ASC 605 as a principal on the sale of goods. Pursuant to ASC 605, Revenue Recognition, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the amount is fixed and determinable, risk of ownership has passed to the customer and collection is reasonably assured. The Company considered ASC 605-45, Principal Agent Considerations, and determined that the Company acts as a principal in its revenue-earnings activities as they are responsible for the production of goods purchased by the customer, can determine the pricing costs, goods purchased are paid directly by the Company, and has a credit risk with respect to collection of amounts owed by its customers.

j)    Cost of Revenue

For the Company's product sales, cost of revenue consists of inventory sold in each transaction. For the Company's service sales, cost of revenue consists of engineering services provided by a related party.

k)   Research and Developments Costs

Research and development costs are charged to operations as incurred.

F-8

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

2.    Summary of Significant Accounting Policies (continued)

l)    Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, loans payable, amounts due to and from related parties, liabilities for shares issuable – related party, and convertible debentures.  Pursuant to ASC 820, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

The following table represents assets and liabilities that are measured and recognized in fair value as of December 31, 2016, on a recurring basis:

The following table represents assets and liabilities that are measured and recognized in fair value as of December 31, 2015, on a recurring basis:

F-9

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

2.    Summary of Significant Accounting Policies (continued)

l)    Financial Instruments (continued)

As of December 31, 2016, the Company had a derivative liability amount of $1,944 (2015 – $491,249) which was classified as a Level 3 financial instrument, and a gain on change in fair value of derivative liabilities of $489,305 (2015 – loss of $341,192).

m)  Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 "Accounting for Income Taxes" as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

n)   Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3.    Convertible Debenture

a)

On June 20, 2014, the Company entered into a consulting agreement for consulting services. Pursuant to the agreement, the Company is to pay the consultant a commencement fee of $250,000. On June 23, 2014, the Company issued a $250,000 convertible note which is unsecured, non-bearing interest and due on June 22, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (December 17, 2014) at a conversion rate of 90% of the lowest closing bid prices of the Company's common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $27,461 (2015 - $36,416) has been recorded in accounts payable and accrued liabilities.

On December 17, 2014, the note became convertible resulting in the Company recording a derivative liability of $94,188 with a corresponding adjustment to loss on change in fair value of derivative liabilities of $1,050 as accretion expense. Pursuant to the agreement, the convertible note matured on June 22, 2015 and 150% of the remaining balance in principal and interest is payable. During the year ended December 31, 2015, the Company included a penalty of $125,000 in interest expense for the additional amount payable due to defaulting on the loan. On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $20,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $140,650 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement. The Company considered ASC Subtopic 470-50, Debt Modifications and Extinguishments, and determined that the modification was an extinguishment and therefore, recognized a gain on the extinguishment of the original debt During the year ended December 31, 2016, the Company had amortized $nil (2015 - $88,357) of the debt discount to interest expense. During the year ended December 31, 2016, the Company repaid $180,000 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As December 31, 2016, the carrying value of the debenture was $70,000 (2015 - $375,000) and the fair value of the derivative liability was $1,830 (2015 - $304,860).

b)

On June 23, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 22, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 20, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company's common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $nil (2015 - $10,267) has been recorded in accounts payable and accrued liabilities.

F-10

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

3.    Convertible Debenture (continued)

On December 20, 2014, the note became convertible resulting in the Company recording a derivative liability of $49,618 with a corresponding adjustment to loss on change in fair value of derivative liabilities. Pursuant to the agreement, the convertible note matured on June 22, 2015 and 150% of the remaining balance in principal and interest is payable. During year ended December 31, 2015, the Company included a penalty of $12,753 in interest expense for the additional amount payable due to defaulting on the loan. During the year ended December 31, 2015, the Company issued 2,001,225 common shares for the conversion of $24,495. On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $5,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $16,820 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement. During the year ended December 31, 2016, the Company had amortized $nil (2015 - $46,652) of the debt discount to interest expense. The Company considered ASC Subtopic 470-50, Debt Modifications and Extinguishments, and determined that the modification was an extinguishment and therefore, recognized a gain on the extinguishment of the original debt. During the year ended December 31, 2016, the Company repaid $32,514 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As at December 31, 2016, the carrying value of the debenture was $nil (2015 - $38,258) and the fair value of the derivative liability was $nil (2015 - $65,853). During the year ended December 31, 2016, the Company amortized $nil (2015 - $285) in financing costs.

c)

On June 25, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 24, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 22, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company's common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2016, accrued interest of $2,613 (2015 - $13,854) has been recorded in accounts payable and accrued liabilities.

