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EX-32.2 - SARBANES-OXLEY 906 CERTIFICATION - CHIEF FINANCIAL OFFICER - STEALTH TECHNOLOGIES, INC.exh32-2.htm
EX-32.1 - SARBANES-OXLEY 906 CERTIFICATION - CHIEF EXECUTIVE OFFICER - STEALTH TECHNOLOGIES, INC.exh32-1.htm
EX-31.2 - SARBANES-OXLEY 302 CERTIFICATION - PRINCIPAL FINANCIAL OFFICER - STEALTH TECHNOLOGIES, INC.exh31-2.htm
EX-31.1 - SARBANES-OXLEY 302 CERTIFICATION - PRINCIPAL EXECUTIVE OFFICER - STEALTH TECHNOLOGIES, INC.exh31-1.htm




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A-1

[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017
   
 
OR
   
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  000-54635

STEALTH TECHNOLOGIES, INC.
(formerly, Excelsis Investments, Inc.)
(Exact name of registrant as specified in its charter)

NEVADA
(State or other jurisdiction of incorporation or organization)

27-2758155
(I.R.S. Employer Identification No.)

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)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 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 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," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer
[   ]
Accelerated Filer
[   ]
Non-accelerated Filer  (Do not check if smaller reporting company)
[   ]
Smaller Reporting Company
[X]
Emerging Growth Company
[   ]
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 7,075,107 as of November 20, 2017.
 


 

REASON FOR AMENDMENT

The sole purpose of this Amendment to the Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2017 is to furnish the Interactive Data File exhibits pursuant to Rule 405 of Regulation S-T. No other changes have been made to this Form 10-Q and this Amendment has not been updated to reflect events occurring subsequent to the filing of this Form 10-Q.





TABLE OF CONTENTS

 
Page
   
 
3
     
Unaudited Consolidated Financial Statements.
3
     
Management's Discussion and Analysis of Financial Condition and Results of Operations.
3
     
Quantitative and Qualitative Disclosures About Market Risk.
3
     
Controls and Procedures.
3
     
 
3
     
Legal Proceedings.
3
     
Risk Factors.
4
     
Unregistered Sales of Equity Securities and Use of Proceeds.
4
     
Defaults Upon Senior Securities.
4
     
Mine Safety Disclosures.
4
     
Other Information.
4
     
Exhibits.
4
     
6
   
7



 

2

PART I – FINANCIAL INFORMATION

ITEM 1.                          FINANCIAL STATEMENTS.













STEALTH TECHNOLOGIES, INC.

Consolidated Financial Statements

For the periods ended September 30, 2017 and December 31, 2016









Consolidated Financial Statement Index

F–1
   
F–2
   
F–3
   
F–4











3



STEALTH TECHNOLOGIES, INC.
Consolidated Balance Sheets
(unaudited)


   
September 30,
2017
$
   
December 31,
2016
$
 
             
ASSETS
           
             
Cash
   
226,732
     
456,967
 
Accounts receivable, net of allowance for doubtful accounts of $2,500 and $nil, respectively
   
313,803
     
853,755
 
Accounts receivable – related party, net of allowance for doubtful accounts of $207,807 and $nil, respectively
   
     
59,926
 
Prepaid expenses
   
202,725
     
162,725
 
Prepaid expenses – related party
   
413
     
 
Inventory
   
395,804
     
396,518
 
                 
Total Current Assets
   
1,139,477
     
1,929,891
 
                 
Intangible assets, net
   
3,963
     
102,337
 
                 
Total Assets
   
1,143,440
     
2,032,228
 
                 
LIABILITIES
               
                 
Current Liabilities
               
                 
Accounts payable and accrued liabilities
   
693,637
     
1,120,632
 
Accounts payable – related party
   
     
9,587
 
Deferred revenue
   
146,250
     
146,370
 
Derivative liabilities
   
102,546
     
1,944
 
Loan payable
   
120,000
     
120,000
 
Due to related parties
   
121,597
     
163,798
 
Liability for shares issuable – related party
   
611,186
     
843,616
 
Convertible debentures, net of unamortized discount of $76,214 and $nil, respectively
   
72,399
     
70,000
 
                 
Total Current Liabilities
   
1,867,615
     
2,475,947
 
                 
STOCKHOLDERS' DEFICIT
               
                 
Preferred Stock
               
Authorized: 500,000,000 preferred shares with a par value of $0.001 per share
Issued and outstanding: 1,000,000 preferred shares
   
1,000
     
1,000
 
                 
Common Stock
               
Authorized: 750,000,000 common shares with a par value of $0.001 per share
Issued and outstanding: 7,075,107 and 6,439,550 common shares, respectively
   
7,075
     
6,440
 
                 
Additional paid-in capital
   
2,799,068
     
2,576,869
 
                 
Accumulated deficit
   
(3,531,318
)
   
(3,028,028
)
                 
Total Stockholders' Deficit
   
(724,175
)
   
(443,719
)
                 
Total Liabilities and Stockholders' Deficit
   
1,143,440
     
2,032,228
 
(The accompanying notes are an integral part of these unaudited interim consolidated financial statements)

