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EX-32.2 - STEALTH TECHNOLOGIES, INC.exh32-2.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2018
  
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________
 
Commission File Number: 333-220846
 
Stealth Technologies, Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 
Nevada
 
27-2758155
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
801 West Bay Drive, Suite 470
Largo, Florida
 
33770
(Address of Principal Executive Office)
 
(Zip Code)
 
727-330-2731
(Registrant's Telephone Number, Including Area Code)

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 ☑ 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 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, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 ☐
Accelerated filer
 ☐
Non-accelerated filer,
(Do not check if a smaller reporting company)
 ☐
Smaller reporting company
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 any 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 ☑
 
As of November 30, 2018, there were 10,512,443 shares of the registrant's common stock outstanding.
 

 
 
 
 
 



STEALTH TECHNOLOGIES, INC.
INDEX

 
 
Page
 
 
 
 
 
 
 
Item 1.
 4
 
 
 
Item 2.
 16
 
 
 
Item 3.
 18
 
 
 
Item 4.
 18
 
 
 
19
 
 
 
Item 1.
19
 
 
 
Item 1A.
 19
 
 
 
Item 2.
 19
 
 
 
Item 3.
 19
 
 
 
Item 4.
 19
 
 
 
Item 5.
 19
 
 
 
Item 6.
20
 
 
 
21




















- 2-


FORWARD-LOOKING STATEMENTS
 
Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain "forward-looking statements'' within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under "Management's Discussion and Analysis of Financial Condition and Results of Operations."
 
These forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may,'' "will,'' "expect,'' "intend,'' "estimate,'' "anticipate,'' "believe,'' "continue'' or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:
 
 
the success or failure of management's efforts to implement our business plan;
 
 
 
 
our ability to fund our operating expenses;
 
 
 
 
our ability to compete with other companies that have a similar business plan;
 
 
 
 
the effect of changing economic conditions impacting our plan of operation; and
 
 
 
 
our ability to meet the other risks as may be described in future filings with the Securities and Exchange Commission (the "SEC").
 
Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.
 
When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time-frame, or at all.























- 3-


STEALTH TECHNOLOGIES, INC.
Consolidated Balance Sheets
(unaudited)

   
June 30,
2018
$
   
December 31,
2017
$
 
   
(unaudited)
       
ASSETS
           
             
Cash
   
292,534
     
51,627
 
Accounts receivable, net of allowance for doubtful accounts of $2,500 and $2,500, respectively
   
486,951
     
329,558
 
Prepaid expenses
   
19,438
     
24,438
 
                 
Total Current Assets
   
798,923
     
405,623
 
                 
Equipment, net
   
3,559
     
 
Intangible assets, net
   
3,963
     
3,963
 
                 
Total Assets
   
806,445
     
409,586
 
                 
LIABILITIES
               
                 
Accounts payable and accrued liabilities
   
1,448,749
     
1,485,426
 
Derivative liabilities
   
336,005
     
157,506
 
Loans payable      120,000        120,000  
Due to related parties
   
36,888
     
36,888
 
Liability for shares issuable – related party
   
     
479,516
 
Convertible debentures, net of unamortized discount of $183,050 and $96,034, respectively
   
578,414
     
150,809
 
                 
 Total current liabilities      2,520,056       2,430,145   
                 
 Other long-term liability     120,000         -  
                 
Total Liabilities
   
2,640,056
     
2,430,145
 
                 
STOCKHOLDERS' DEFICIT
               
                 
Preferred Stock
               
Authorized: 500,000,000 preferred shares with a par value of $0.001 per share
               
Issued and outstanding: 500,000 and 500,000 preferred shares, respectively
   
500
     
500
 
                 
Common Stock
               
Authorized: 750,000,000 common shares with a par value of $0.001 per share
               
Issued and outstanding: 9,534,703 and 7,123,521 common shares, respectively
   
9,535
     
7,124
 
                 
Additional paid-in capital
   
2,833,010
     
2,704,729
 
Accumulated deficit
   
(4,676,656
)
   
(4,732,912
)
                 
Total Stockholders' Deficit
   
(1,833,611
)
   
(2,020,559
)
                 
Total Liabilities and Stockholders' Deficit
   
806,445
     
409,586
 
                 

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

F-1
- 4-



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

   
Three months ended
June 30,
2018
$
   
Three months ended
June 30,
2017
$
   
Six months ended
June 30,
2018
$
   
Six months ended
June 30,
2017
$
 
                         
Revenue of goods
   
878,798
     
972,127
     
1,795,609
     
1,641,384
 
Revenue of services – related party
   
     
68,379
     
     
147,881
 
                                 
Total revenue
   
878,798
     
1,040,506
     
1,795,609
     
1,789,265
 
                                 
Cost of goods sold
   
(650,598
)
   
(510,045
)
   