On December 22, 2014, the note became convertible resulting in the Company recording a derivative liability of $49,464 with a corresponding adjustment to loss on change in fair value of derivative liabilities. Pursuant to the agreement, the convertible note matured on June 24, 2015 and 150% of the remaining balance in principal and interest is payable. During the year ended December 31, 2015, the Company included a penalty of $25,000 in interest expense for the additional amount payable due to defaulting on the loan.  On February 2, 2016, the Company entered into a settlement agreement whereby the Company would pay $5,000 on or before the third day of each subsequent month until the entire balance is repaid. The Company recognized a gain in forgiveness of debt for $30,202 (2015 - $nil) for principal and interest forgiven pursuant to the settlement agreement.  The Company considered ASC Subtopic 470-50, Debt Modifications and Extinguishments, and determined that the modification was an extinguishment and therefore, recognized a gain on the extinguishment of the original debt During the year ended December 31, 2016, the Company had amortized $nil (2015 - $47,044) of the debt discount to interest expense. During the year ended December 31, 2016, the Company repaid $57,486 (2015 - $nil) of the outstanding loan pursuant to a settlement agreement. As at December 31, 2016, the carrying value of the debenture was $nil (2015 - $75,000) and the fair value of the derivative liability was $114 (2015 - $120,536). During the year ended December 31, 2016, the Company amortized $nil (2015 - $288) in financing costs.

4.    Derivative Liabilities

The Company records the fair value of the of the conversion price of the convertible debentures disclosed in Note 3 in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative was calculated using a multi-nominal lattice model performed by an independent qualified business valuator. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the year ended December 31, 2016, the Company recorded a gain on the change in fair value of derivative liability of $489,305 (2015 – loss of $341,192). As at December 31, 2016, the Company recorded a derivative liability of $1,944 (2015 - $491,249).

The following inputs and assumptions were used to value the convertible debentures outstanding during the year ended December 31, 2016:

·	The range of stock prices for the valuation of the derivative instruments at December 31, 2016 ranged from $0.030 to $0.0244 per share of common stock.

F-11

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

4.    Derivative Liabilities (continued)

·	The debtholder would automatically convert note at maturity if the registration was effective and the Company is not in default.

·	The projected annual volatility for each valuation period based on the historic volatility of the Company 280% - 259%

·	The debtholder would redeem (with penalties of 0% to 50% depending on the date and full-partial redemption) based on availability of alternative financing of 95%.

·	Capital raising events of $100,000 would occur in each quarter at 75% of market generating dilutive reset events at prices below $0.015 (rounded) for the convertible debentures.

The following inputs and assumptions were used to value the convertible debentures outstanding during the year ended December 31, 2015:

·	The range of stock prices for the valuation of the derivative instruments at December 31, 2015 ranged from $0.0144 to $0.0285 per share of common stock.

·	The debtholder would automatically convert the note at maturity if the registration was effective and the Company is not in default.

·	The debtholder would redeem (with penalties of 0% to 50% depending on the date and full-partial redemption) based on availability of alternative financing, at a rate of 0% increasing 1.0% monthly to a maximum of 10%.

·	The projected annual volatility for each valuation period based on the historic volatility of the Company 444% - 474%

·	Capital raising events of $100,000 would occur in each quarter for a total of $100,000 in 2014 at 75% of market generating dilutive reset events at prices below $0.0122 (rounded) for the convertible debentures.