F-1



STEALTH TECHNOLOGIES, INC.
Consolidated Statements of Operations
(unaudited)

   
Three months ended
September 30,
2017
$
   
Three months ended
September 30,
2016
$
   
Nine months ended
September 30,
2017
$
   
Nine months ended
September 30,
2016
$
 
                         
Revenue of goods
   
750,557
     
1,192,845
     
2,391,941
     
2,946,269
 
Revenue of services – related party
   
     
117,500
     
147,881
     
354,444
 
                                 
Total revenue
   
750,557
     
1,310,345
     
2,539,822
     
3,300,713
 
                                 
Cost of goods sold
   
(387,281
)
   
(548,576
)
   
(1,289,225
)
   
(1,347,806
)
                                 
Gross Margin
   
363,276
     
761,769
     
1,250,597
     
1,952,907
 
                                 
Operating Expenses
                               
                                 
Amortization
   
25,399
     
37,092
     
98,374
     
110,471
 
Consulting
   
     
15,317
     
68,115
     
986,159
 
General and administrative
   
605,382
     
425,719
     
1,220,818
     
1,271,377
 
Payroll
   
77,391
     
138,025
     
317,666
     
394,510
 
Professional fees
   
66,429
     
38,485
     
201,371
     
145,022
 
Research and development
   
     
41,054
     
38,002
     
43,654
 
                                 
Total Operating Expenses
   
774,601
     
695,692
     
1,944,346
     
2,951,193
 
                                 
Income (Loss) Before Other Income (Expense)
   
(411,325
)
   
66,077
     
(693,749
)
   
(998,286
)
                                 
Other Income (Expense)
                               
                                 
Gain (loss) on change in fair value of derivative liabilities
   
(2,107
)
   
19,413
     
(4,328
)
   
418,878
 
Gain on forgiveness of debt
   
     
19,988
     
     
19,988
 
Interest expense
   
(14,745
)
   
(22,547
)
   
(32,643
)
   
(75,770
)
Make whole expense with related party
   
(176,758
)
   
(281,254
)
   
232,430
     
(295,280
)
Other expense
   
     
     
(5,000
)
   
 
                                 
Total Other Income (Expense)
   
(193,610
)
   
(264,400
)
   
190,459
     
67,816
 
Net Loss
   
(604,935
)
   
(198,323
)
   
(503,290
)
   
(930,470
)
                                 
Net Loss per Share – Basic
   
(0.09
)
   
(0.03
)
   
(0.08
)
   
(0.17
)
                                 
Net Loss per Share – Diluted
   
(0.09
)
   
(0.03
)
   
(0.09
)
   
(0.17
)
Weighted Average Shares Outstanding – Basic
   
6,779,214
     
6,129,552
     
6,599,633
     
5,454,847
 
Weighted Average Shares Outstanding – Diluted
   
6,779,214
     
6,129,552
     
8,140,339
     
5,454,847
 
(The accompanying notes are an integral part of these unaudited interim consolidated financial statements)

F-2


STEALTH TECHNOLOGIES, INC.
Consolidated Statements of Cashflows
(unaudited)

   
Nine months ended
September 30,
2017
$
   
Nine months ended
September 30,
2016
$
 
Operating Activities
           
             
Net loss for the period
   
(503,290
)
   
(930,470
)
                 
Adjustments to reconcile net (loss) to net cash used in operating activities:
               
Accretion of discount on convertible debentures
   
26,060
     
 
Amortization of intangible assets
   
98,374
     
110,471
 
Bad debts
   
210,307
     
 
Change in fair value of make whole expense with related party
   
(232,430
)
   
295,280
 
Gain on forgiveness of debt
   
     
(19,989
)
Imputed interest
   
     
4,504
 
Issuance of shares for consulting services
   
222,834
     
247,561
 
Issuance of shares for employee bonuses
   
     
671,831
 
Loss (gain) on change in fair value of derivative liabilities
   
4,328
     
(418,878
)
                 
Changes in operating assets and liabilities:
               
Accounts receivable
   
537,452
     
331,444
 
Accounts receivable – related party
   
(147,881
)
   
(311,944
)
Prepaid expenses
   
(40,000
)
   
(159,860
)
Prepaid expense – related party
   
(413
)
   
 
Inventory
   
714
     
(45,612
)
Prepaid inventory
   
     
297,305
 
Accounts payable and accrued liabilities
   
(426,995
)
   
653,306
 
Accounts payable – related party
   
(9,587
)
   
(193,904
)
Deferred revenue
   
(120
)
   
146,250
 
Due to related parties
   
(42,201
)
   
83,795
 
                 
Net cash provided by (used in) operating activities
   
(302,848
)
   
761,090
 
                 
Investing Activities
               
Acquisition of intangible assets
   
     
(2,247
)
                 
Net cash used in investing activities
   
     
(2,247
)
                 
Financing Activities
               
Repayments of loans payable
   
     
(19,491
)
Proceeds from convertible debentures
   
120,000
     
 
Repayments of convertible debentures
   
(47,387
)
   
(210,000
)
                 
Net cash provided by (used in) financing activities
   
72,613
     
(229,491
)
                 