(1,410,871
)
   
(901,944
)
                                 
Gross Margin
   
228,200
     
530,461
     
384,738
     
887,321
 
                                 
Operating Expenses
                               
                                 
Amortization
   
194
     
36,689
     
339
     
72,975
 
Consulting
   
22,000
     
5,000
     
22,000
     
68,115
 
General and administrative
   
80,514
     
244,595
     
215,264
     
615,436
 
Payroll
   
92,804
     
102,508
     
178,378
     
240,275
 
Professional fees
   
59,427
     
72,622
     
155,533
     
134,942
 
Research and development
   
     
     
     
38,002
 
                                 
Total Operating Expenses
   
254,939
     
461,414
     
571,514
     
1,169,745
 
                                 
Income (Loss) Before Other Income (Expense)
   
(26,739
)
   
69,047
     
(186,776
)
   
(282,424
)
                                 
Other Income (Expense), net
                               
                                 
Gain (loss) on change in fair value of derivative liabilities
   
10,247
     
(1,825
)
   
20,391
     
(2,221
)
Gain on settlement of liability
   
455,741
     
     
455,741
     
 
Interest expense
   
(163,731
)
   
(14,906
)
   
(256,876
)
   
(17,898
)
Make whole expense with related party
   
     
757,532
     
23,776
     
409,188
 
Other expense
   
     
     
     
(5,000
)
                                 
Total Other Income, net
   
302,257
     
740,801
     
243,032
     
384,069
 
Net Income
   
275,518
     
809,848
     
56,256
     
101,645
 
                                 
Net Income per Share – Basic
   
0.03
     
0.12
     
0.01
     
0.02
 
                                 
Net Income (Loss) per Share – Diluted
   
(0.00
)
   
0.01
     
(0.01
)
   
(0.03
)
                                 
Weighted Average Shares Outstanding – Basic
   
9,534,703
     
6,519,552
     
8,954,725
     
6,508,355
 
                                 
Weighted Average Shares Outstanding – Diluted
   
24,844,394
     
8,214,328
     
24,264,416
     
8,203,131
 

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

F-2


- 5-


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

   
Six months ended
June 30,
2018
   
Six months ended
June 30,
2017
 
    $       $    
Operating Activities
               
                 
Net income for the period
   
56,256
     
101,645
 
                 
Adjustments to reconcile net income  to net cash used in operating activities:
               
               
Accretion of discount on convertible debentures
   
247,711
     
10,875
 
Amortization of intangible assets
   
339
     
72,975
 
Change in fair value of make whole expense with related party
   
(23,776
)
   
(409,188
)
Gain on settlement of liability
   
(455,741
)
   
 
Issuance of shares for consulting services
   
     
32,000
 
Loss (gain) on change in fair value of derivative liabilities
   
(20,391
)
   
2,221
 
Share based compensation
   
56,689
     
 
                 
Changes in operating assets and liabilities:
               
                 
Accounts receivable
   
(157,393
)
   
334,465
 
Accounts receivable – related party
   
     
(147,881
)
Prepaid expenses
   
5,000
     
(30,000
)
Prepaid expense – related party
   
     
(413
)
Inventory
   
     
694
 
Accounts payable and accrued liabilities
   
52,111
     
(307,288
)
Accounts payable – related party
   
     
(9,587
)
Deferred revenue
   
     
(120
)
Due to related parties
   
     
(21,807
)
                 
Net cash used in operating activities
   
(239,195
)
   
(371,409
)
                 
Investing Activities
               
                 
Acquisition of equipment
   
(3,898
)
   
 
                 
Net cash used in investing activities
   
(3,898
)
   
 
                 
Financing Activities
               
                 
Proceeds from convertible debentures
   
500,000
     
120,000
 
Repayments of convertible debentures
   
(10,000
)
   
(47,387
)
Deferred financing fees paid     (6,000 )    
– 
 
                 
Net cash provided by financing activities
   
484,000
     
72,613
 
                 
                 
Increase (decrease) in cash
   
240,907
     
(298,796
)
                 
Cash, beginning of period
   
51,627
     
456,967
 
                 
Cash, end of period
   
292,534
     
158,171
 
                 
Non-cash Financing Activities
               
Debt discount resulting from derivative liability
   
211,916
     
96,274
 
Reclassification of derivative liability to APIC on conversion
   
13,026
         
Shares issued for convertible debentures
   
17,777
         
Shares issued for loan fees
   
43,200
         
                 
Supplemental Disclosures
               
Interest paid
   
     
2,613
 
Income tax paid
   
     
 

(The accompanying notes are an integral part of these interim consolidated financial statements)
F-3
- 6-


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 June 30, 2018, there has been no activity within the subsidiary.

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 June 30, 2018, the Company has a working capital deficit of $1,721,133 and an accumulated deficit of $4,676,656. 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, 2017.