A summary of the activity of the derivative liability is shown below:

5.    Related Party Transactions

a)

As at December 31, 2016, the Company was owed $59,926 (2015 - $nil) from sales revenue from a significant shareholder for service revenue and $nil (2015 - $5,000) for product sales revenue. The amounts owed are non-interest bearing, unsecured, and due on demand. This amount has been included in accounts receivable – related party.

b)

As at December 31, 2016, the Company owed $75,964 (2015 - $25,150) to the President of the Company, which is non-interest bearing, unsecured, and due on demand.

c)

As at December 31, 2016, the Company owed $87,834 (2015 - $22,998) to the Chief Financial Officer of the Company, which is non-interest bearing, unsecured, and due on demand.

d)

As at December 31, 2016, the Company recorded a liability for shares issuable of $843,616 (2015 - $831,233) relating to 34,574,439 common shares to be issued to a significant shareholder pursuant to the acquisition agreement for the intangible assets. During the year ended December 31, 2016, the Company recorded a $12,383 (2015 – $318,132) loss in the fair value of the shares issuable to the significant shareholder.

F-12

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

5.    Related Party Transactions (continued)

e)

As at December 31, 2016, the Company owed $nil (2015 - $75,000) to a significant shareholder for a loan payable. During the year ended December 31, 2016, the Company entered into a settlement agreement where the outstanding loan was to offset the balance receivable from the significant shareholder for service revenue. Refer to Note 6(a).

f)

During the year ended December 31, 2016, the Company generated net service revenues of $461,315 (2015 - $837,100) from a significant shareholder as noted in Note 4(d).

g)

During the year ended December 31, 2016, the Company incurred payroll expense of $546,680 (2015 - $267,495) to management and officers of the Company.

h)

During the year ended December 31, 2016, the Company incurred bonuses on sales of stealth cards of $194,793 (2015 - $nil) to management and officers of the Company which has been included in cost of sales. Bonuses accrue on total gross sales at a rate of 5% each to the Chief Executive Officer and the Chief Financial Officer of the Company.

i)

During the year ended December 31, 2016, the Company issued 23,166,555 (2015 – nil) common shares with a fair value of $671,831 (2015 - $nil) to management and officers of the Company as a bonus relating to the sale of goods for the Company. The amount has been included in consulting expenses.

j)

During the year ended December 31, 2016, the Company incurred engineering expense of $7,025 (2015 - $132,550), which was included in cost of goods sold, and research and development costs of $96,877 (2015 - $nil) to a company owned by the mother of the President of the Company. As at December 31, 2016, the Company owed $9,587 (2015 - $245,270) to the company owned by the mother of the President of the Company, which is non-interest bearing, unsecured, and due on demand. The amount owing has been recorded as accounts payable – related party.

6.    Loans Payable

a)

On July 25, 2014, the Company entered into a loan agreement with a related party for a loan of $175,000. Under the terms of the note, the amount is unsecured, non-interest bearing, and due on July 25, 2017. The unpaid principal is to be repaid in installments defined as the collected sum of 10% of the unadjusted gross sales revenue (net of returns and chargebacks) with the installments to begin once the Company has received the gross proceeds of $175,000. As at December 31, 2016, the Company had received loan proceeds of $75,000 (2015 - $75,000). On December 31, 2016, the parties agreed to set off the balance payable on the loan against the amount receivable from the related party for service revenue. As at December 31, 2016, the carrying value of the loan was $nil (2015 - $75,000). During the year ended December 31, 2016, the Company recorded imputed interest of $6,016 (2015 - $6,000).

b)

As at December 31, 2016, the Company owes $nil (2015 - $19,491) pursuant to a future receivable sales agreement with a non-related party. Under the terms of the agreement, the amount is secured by $73,639 of the Company's accounts receivable, bears interest at 30%, and due in installments of $792 payable on each business day.

c)

As at December 31, 2016, the Company owes $120,000 (2015 - $120,000) in a note payable to a non-related party. The loan is unsecured, bears interest at $10, and is due on demand.

7.    Common Shares

 

a)

On January 1, 2016, the Company issued 500,000 common shares with a fair value of $14,250 to non-related parties for consulting services.

b)

On January 8, 2016, the Company issued 3,000,000 common shares with a fair value of $87,000 to non-related parties for consulting services.

c)

On March 26, 2016, the Company issued 13,166,555 common shares with a fair value of $381,830 to the President of the Company for employee bonuses.