Change in cash
   
(230,235
)
   
529,352
 
                 
Cash, beginning of period
   
456,967
     
388,183
 
                 
Cash, end of period
   
226,732
     
917,535
 
                 
Non-cash Financing Activity
               
Debt discount resulting from derivative liability
   
96,274
     
 
                 
Supplemental Disclosures
               
Interest paid
   
2,613
     
 
Income tax paid
   
     
 
(The accompanying notes are an integral part of these unaudited interim consolidated financial statements)

F-3

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)


1.       Nature of Operations and Continuance of Business

Stealth Technologies, Inc. (the "Company") was incorporated in the state of Nevada on May 27, 2010 under the name "Pub Crawl Holdings, Inc". On March 11, 2014, the Company announced its name change from Pub Crawl Holdings to Excelsis Investments, Inc. On May 26, 2016, the Company changed its name from Excelsis Investments Inc. to Stealth Technologies, Inc.

The Company is focused 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, and 911 buttons, an emergency two way voice system that connects the user to 911.

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 September 30, 2017, there has been no activity within the subsidiary.

On November 7, the Company completed a 1:15 reverse stock split of its common shares. All common shares and per common share amounts in these financial statements have been retroactively restated to reflect the reverse stock-split.

These interim 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 September 30, 2017, the Company has a working capital deficit of $728,138 and an accumulated deficit of $3,531,318. 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 interim 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.


2.
Summary of Significant Accounting Policies

a)
Basis of Presentation and Principles of Consolidation
 
The interim consolidated 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 subsidiary, Safety Technologies Inc., a Nevada company. All intercompany transactions have been eliminated on consolidation.  The Company's fiscal year end is December 31.

b)       Interim Consolidated Financial Statements
 
These interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's consolidated financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. These unaudited interim consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

c)        Accounts Receivable
 
Accounts receivable represents amounts owed from customers for the sale of products 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 September 30, 2017, the Company had an allowance for doubtful accounts of $210,307 (December 31, 2016 - $nil).
F-4

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)


2.
Summary of Significant Accounting Policies

d)       Inventory
 
Inventory is comprised of stealth cards purchased for resale, 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.

e)        Intangible Assets
 
Intangible assets are stated at cost less accumulated amortization and are comprised of customer accounts acquired with a useful life of three years and amortized straight line over three years and patent and trademark development costs, which are currently being developed and have not been placed in use. During the nine months ended September 30, 2017, the Company incurred $98,374 (2016 - $110,471) in amortization expense.

f)         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.

The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation:
 
 
 
Three months ended
September 30, 2017
   
Three months ended
September 30, 2016
 
 
 
Net Income (loss)
(Numerator)
   
Shares
(Denominator)
   
Per Share
Amount
   
Net Income (loss)
(Numerator)
   
Shares
(Denominator)
   
Per Share
Amount
 
Basic EPS
 
$
(604,935
)
   
6,779,214
   
$
(0.09
)
 
$
(198,323
)
   
6,129,552
   
$
(0.03
)
Effect of dilutive securities
   
-
     
-
     
-
     
-
     
-
     
-
 
Convertible debentures
   
-
     
-
     
-
     
-
     
-
     
-
 
Diluted EPS
 
$
(604,935
)
   
6,779,214
   
$
(0.09
)
 
$
(198,323
)
   
6,129,552
   
$
(0.03
)

The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation:
 
 
 
Nine months ended
September 30, 2017
   
Nine months ended
September 30, 2016
 
 
 
Net Income (loss)
(Numerator)
   
Shares
(Denominator)
   
Per Share
Amount
   
Net
(Numerator)
   
Shares
(Denominator)
   
Per Share
Amount
 
Basic EPS
 
$
(503,290
)
   
6,599,633
   
$
(0.08
)
 
$
(930,470
)
   
5,454,847
   
$
(0.17
)
Effect of dilutive securities
   
-
     
-
     
-
     
-
     
-
     
-
 
Convertible debentures
   
(195,459
)
   
1,540,706
     
(0.13
)
   
-
     
-
     
-
 
Diluted EPS
 
$
(698,749
)
   
8,140,339
   
$
(0.09
)
 
$
(930,470
)
   
5,454,847
   
$
(0.17
)

g)       Revenue Recognition
 
The Company recognizes 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.

The Company considered ASC 605-45, Principal Agent Considerations, and determined that the Company does not act as the principal in its revenue-earnings activities related to certain service revenues where the Company does not bear enough of the risks in the transaction to record them on the gross basis. Revenues for these activities are recorded based on the net amount earned by the Company.  