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 June 30, 2018, the Company had an allowance for doubtful accounts of $2,500 (December 31, 2017 - $2,500).

F-4
- 7-


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

3.
Summary of Significant Accounting Policies (continued)
 
d)
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 six months ended June 30, 2018, the Company incurred $nil (June 30, 2017 - $72,975) in amortization expense.

e)
Basic and Diluted Net Income per Share

The Company computes net income 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 income 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 June 30, 2018, the Company had 15,309,691 (2017 – 1,694,776) potentially issuable shares that were dilutive.

The following table represents a reconciliation to the diluted EPS:

   
Three months ended
June 30,
2018
$
   
Three months ended
June 30,
2017
$
   
Six months ended
June 30,
2018
$
   
Six months ended
June 30,
2017
$
 
                         
Net income
   
275,518
     
809,848
     
56,256
     
101,645
 
Less: Other income, net
   
(302,257
)
   
(740,801
)
   
(243,032
)
   
(384,069
)
                                 
Adjusted operating income
   
(26,739
)
   
69,047
     
(186,776
)
   
(282,424
)
Weighted Average Shares Outstanding – Diluted
   
24,844,394
     
8,214,328
     
24,264,416
     
8,203,131
 
Net Income (Loss) per Share – Diluted
   
(0.00
)
   
0.01
     
(0.01
)
   
(0.03
)

f)
Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition" (Topic 605) and requires entities to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. We recognized the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted. The adoption of Topic 606 did not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations.

g)
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. Shipping and handling costs are recorded as general and administrative costs.

F-5
- 8-


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


2. Summary of Significant Accounting Policies (continued)

h)
Financial Instruments

The following table represents assets and liabilities that are measured and recognized in fair value as of June 30, 2018, on a recurring basis:

   
Level 1
$
   
Level 2
$
   
Level 3
$
   
Total gains and (losses)
$
 
                         
                         
Liability for shares issuable – related party
   
     
     
     
23,776
 
Derivative liabilities
   
     
     
(336,005
)
   
20,391
 
                                 
Total
   
     
     
(336,005
)
   
44,167
 

The following table represents assets and liabilities that are measured and recognized in fair value as of December 31, 2017, on a recurring basis:

   
Level 1
$
   
Level 2
$
   
Level 3
$
   
Total gains and (losses)
 
                         
Liability for shares issuable – related party
   
(479,516
)
   
     
     
364,100
 
Derivative liabilities
   
     
     
(157,506
)
   
(20,022
)
                                 
Total
   
(479,516
)
   
     
(157,506
)
   
344,078
 

As of June 30, 2018, the Company had a derivative liability amount of $336,005 (December 31, 2017 – $157,506) which was classified as a Level 3 financial instrument, and a gain on change in fair value of derivative liabilities of $20,391 (June 30, 2017 – loss of $2,221).

i)
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.

F-6
- 9-



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

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 June 30, 2018, accrued interest of $27,461 (December 31, 2017 - $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. 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 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 six months ended June 30, 2018, the Company repaid $10,000 (2017 - $47,387) of the outstanding loan pursuant to a settlement agreement. As at June 30, 2018, the carrying value of the debenture was $12,613 (December 31, 2017 - $22,613) and the fair value of the derivative liability was $5,000 (December 31, 2017 - $14,237).

b)
On May 23, 2017, the Company issued a $63,000 convertible note, net of an original issue discount of $3,000, which is unsecured, bears interest at 8% per annum, and matured on May 23, 2018. The convertible note is in default. 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. During the six months ended June 30, 2018, the Company issued 249,916 common shares for the conversion of $3,540 of principal and $185 of accrued interest. As at June 30, 2018, accrued interest of $5,094 (December 31, 2017 - $2,992) 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. During the six months ended June 30, 2018, $26,303 (2017 - $5,437) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $57,690 (December 31, 2017 - $34,927) and the fair value of the derivative liability was $32,238 (December 31, 2017 - $52,001).

c)
On May 23, 2017, the Company issued a $63,000 convertible note, net of an original issue discount of $3,000, 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. During the six months ended June 30, 2018, the Company issued 600,000 common shares for the conversion of $10,450 of principal and $3,602 of accrued interest. As at June 30, 2018, accrued interest of $2,540 (December 31, 2017 - $3,077) has been recorded in accounts payable and accrued liabilities.