F-13

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

7.    Common Shares (continued)

 

d)

On March 26, 2016, the Company issued 10,000,000 common shares with a fair value of $290,000 to the Chief Financial Officer of the Company for employee bonuses.

e)

On March 26, 2016, the Company issued 3,000,000 common shares with a fair value of $87,000 to a non-related party for consulting services.

f)

On at June 16, 2016, the Company issued 2,965,558 common shares with a fair value of $59,311 to non-related parties for consulting services.

g)

On October 1, 2016, the Company issued 4,650,000 common shares with a fair value of $139,500 to a non-related party to settle debt in the amount of $100,000. The Company recognized a loss of $12,095 as a result of the settlement.

 

h)

On January 12, 2015, the Company issued 1,912,000 common shares for the conversion of a convertible note with a non-related party with a book value of $19,120. $17,589 was reclassified from derivative liabilities to additional paid-in capital on conversion.

i)

On January 29, 2015, the Company approved a ten-for-one reverse split of its issued and outstanding common shares, which has been applied on a retroactive basis.

j)

On March 13, 2015, the Company issued 1,400,000 common shares for the conversion of a convertible note with a non-related party with a book value of $2,380. $1,791 was reclassified from derivative liabilities to additional paid-in capital on conversion.

k)

On April 28, 2015, the Company issued 1,414,286 common shares for the conversion of a convertible note with a non-related party with a book value of $1,980. $1,486 was reclassified from derivative liabilities to additional paid-in capital on conversion.

l)

On May 4, 2015, the Company issued 1,414,706 common shares for the conversion of a convertible note with a non related party with a book value of $4,810. $3,720 was reclassified from derivative liabilities to additional paid-in capital on conversion.

m)

On May 6, 2015, the Company issued 1,415,116 common shares for the conversion of a convertible note with a non-related party with a book value of $6,085. $4,705 was reclassified from derivative liabilities to additional paid-in capital on conversion.

n)

On May 20, 2015, the Company issued 1,485,556 common shares for the conversion of a convertible note with a non-related party with a book value of $6,685. $5,291 was reclassified from derivative liabilities to additional paid-in capital on conversion.

o)

On June 1, 2015, the Company issued 1,485,776 common shares for the conversion of a convertible note with a non-related party with a book value of $17,235. $14,633 was reclassified from derivative liabilities to additional paid-in capital on conversion.

p)

On June 12, 2015, the Company issued 2,001,225 common shares for the conversion of a convertible note with a non-related party, as noted in Note 3(b), with a book value of $24,495. $28,034 was reclassified from derivative liabilities to additional paid-in capital on conversion.

q)

On June 12, 2015, the Company issued 2,001,225 common shares for the conversion of a convertible note with a non-related party with a book value of $24,495. $28,034 was reclassified from derivative liabilities to additional paid-in capital on conversion.

r)

On June 16, 2015, the Company issued 1,226,538 common shares for the conversion of a convertible note with a non-related party with a book value of $15,945. $12,237 was reclassified from derivative liabilities to additional paid-in capital on conversion.

s)

On July 7, 2015, the Company issued 1,485,632 common shares for the conversion of a convertible note with a non-related party with a book value of $12,925. $11,477 was reclassified from derivative liabilities to additional paid-in capital on conversion.

F-14

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

7.    Common Shares (continued)

 

t)

On July 8, 2015, the Company issued 1,760,111 common shares for the conversion of a convertible note with a non-related party with a book value of $15,841. $18,857 was reclassified from derivative liabilities to additional paid-in capital on conversion.

u)

On July 9, 2015, the Company issued 500,000 common shares for financial advisory services upon execution of an advisory agreement with a non related party. The shares were recorded at their fair value of $15,000 based on the closing market price on the date of the agreement. Refer to Note 9(b).

v)

On July 23, 2015, the Company issued 1,363,636 common shares for the conversion of a convertible note with a non-related party with a book value of $12,000. $10,788 was reclassified from derivative liabilities to additional paid-in capital on conversion.

w)

On July 30, 2015, the Company issued 2,069,335 common shares for the conversion of a convertible note with a non related party with a book value of $13,658. $11,789 was reclassified from derivative liabilities to additional paid-in capital on conversion.