F-5

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)



2.       Summary of Significant Accounting Policies (continued)

h)       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.

i)         Financial Instruments
 
The following table represents assets and liabilities that are measured and recognized in fair value as of September 30, 2017, on a recurring basis:

   
Level 1
$
   
Level 2
$
   
Level 3
$
   
Total gains and
(losses)
 
                         
                         
Liability for shares issuable – related party
   
(611,186
)
   
     
     
232,430
 
Derivative liabilities
   
     
     
(102,546
)
   
(4,328
)
                                 
Total
   
(611,186
)
   
     
(102,546
)
   
228,102
 


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

   
Level 1
$
   
Level 2
$
   
Level 3
$
   
Total gains and
(losses)
 
                         
Liability for shares issuable – related party
   
(843,616
)
   
     
     
(12,383
)
Derivative liabilities
   
     
     
(1,944
)
   
489,305
 
                                 
Total
   
(843,616
)
   
     
(1,944
)
   
476,922
 

As of September 30, 2017, the Company had a derivative liability amount of $102,546 (December 31, 2016 – $1,944) which was classified as a Level 3 financial instrument, and a loss on change in fair value of derivative liabilities of $4,328 (December 31, 2016 – gain of $489,305).


3.       Convertible Debentures

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 September 30, 2017, accrued interest of $27,461 (December 31, 2016 - $27,461) 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. During the year ended December 31, 2016, the Company recognized a gain in forgiveness of debt for $140,650 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 period ended September 30, 2017, the Company repaid $47,387 (2016 - $140,000) of the outstanding loan pursuant to a settlement agreement. As at September 30, 2017, the carrying value of the debenture was $22,613 (December 31, 2016 - $70,000) and the fair value of the derivative liability was $2,618 (December 31, 2016 - $1,830).
F-6

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)



3.
Convertible Debentures (continued)

b)
On May 23, 2017, the Company issued a $63,000 convertible note which is unsecured, bears interest at 8% per annum, and is due on May 23, 2018. The note is convertible into shares of common stock at a conversion rate of 55% of the lowest closing bid prices of the Company's common stock for the twenty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2017, accrued interest of $1,808 (December 31, 2016 - $nil) has been recorded in accounts payable and accrued liabilities.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability resulted in a discount to the convertible note of $48,137. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $63,000. During the period ended September 30, 2017, $10,030 (2016 - $nil) of accretion expense had been recorded. The original issue discount on the convertible note of $3,000 was fully amortized to interest expense during the period ended September 30, 2017.  As at September 30, 2017, the carrying value of the debenture was $24,893 (December 31, 2016 - $nil) and the fair value of the derivative liability was $49,964 (December 31, 2016 - $nil).

c)
On May 23, 2017, the Company issued a $63,000 convertible note which is unsecured, bears interest at 8% per annum, and is due on May 23, 2018. The note is convertible into shares of common stock at a conversion rate of 55% of the lowest closing bid prices of the Company's common stock for the twenty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2017, accrued interest of $1,808 (December 31, 2016 - $nil) has been recorded in accounts payable and accrued liabilities.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability resulted in a discount to the convertible note of $48,137. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $63,000. During the period ended September 30, 2017, $10,030 (2016 - $nil) of accretion expense had been recorded. The original issue discount on the convertible note of $3,000 was fully amortized to interest expense during the period ended September 30, 2017.  As at September 30, 2017, the carrying value of the debenture was $24,893 (December 31, 2016 - $nil) and the fair value of the derivative liability was $49,964 (December 31, 2016 - $nil).


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 period ended September 30, 2017, the Company recorded a loss on the change in fair value of derivative liability of $4,328 (2016 – gain of $418,878). As at September 30, 2017, the Company recorded a derivative liability of $102,546 (December 31, 2016 – $1,944).

The following inputs and assumptions were used to value the convertible debentures outstanding during the period ended September 30, 2017:

·
The stock price for the valuation of the derivative instruments at September 30, 2017 was $0.195 per share of common stock;
 
·
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%;
 
·
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 274% - 305%; and
 
·
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.

F-7

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)

4.
Derivative Liabilities (continued)

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

   
 
$
 
         
Balance, December 31, 2016
   
1,944
 
Debt discount
   
96,274
 
Loss in change in fair value of the derivative
   
4,328
 
         
Balance, September 30, 2017
   
102,546
 


5.       Related Party Transactions

a)
As at September 30, 2017, the Company was owed $nil (December 31, 2016 - $59,926) in trade accounts receivable, net of allowance for doubtful accounts of $$207,807 (December 31, 2016 - $nil) from a significant shareholder, which is non-interest bearing, unsecured, and due on demand. This amount has been included in accounts receivable – related party.
 
b)
As at September 30, 2017, the Company owed $61,523 (December 31, 2016 - $75,964) to the President of the Company, which is non-interest bearing, unsecured, and due on demand.
 
c)
As at September 30, 2017, the Company owed $60,074 (December 31, 2016 - $87,834) to the Chief Financial Officer of the Company, which is non-interest bearing, unsecured, and due on demand.
 
d)
As at September 30, 2017, the Company recorded a liability for shares issuable of $611,186 (December 31, 2016 - $843,616) relating to 3,134,285 common shares to be issued to a significant shareholder pursuant to the acquisition agreement for the intangible assets. During the period ended September 30, 2017, the Company recorded $232,430 (2016 –$295,280) as a gain in the fair value of the shares issuable to the significant shareholder.
 
e)
During the nine months ended September 30, 2017, the Company generated net service revenues of $147,881 (2016 - $354,444) for sales revenue to a significant shareholder.
 