x)

On August 19, 2015, the Company issued 2,261,538 common shares for the conversion of a convertible note with a non related party with a book value of $14,700. $13,535 was reclassified from derivative liabilities to additional paid-in capital on conversion.

y)

On September 16, 2015, the Company issued 2,148,171 common shares for the conversion of a convertible note with a non related party with a book value of $17,615. $13,649 was reclassified from derivative liabilities to additional paid-in capital on conversion.

z)

On November 11, 2015, the Company issued 5,500,003 common shares for financial advisory services upon the amendment of an advisory agreement with a non related party. The shares were recorded at their fair value of $44,550 based on the closing market price on the date of the agreement.

8.    Concentrations

a)

The Company had one product that accounted for approximately 26% (2015 - 61%) of gross revenue for the year ended December 31, 2016.

b)

The Company had one product that accounted for approximately 65 % (2015 - nil) of gross revenue for the year ended December 31, 2015.

9.    Commitment and Contingencies

a)

On December 22, 2015, the Company was served notice by an individual claiming that he had received electronic emails recommending the purchase of the Company's common stock. The plaintiff claims that during the period of December 3, 2012 to December 7, 2012, he had received eighteen unsolicited electronic mails in regards to the purchase of the Company's common stock and is seeking damages of $1,000 for each electronic mail he has received, plus $1,700 in attorney fees for a total claim of $19,700. Per the plaintiff's claim, he has served notice to the Company since 2013. The plaintiff presented his case in court on February 19, 2016 and the court ruled in favor of the plaintiff for the full amount of $19,700.  On January 17, 2017, the plaintiff's claims against the Company was dismissed and the court vacated the default judgment of $19,700. As at December 31, 2016, the Company recognized a gain of $19,700 (2015 - loss of $19,700) for the reversal in the accrued amount of the claim.

b)

On February 2, 2016, the Company and three debt holders entered into a settlement agreement, where the Company agrees to pay $30,000 to the debt holders on or before the third day of each subsequent month until the entire balance is repaid by the Company. Refer to Notes 3(a), (b), and (c).

F-15

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

9.    Commitment and Contingencies (continued)

c)

On February 1, 2016, the Company received notice that a third party was seeking compensation for damages as a result of false advertisements made by the Company in regards to the Company's stealth cards. The plaintiff is a manufacturer and distributor of radio frequency identification (RFID) chip protection cards which are in competition with the Company's stealth cards. The Company has filed an answer to the plaintiff's complaint, with denials and affirmative defenses, and is unable to estimate the likelihood of any outcome as at December 31, 2016.

d)

On February 22, 2016, the Company received notice that a consultant was seeking compensation for breach of agreement. Pursuant to the agreement, the parties agreed to equally split any net profits generated from the sale of stealth cards made by the consultant. The Company asserts that historical sales generated from the sale of the stealth cards were not as a result of the consultant's services, and therefore the Company should not be liable for any compensation due to the consultant. The Company has filed its Answer and Affirmative Defenses on July 18, 2016 and has asserted counterclaims against the consultant. The Company is currently awaiting the response from the consultant and is unable to estimate the likelihood of any outcome as at December 31, 2016.

10.  Income Taxes

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs"), to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules) increases by more than 50 percentage points over such stockholders' lowest percentage ownership during the testing period (generally three years). As at December 31, 2016, the Company has $1,695,762 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2032.  The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes. As at December 31, 2016 and 2015, the Company had no uncertain tax positions.

The significant components of deferred income tax assets and liabilities at December 31, 2016 and 2015 are as follows:

F-16

STEALTH TECHNOLGIES, INC.

(formerly Excelsis Investments, Inc.)

Notes to the Consolidated Financial Statements

11.  Subsequent Event

a)

On January 23, 2017, the Company entered into a consulting agreement for business development services. In consideration for the services, the Company shall pay $45,000 to the consultant, of which $15,000 is due upon the execution of the agreement, and an additional $15,000 on February 23, 2017 and March 23, 2017. The Company shall also issue 1,000,000 common shares to the consultant as compensation. The common shares were issued on January 24, 2017.

b)

On February 17, 2016, the Company entered into a consulting agreement for marketing and branding consulting services. In consideration for the services, the Company shall pay the consultant $4,000 per month and a total of 600,000 common shares of the Company at a rate of 100,000 common shares per month for a total of six months.

 

F-17

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this Form 10-K. MaloneBailey, LLP has audited our financial statements for the years ended December 31, 2016 and 2015.

ITEM 9A.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the "Evaluation"), under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms due to material weaknesses in our internal controls described below.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

CEO and CFO Certifications

Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Management's Report on Internal Control over Financial Reporting

Our 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). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment, we believe that, as of December 31, 2016, our internal control over financial reporting was not effective based on those criteria.

Management's assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:

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.

Changes in Internal Controls

There were no changes in our internal control over financial reporting during the year ended December 31, 2016, which have affected, or are reasonably likely to affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Officers and Directors

Our officers are elected by the board of directors to a term of one (1) year and serves until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.

The names, ages and positions of our present officers and director are set forth below:

Background of officers and directors

Brian McFadden

Since November 29, 2012, Brian McFadden has been our president, principal executive officer and a member of our board of directors. Brian McFadden graduated from Hamilton College in 2007 where he studied both Economics and Sociology. Following graduation and through December 2008, Mr. McFadden worked for Rogers Associates Machine Tool Corp as the Director of Business Development where he designed and implemented sales plans for major companies and Government entities including NASA, Ball Aerospace, The Harris Corporation and others. In December 2008, Mr. McFadden founded Rail Nine Media, a full service web design and marketing house that has worked with clients ranging from MTV's Bam Margera to major financial service companies on all aspects of marketing. Mr. McFadden is responsible for the daily operation and maintenance of us and its clientele. In this role, Mr. McFadden has created and maintained Social Media Marketing Campaigns, SMS Messaging campaigns, Print Media, Web Media and comprehensive multi-media campaigns. In April 2010, Mr. McFadden co-

founded IRocNights, a single source hospitality resource for the Western New York Region. IRocNights expanded from Syracuse to Buffalo and gained major traction with over 100 clients in less than a year. While running IRocNights, Mr. McFadden assisted in the creation of a 25-member team that cultivated and maintained relationships with numerous local businesses, politicians and social groups. Mr. McFadden expanded his IRocNights customer base through the launch of Let's Stay Local in March 2011, a daily deal site specializing in Entertainment and targeting nightlife venue demographics. Capitalizing on the Groupon momentum, Let's Stay Local focused on daily deals for the targeted younger generations. While at Let's Stay Local, Mr. McFadden was responsible for building the consumer distribution list while ensuring that the proper Daily Deals had been acquired and scheduled. Mr. McFadden sold IRocNights and its partnering businesses in October of 2011. Mr. McFadden currently sits on the Board of Islet Sciences Inc.

Michelle Pannoni

Since November 29, 2012, Michelle Pannoni has been our secretary, treasurer, principal financial officer, principal accounting officer, and a member of the board of directors. Ms. Pannoni attended Monroe Community College and Rochester Institute of Technology in Rochester, New York. Ms. Pannoni did not receive a degree from either institution. She subsequently began her professional career in Rochester New York, employing her accounting educational background, in various businesses. She expanded her career experience capitalizing on her marketing background and secured a marketing position in a hospitality enterprise with full accountability for all phases of marketing management, promotions and sales. Ms. Pannoni relocated to Florida for an opportunity as VP Marketing for a Marketing Group of various condominium tracts where she was responsible for the development, execution, and tracking of multiple web based marketing lead generation and sales programs. She continued to expand her business expertise, serving in the management, marketing, and accounting functions for various private and public venues, all with corporate objectives related to utilizing her skill set in the development and ongoing management of web based marketing services. In April of 2007, Ms. Pannoni launched her own unique retail business "Talk of the Town Accessories" which she developed, marketed, and brought to a profitable sale in September 2009. In October 2009, she became active as Florida Realtor specializing in the analysis, packaging, and web based marketing and sales of Commercial Real Estate venues including mixed use land sites, apartment and condominium conversion projects, marinas, and hospitality/hotel acquisition projects. In March of 2011, Ms. Pannoni launched her own web based marketing and design company – Trudico LLC, and simultaneously partnered with Brian McFadden, for the launch of Let's Stay Local, an Entertainment venue designed to leverage the Groupon Daily Deal phenomenon into a younger, recurring, local nightlife demographic. Ms. Pannoni and Mr. McFadden, subsequently launched the publicly traded entity today known as Stealth Technologies.