f)
During the nine months ended September 30, 2017, the Company incurred payroll expense of $317,666 (2016 - $394,510) to management and officers of the Company.
 
g)
During the nine months ended September 30, 2017, the Company incurred bonuses on sales of stealth cards of $nil (2016 - $182,198) 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.
 
h)
During the nine months ended September 30, 2017, the Company issued nil (2016 – 1,544,437) common shares with a fair value of $nil (2016 - $671,830) to management and officers of the Company which has been included in consulting expenses.
 
i)
During the nine months ended September 30, 2017, the Company incurred engineering expense of $nil (2016 - $7,025), which was included in cost of goods sold, and research and development costs of $38,002 (2016 - $42,600) to a company owned by the mother of the President of the Company. As at September 30, 2017, the Company was owed $413 (December 31, 2016 - $nil) from 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 prepaid expense – related party. As at September 30, 2017, the Company owed $nil (December 31, 2016 – $9,587) to the company owned by the mother of the President of the Company, which has been recorded as accounts payable – related party.


6.       Loan Payable

At September 30, 2017, the Company owes $120,000 (December 31, 2016 - $120,000) in a note payable to a non-related party. Under the terms of the note, the amount is unsecured, bears interest at 10% per annum, and due on demand.
F-8

STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)



7.       Common Shares

a)
On January 24, 2017, the Company issued 66,667 common shares with a fair value of $25,000 to a non-related party for consulting services.

b)
On February 1, 2017, the Company issued 13,334 common shares with a fair value of $7,000 to a non-related party for consulting services.

c)
On August 18, 2017, the Company issued 555,556 common shares with a fair value of $190,834 to a non-related party for advertising services, which has been recorded in general and administrative expenses. The fair value of the common shares was determined on June 20, 2017, which was the effective date of the advertising services.


8.       Commitment and Contingencies

a)
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 September 30, 2017.

b)
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 September 30, 2017.

c)
On October 23, 2017, the Company received notice that a consultant was seeking compensation for breach of agreement. Pursuant to the agreement, the Company agreed to compensate the consultant for services performed and for commission earned on the sale of Stealth cards promoted by the consultant. The Company asserts that the agreement was terminated with just cause, and therefore the Company should not be liable for any compensation due to the consultant. The Company intends to defend itself against the consultant and is unable to estimate the likelihood of any outcome as at the date of the report.


9.       Subsequent Event

On November 7, 2017, the Company completed a 1:15 reverse stock split of its common shares. All common shares and per common share amounts in these financial statements have been retroactively restated to reflect the reverse stock-split.




ITEM 2.
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

  
September 30, 2017
$
December 31, 2016
$
Current Assets
1,139,477
1,929,891
Current Liabilities
(1,867,615)
(2,475,947)
Working Capital (Deficit)
(728,138)
(546,056)

Cash Flows

  
September 30, 2017
$
September 30, 2016
$
Cash Flows provided by (used in) Operating Activities
(302,848)
761,090
Cash Flows provided by (used in) Investing Activities
-
(2,247)
Cash Flows provided by (used in) Financing Activities
72,613
(229,491)
Net Change in Cash During Period
(230,235)
529,352

Operating Revenues

During the three months ended September 30, 2017, the Company earned revenue from operations of $750,557 compared with revenue of $1,310,345 during the three months ended September 30, 2016. The decrease in revenue is due to the fact that the Company earned less revenue from the sale of the 911 buttons, an emergency two way voice system that connects the user to 911, and Stealth cards. The decrease in total revenue is due to decreases in revenue from services and sale of goods during the three month period ended September 30, 2017 compared to the same period in 2016. For the three month period ended September 30, 2017, the Company recorded a gross margin of $363,276 or 48.40% compared to $761,769 or 58.13% during the period ended September 30, 2016. During the three month period ended September 30, 2017, the Company incurred a lower cost of goods relating to the buttons sold in comparison to that in the prior year.

During the nine months ended September 30, 2017, the Company earned revenues from operations of $2,539,822 compared with revenues of $3,300,713 during the nine months ended September 30, 2016.  The decrease in revenues and gross profit margin is due to the fact that the Company earned decreased revenues from the sale of Stealth cards and 911 buttons. The decrease in total revenue is also attributable to a decrease in revenue from services of $206,563 during the nine month period ended September 30, 2017 compared to the same period in 2016. For the nine month period ended September 30, 2017, the Company recorded a gross margin of $1,250,597 or 49.24% compared to $1,952,907 or 59.17% during the period ended September 30, 2016. During the nine month period ended September 30, 2017, the Company incurred less cost of services relating to engineering costs in comparison to the prior year.



Operating Expenses and Net Loss

Operations

During the three months ended September 30, 2017, the Company incurred operating expenses from operations of $774,601 compared with $695,692 during the three months ended September 30, 2016.  The increase is due to an increase of $179,663 in general and administrative expenses and $27,944 increase in professional fees for legal services due to legal disputes which arose during the current period, offset by decreases of $41,054 in research and development costs, $15,317 in consulting fees incurred for business and financial consulting services in the prior year as per consulting agreements which were not incurred in the current year, in payroll costs of $60,634. Payroll costs decreased from prior quarter due to decreased salaries and benefits incurred to the President and Chief Financial Officer of the Company in the current period in comparison to prior year.