Conflicts of Interest

We believe that our current officers and directors will not be subject to conflicts of interest. No policy has been implemented or will be implemented to address conflicts of interest.

Audit Committee Financial Expert

We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.

Involvement in Certain Legal Proceedings

During the past ten years, Mr. McFadden and Ms. Pannoni have not been the subject of the following events:

Audit Committee and Audit Committee Financial Expert

We do not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its board of directors. All current members of the board of directors lack sufficient financial expertise for overseeing financial reporting responsibilities. We have not yet employed an audit committee financial expert due to the inability to attract such a person.

We intend to establish an audit committee of the Board of Directors, which will consist of independent directors. The audit committee's duties will be to recommend to our board of directors the engagement of an independent registered public accounting firm to audit our financial statements and to review our accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in our opinion, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics was filed as Exhibit 14.1 our 2009 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 1, 2010.

Disclosure Committee and Charter

We do not have a disclosure committee and disclosure committee charter. We plan to establish a Disclosure Committee and will operate under a charter. The purpose of a disclosure committee would be to provide assistance to the Principal Executive Officer and the Principal Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, or written representations that no other reports were required, and to the best of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms 3, 4, and 5 with the exception of Hubert Elrington and Peter Kramer who never filed any Forms 3, 4 or 5 and have no intention to do so.

ITEM 11.

EXECUTIVE COMPENSATION.

The following table sets forth the compensation paid by us for the last two years ended December 31, 2016 and 2015, to our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.

Summary Compensation Table

The following table sets forth the compensation paid by us to our directors for the year ending December 31, 2016. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named director.

Director Compensation Table

All compensation received by our officers and directors has been disclosed.

We have not paid any compensation to our directors in 2016.

There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.

Director Independence

None of directors are deemed independent as a matter of law.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance at this time.

Indemnification

Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against policy, as expressed in the Act and is, therefore, unenforceable.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of December 31, 2016, the beneficial ownership of the outstanding common stock and preferred stock: (i) any holder of more than five (5%) percent; (ii) each of our executive officers and directors; and (iii) our directors and executive officers as a group. Unless otherwise indicated, each of the stockholders named in the table below has sole voting and dispositive power with respect to such shares of common stock. As of December 31, 2016, there were 96,593,278 shares of common stock issued and outstanding.

Future sales by existing stockholders

Rule 144 of the Securities Act of 1933, as amended, (the "Act") is available for the resale of our shares of common stock because we are no longer categorized as a "shell company" as that term is defined in Reg. 405 of the Act. A "shell company" is a corporation with no or nominal assets or its assets consist solely of cash, and no or nominal operations.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

As at December 31, 2016, the Company was owed $59,926 (2015 - $5,000) from a significant shareholder which is non-interest bearing, unsecured, and due on demand.

As at December 31, 2016, the Company owed $75,964 (2015 - $25,150) to the President of the Company, which is non-interest bearing, unsecured, and due on demand.

As at December 31, 2016, the Company owed $87,834 (2015 - $22,998) to the Chief Financial Officer of the Company, which is non-interest bearing, unsecured, and due on demand.

As at December 31, 2016, the Company recorded a liability for shares issuable of $843,616 (2015 - $831,233) relating to 34,574,439 common shares to be issued to a significant shareholder pursuant to the acquisition agreement for the intangible assets. During the year ended December 31, 2016, the Company recorded a $12,383 (2015 – $318,132) loss in the fair value of the shares issuable to the significant shareholder.

As at December 31, 2016, the Company owed $nil (2015 - $75,000) to a significant shareholder for a loan payable.

During the year ended December 31, 2016, the Company generated revenues of $461,315 (2015 - $837,100) from a significant shareholder.