During the nine months ended September 30, 2017, the Company incurred operating expenses from operations of $1,944,346 compared with $2,951,193 during the nine months ended September 30, 2016.  The decrease is due to a decrease of $918,044 in consulting fees incurred to consultants for business and financial consulting services as per consulting agreements as well as share-based compensation to the President and Chief Financial Officer of the Company for business consulting services incurred in the prior period which were not incurred in the current year, $76,844 of payroll costs due to decreased salaries and benefits incurred to the President and Chief Financial Officer of the Company in the current period in comparison to prior year, and $50,559 of general and administrative fees due to decreased overall office costs as compared to prior year, offset by $56,349 in professional fees for legal services with the legal disputes which arose in the prior period.

Net Income (Loss)

For the three months ended September 30, 2017, the Company had net loss of $604,935 and basic and diluted net loss per share of $0.09. In addition to expenses from operations, the Company also incurred make whole expense of $176,758, a loss in the change in fair value of derivative liabilities relating to the floating conversion price of its convertible debenture of $2,107, and interest expense of $14,745 relating to interest charges incurred on its convertible debentures. For the three months ended September 30, 2016, the Company had net loss of $198,323 and basic and diluted net loss per share of $0.03. In addition to expenses from operations, the Company also incurred a $281,254 from make whole expense and interest expense of $22,547 relating to interest charges incurred on its convertible debentures, offset by gain of $19,413 for the change in fair value of derivative liabilities relating to the floating conversion price of its convertible debenture and $19,988 gain on forgiveness of debt.

For the nine months ended September 30, 2017, the Company had a net loss of $503,290 and basic and diluted net loss per share of $0.08 and $0.09, respectively. In addition to expenses from operations, the Company also incurred interest expense of $32,643 relating to interest charges incurred on its' convertible debentures, $5,000 in other losses to settle and outstanding lawsuit, and a loss of $4,328 for the change in fair value of derivative liabilities relating to the floating conversion price of its' convertible debenture, offset by make whole income of $232,430.  For the nine months ended September 30, 2016, the Company had a net loss of $930,470 and basic and diluted net loss per share of $0.17. In addition to operating expenses from operations, the Company also incurred make whole expense of $295,280 and interest expense of $75,770 relating to interest charges incurred on its convertible debentures, offset by a gain of $418,878 for the change in fair value of derivative liabilities relating to the floating conversion price of its convertible debenture and gain on forgiveness of debt of $19,988.

Liquidity and Capital Resources

As at September 30, 2017, the Company had cash of $226,732 and total current assets of $1,139,477 compared with cash of $456,967 and total current assets of $1,929,891 at December 31, 2016. The decrease in cash is attributed to less revenue earned from operations, in addition to cash used for cost of goods sold and operating expenses. The overall decrease in total current assets is due to decrease of $230,235 in cash, $539,952 in accounts receivable, $59,926 in accounts receivable – related party, and $714 in inventory, net of an increase in $40,000 in prepaid expense, and $413 in prepaid expense - related party.

The overall working capital deficit increased from $546,056 at December 31, 2016 to $728,138 at September 30, 2017 due in part to decrease in shares issuable - related party, accounts payable and accrued liabilities, and accounts payable – related party, offset by an increase in derivative liabilities relating to the fair value of the floating conversion price of the convertible debenture.

Cashflow from Operating Activities

During the nine months ended September 30, 2017, the Company used $302,848 of cash from operating activities, which is reflective of the cash earned from operating activities, net of cash used for day-to-day business operations.   Comparatively, the Company earned cash of $761,090 during the nine months ended September 30, 2016. The increase of cash used by operating activities is largely due to the Company earning less revenue from the sale of its Stealth products and the 911 buttons in comparison to its prior period and due to paying off outstanding accounts payable balances with cash on hand.

Cashflow from Investing Activities

During the nine months ended September 30, 2017, the Company used $nil for investing activities compared to the Company using $2,247 for investing activities to acquire intangible assets during the nine months ended September 30, 2016,

Cashflow from Financing Activities

During the nine months ended September 30, 2017, the Company received $72,613 of cash from financing activities, compared with $229,491 in cash used during the nine months ended September 30, 2016. The change in cash received and used is due to the Company receiving proceeds of $120,000 in the current period and repaying fewer amounts on outstanding convertible debentures in comparison to repayments made on outstanding loans payable and convertible debentures during the nine months ended September 30, 2016.

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 September 30, 2017, accrued interest of $27,461 (December 31, 2016 - $27,461) 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. During the year ended December 31, 2016, the Company recognized a gain in forgiveness of debt for $140,650 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 period ended September 30, 2017, the Company repaid $47,387 (2016 - $140,000) of the outstanding loan pursuant to a settlement agreement. As at September 30, 2017, the carrying value of the debenture was $22,613 (December 31, 2016 - $70,000) and the fair value of the derivative liability was $2,618 (December 31, 2016 - $1,830).

On May 23, 2017, the Company issued a $63,000 convertible note which is unsecured, bears interest at 8% per annum, and is due on May 23, 2018. The note is convertible into shares of common stock at a conversion rate of 55% of the lowest closing bid prices of the Company's common stock for the twenty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2017, accrued interest of $1,808 (December 31, 2016 - $nil) has been recorded in accounts payable and accrued liabilities.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability resulted in a discount to the convertible note of $48,137. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $63,000. During the period ended September 30, 2017, $10,030 (2016 - $nil) of accretion expense had been recorded. As at September 30, 2017, the carrying value of the debenture was $24,893 (December 31, 2016 - $nil) and the fair value of the derivative liability was $49,964 (December 31, 2016 - $nil).

On May 23, 2017, the Company issued a $63,000 convertible note which is unsecured, bears interest at 8% per annum, and is due on May 23, 2018. The note is convertible into shares of common stock at a conversion rate of 55% of the lowest closing bid prices of the Company's common stock for the twenty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2017, accrued interest of $1,808 (December 31, 2016 - $nil) has been recorded in accounts payable and accrued liabilities.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability resulted in a discount to the convertible note of $48,137. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $63,000. During the period ended September 30, 2017, $10,030 (2016 - $nil) of accretion expense had been recorded. As at September 30, 2017, the carrying value of the debenture was $24,893 (December 31, 2016 - $nil) and the fair value of the derivative liability was $49,964 (December 31, 2016 - $nil).

Critical Accounting Policies and Estimates

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:

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 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.

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 receivable – related party, accounts payable and accrued liabilities, accounts payable – related party, loans payable, amount due to related parties, convertible debenture, and loan payable – related party. 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 3.                          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4.                          CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective.

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

-
Insufficient number of qualified accounting personnel governing the financial close and reporting process
-
Lack of proper segregation of duties

There was no change in our internal control over financial reporting during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION.

ITEM 1.                          LEGAL PROCEEDINGS.

a)
An action was initiated against us in Scanner Guard Corporation v. Excelsis Investments, Inc., et al., Case No. 16-516, pending in the United States District Court for the Eastern District of Pennsylvania wherein Scanner Guard alleges that we made false statements about our stealth card.  The plaintiff is a manufacturer and distributor of radio frequency identification (RFID) chip protection cards which are in competition with our stealth cards. We filed an answer to Scanner's complaint, denying the allegations in Scanner's complaint and have asserted certain affirmative defenses.  We intend to vigorously defend this matter.

b)
An action was initiated against us in The Marketing Source, Inc. v. Mobile Dynamic Marketing, Inc., a Florida corporation, et al, Case No. 2016-000823-CI, pending in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida wherein The Marketing Source alleges that we breached the terms a Marketing Agreement and as a result The Marketing Source is entitled to an unspecified amount of damages, an accounting, and an injunction.  We deny The Marketing Source's allegations and intend to vigorously defend this action.

c)
An action was initiated against Stealth Card, Inc. (the "Company") in HD Group Enterprises LLC v. Stealth Card, Inc. f/k/a Mobile Dynamic Marketing, Inc., Case No. 17-006359-CI, pending in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida.  In that action, the plaintiff HD Group Enterprises LLC (the "plaintiff") alleges that the Company breached a contract by failing to pay sales commissions and other sums purportedly due to the plaintiff, and by refusing to indemnify the plaintiff regarding two lawsuits pending in the United States District Court for the Eastern District of Pennsylvania. The plaintiff seeks damages exceeding $600,000, as well as the referenced indemnification.  The Company's response is due on or before December 1, 2017.  In short, the Company denies the plaintiff's claims in their entirety, and intends to vigorously defend this matter.


ITEM 1A.                     RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 2.                          UNREGISTERED SALE OF EQUITY SECURITIES.

None.


ITEM 3.                          DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.                          MINE SAFETY DISCLOSURES.

None.
 

ITEM 5.                          OTHER INFORMATION.

None.
 

ITEM 6.                          EXHIBITS.

Exhibit
 
Incorporated by reference
Filed
Number
Document Description
Form
Date
Number
Herewith
           
Exchange Agreement between Pub Crawl Holdings, Inc. and Mobile Dynamic Marketing, Inc.
8-K
01/31/13
2.1
 
Exchange Agreement between Pub Crawl Holdings, Inc. and Career Start, Inc.
10-Q
11/19/13
2.2
 
Articles of Incorporation - Pub Crawl.
S-1
10/07/10
3.1
 
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
10-K/A
04/16/13
3.2
 
Articles of Incorporation – Career Start, Inc.
10-K
04/15/14
3.3
 
Bylaws - Pub Crawl Holdings, Inc.
S-1
10/07/10
3.2
 
Bylaws - Mobile Dynamic Marketing, Inc.
S-1
06/14/13
3.4
 
Bylaws – Career Start, Inc.
10-K
04/15/14
3.6
 
Amended Articles of Incorporation – March 26, 2013.
10-K
04/15/14
3.7
 
Amended Articles of Incorporation – October 24, 2013.
10-K
04/15/14
3.8
 
Amended Articles of Incorporation – May 26, 2016.
8-K
06/02/16
3.1
 
Correction to Amended Articles of Incorporation – June 2, 2016.
8-K
06/02/16
3.2
 
Assignment Agreement between the Company, Peter Kremer, and PBPubCrawl.com, LLC dated June 14, 2010.
S-1
10/07/10
10.1
 