During the year ended December 31, 2016, the Company incurred payroll expense of $546,680 (2015 - $267,495) to management and officers of the Company.

During the year ended December 31, 2016, the Company incurred bonuses on sales of stealth cards of $194,793 (2015 - $nil) to management and officers of the Company which has been included in cost of sales. Bonuses accrue on total gross sales at a rate of 5% each to the Chief Executive Officer and the Chief Financial Officer of the Company.

During the year ended December 31, 2016, the Company issued 23,166,555 (2015 – nil) common shares with a fair value of $671,831 (2015 - $nil) to management and officers of the Company which has been included in consulting expenses.

During the year ended December 31, 2016, the Company incurred engineering expense of $7,025 (2015 - $132,550), which was included in cost of goods sold, and research and development costs of $96,877 (2015 - $nil) to a company owned by the mother of the President of the Company. As at December 31, 2016, the Company owed $9,587 (2015 - $245,270) to the company owned by the mother of the President of the Company, which is non-interest bearing, unsecured, and due on demand. The amount owing has been recorded as accounts payable – related party.

In March 2016, we issued 13,166,555 shares of common stock to Brian McFadden in consideration of bonus compensation.  Brian McFadden is the brother-in-law of Michelle Pannoni, our secretary and treasurer.

In March 2016, we issued 10,000,000 shares of common stock to Michelle Pannoni in consideration of bonus compensation.  Michelle Pannoni is the sister-in-law of Brian McFadden, our president.

Other than the foregoing, none of our directors or executive officers, nor any person who owned of record or was known to own beneficially more than 5% of our outstanding shares of common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect us.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(1)        Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

(2)        Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

(3)        Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

(4)        All Other Fees

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

(5)	Our audit committee's pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.

(6)	The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full time, permanent employees was 0%.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 25th day of April, 2017.

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

EXHIBIT INDEX
 

Exhibit		Incorporated by reference			Filed
Number	Document Description	Form	Date	Number	Herewith
2.1	Exchange Agreement between Pub Crawl Holdings, Inc. and Mobile Dynamic Marketing, Inc.	8-K	01/31/13	2.1
2.2	Exchange Agreement between Pub Crawl Holdings, Inc. and Career Start, Inc.	10-Q	11/19/13	2.2
3.1	Articles of Incorporation - Pub Crawl.	S-1	10/07/10	3.1
3.2	Articles of Incorporation - Mobile Dynamic Marketing, Inc.	10-K/A	04/16/13	3.2
3.3	Articles of Incorporation – Career Start, Inc.	10-K	04/15/14	3.3
3.4	Bylaws - Pub Crawl Holdings, Inc.	S-1	10/07/10	3.2
3.5	Bylaws - Mobile Dynamic Marketing, Inc.	S-1	06/14/13	3.4
3.6	Bylaws – Career Start, Inc.	10-K	04/15/14	3.6
3.7	Amended Articles of Incorporation – March 26, 2013.	10-K	04/15/14	3.7
3.8	Amended Articles of Incorporation – October 24, 2013.	10-K	04/15/14	3.8
3.9	Amended Articles of Incorporation – May 26, 2016.	8-K	06/02/16	3.1
3.10	Correction to Amended Articles of Incorporation – June 2, 2016.	8-K	06/02/16	3.2
10.1	Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012.	8-K	08/11/12	10.2
10.2	Debt Forgiveness Agreement with Hermaytar SA.	10-K/A-2	07/21/14	10.7
10.3	Consulting Agreement with Still Goin Inc. dated March 17, 2016.	10-Q	08/22/16	10.1
10.4	Consulting Agreement with Type A Partners Inc. dated March 17, 2016.	10-Q	08/22/16	10.2
14.1	Code of Ethics.	S-1	10/07/10	14.1
21.1	List of Subsidiaries.	10-K	04/15/14	21.1
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension – Schema.
101.CAL	XBRL Taxonomy Extension – Calculations.
101.DEF	XBRL Taxonomy Extension – Definitions.
101.LAB	XBRL Taxonomy Extension – Labels.
101.PRE	XBRL Taxonomy Extension – Presentation.