Form of Management Agreement between the Company and Peter Kremer dated June 22, 2010.
S-1
10/07/10
10.2
 
Promissory Note between the Company and Sun Valley Investments dated August 5, 2010.
S-1
10/07/10
10.3
 
Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010.
S-1
10/07/10
10.4
 
Settlement Agreement between the Company and Sun Valley Investments dated May 25, 2012.
8-K
08/11/12
10.1
 
Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012.
8-K
08/11/12
10.2
 
Debt Forgiveness Agreement with Hermaytar SA.
10-K/A-2
07/21/14
10.7
 
Consulting Agreement with Still Goin Inc. dated March 17, 2016.
10-Q
8/22/16
10.1
 
Consulting Agreement with Type A Partners Inc. dated March 17, 2016.
10-Q
8/22/16
10.2
 
Code of Ethics.
S-1
10/07/10
14.1
 
List of Subsidiaries.
S-1
10/07/10
21.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
101.INS
XBRL Instance Document.
     
X
101.SCH
XBRL Taxonomy Extension – Schema.
     
X
101.CAL
XBRL Taxonomy Extension – Calculations.
     
X
101.DEF
XBRL Taxonomy Extension – Definitions.
     
X
101.LAB
XBRL Taxonomy Extension – Labels.
     
X
101.PRE
XBRL Taxonomy Extension – Presentation.
     
X


SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934, this registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized on this 7th day of December 2017.

 
STEALTH TECHNOLOGIES, INC.
(formerly Excelsis Investments, Inc.)
     
 
BY:
BRIAN McFADDEN
   
Brian McFadden
   
President, Principal Executive Officer and Director
     
 
BY:
MICHELLE PANNONI
   
Michelle Pannoni
   
Principal Financial Officer, Principal Accounting Officer
and Treasurer












EXHIBIT INDEX

Exhibit
 
Incorporated by reference
Filed
Number
Document Description
Form
Date
Number
Herewith
           
Exchange Agreement between Pub Crawl Holdings, Inc. and Mobile
Dynamic Marketing, Inc.
8-K
01/31/13
2.1
 
Exchange Agreement between Pub Crawl Holdings, Inc. and Career
Start, Inc.
10-Q
11/19/13
2.2
 
Articles of Incorporation - Pub Crawl.
S-1
10/07/10
3.1
 
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
10-K/A
04/16/13
3.2
 
Articles of Incorporation – Career Start, Inc.
10-K
04/15/14
3.3
 
Bylaws - Pub Crawl Holdings, Inc.
S-1
10/07/10
3.2
 
Bylaws - Mobile Dynamic Marketing, Inc.
S-1
06/14/13
3.4
 
Bylaws – Career Start, Inc.
10-K
04/15/14
3.6
 
Amended Articles of Incorporation – March 26, 2013.
10-K
04/15/14
3.7
 
Amended Articles of Incorporation – October 24, 2013.
10-K
04/15/14
3.8
 
Amended Articles of Incorporation – May 26, 2016.
8-K
06/02/16
3.1
 
Correction to Amended Articles of Incorporation – June 2, 2016.
8-K
06/02/16
3.2
 
Assignment Agreement between the Company, Peter Kremer, and
PBPubCrawl.com, LLC dated June 14, 2010.
S-1
10/07/10
10.1
 
Form of Management Agreement between the Company and Peter
Kremer dated June 22, 2010.
S-1
10/07/10
10.2
 
Promissory Note between the Company and Sun Valley Investments
dated August 5, 2010.
S-1
10/07/10
10.3
 
Consulting Agreement between the Company and Voltaire Gomez
dated September 23, 2010.
S-1
10/07/10
10.4
 
Settlement Agreement between the Company and Sun Valley
Investments dated May 25, 2012.
8-K
08/11/12
10.1
 
Promissory Note between the Company and Deville Enterprises, Inc.
dated June 1, 2012.
8-K
08/11/12
10.2
 
Debt Forgiveness Agreement with Hermaytar SA.
10-K/A-2
07/21/14
10.7
 
Consulting Agreement with Still Goin Inc. dated March 17, 2016.
10-Q
8/22/16
10.1
 
Consulting Agreement with Type A Partners Inc. dated March 17, 2016.
10-Q
8/22/16
10.2
 
Code of Ethics.
S-1
10/07/10
14.1
 
List of Subsidiaries.
S-1
10/07/10
21.1
 
Certification of Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
     
X
Certification of Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
     
X
Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
     
X
Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
     
X
101.INS
XBRL Instance Document.
     
X
101.SCH
XBRL Taxonomy Extension – Schema.
     
X
101.CAL
XBRL Taxonomy Extension – Calculations.
     
X
101.DEF
XBRL Taxonomy Extension – Definitions.
     
X
101.LAB
XBRL Taxonomy Extension – Labels.
     
X
101.PRE
XBRL Taxonomy Extension – Presentation.
     
X





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