F-7
- 10-


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

4.
Convertible Debentures (continued)

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 $107,957. The carrying value of the convertible note will be accreted over the term of the convertible note. On May 23, 2018, the Company extended the maturity of note to July 31, 2018 through the payment of a one-time $6,000 fee, which has been recorded as a discount on the note and will be accreted over the remaining life of the note The Company concluded that the modification of the loan was not deemed substantial. The note matured on July 31, 2018 and is in default. During the six months ended June 30, 2018, $31,146 (2017 - $5,438) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $50,513 (December 31, 2017 - $35,817) and the fair value of the derivative liability was $33,516 (December 31, 2017 - $48,450).

d)
On December 28, 2017, the Company issued a $100,000 convertible note to the former Chief Financial Officer of the Company which is unsecured, bears interest at 6% per annum, and is due on December 28, 2018. The note is convertible into shares of common stock at a conversion rate of 70% 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 June 30, 2018, accrued interest of $3,039 (December 31, 2017 - $66) 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 $42,817. The carrying value of the convertible note will be accreted over the term of the convertible note. During the six months ended June 30, 2018, $18,352 (2017 - $nil) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $75,804 (December 31, 2017 - $57,452) and the fair value of the derivative liability was $42,801 (December 31, 2017 - $42,818).

e)
On January 23, 2018, the Company issued a $111,111 convertible note, net of an original issue discount of $11,111, which is unsecured, bears one-time interest at 14%, and matured six months from the issue date. The Company also agreed to issue 350,000 common shares with the convertible note. The fair value of the restricted common shares was $18,200 and has been recorded as a discount on the note and will be accreted over the remaining life of the note. The note is convertible into shares of common stock at a conversion price of $0.30 per share. As at June 30, 2018, accrued interest of $14,000 (December 31, 2017 - $nil) has been recorded in accounts payable and accrued liabilities.

Since this note became tainted by the notes with variable conversion rates, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability and the one-time interest resulted in a discount to the convertible note of $17,712. The carrying value of the convertible note will be accreted over the term of the convertible note. During the six months ended June 30, 2018, $40,254 (2017 - $nil) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $104,342 (December 31, 2017 - $nil) and the fair value of the derivative liability was $4,741 (December 31, 2017 - $nil).
 
On September 4, 2018, the Company entered into an extension agreement whereby the Company would issue 350,000 restricted common stock to the investor and pay a one time 12% interest payment to extend the loan due date to October 23, 2018.  The convertible note was extended to October 23, 2018 and is currently in default.

f)
On January 26, 2018, the Company issued a $165,000 convertible note, net of an original issue discount of $15,000, which is unsecured, bears one‐time interest at 14%, matured six months from the issue date and is in default. The note is convertible into shares of common stock at a conversion price of $0.30 per share. A total of 500,000 shares with a fair value of $25,000 was also issued with the convertible note. Refer to Note 7(f). As at June 30, 2018, accrued interest of $21,000 (December 31, 2017 ‐ $nil) has been recorded in accounts payable and accrued liabilities.
F-8
- 11-


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

3.
Convertible Debentures (continued)

Since this note became tainted by the notes with variable conversion rates, the embedded conversion option qualifies for derivative accounting under ASC 815-15 "Derivatives and Hedging". The fair value of the derivative liability and the one-time interest resulted in a discount to the convertible note of $50,697. The carrying value of the convertible note will be accreted over the term of the convertible note. During the six months ended June 30, 2018, $55,581 (2017 - $nil) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $154,884 (December 31, 2017 - $nil) and the fair value of the derivative liability was $7,098 (December 31, 2017 - $nil).

g)
On February 20, 2018, the Company issued a $131,250 convertible note, which is unsecured, bears interest at 8% per annum, and is due on February 20, 2019. 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 prior including the date the conversion notice is received by the Company. As at June 30, 2018, accrued interest of $3,740 (December 31, 2017 - $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 $108,050. The carrying value of the convertible note will be accreted over the term of the convertible note. During the six months ended June 30, 2018, $47,177 (2017 - $nil) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $70,377 (December 31, 2017 - $nil) and the fair value of the derivative liability was $105,377 (December 31, 2017 - $nil).

h)
On February 23, 2018, the Company issued a $131,250 convertible note, which is unsecured, bears interest at 8% per annum, and is due on February 23, 2019. 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 prior including the date the conversion notice is received by the Company. As at June 30, 2018, accrued interest of $3,653 (December 31, 2017 - $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 $107,957. The carrying value of the convertible note will be accreted over the term of the convertible note. During the six months ended June 30, 2018, $28,898 (2017 - $nil) of accretion expense had been recorded. As at June 30, 2018, the carrying value of the debenture was $52,191 (December 31, 2017 - $nil) and the fair value of the derivative liability was $105,234 (December 31, 2017 - $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 six months ended June 30, 2018, the Company recorded a gain on the change in fair value of derivative liability of $20,391 (2017 – $(2,221)). As at June 30, 2018, the Company recorded a derivative liability of $336,005 (December 31, 2017 – $157,506).

The following inputs and assumptions were used to value the convertible debentures outstanding during the six months ended June 30, 2018:
 
 F-9
- 12-


STEALTH TECHNOLOGIES, INC.
Notes to the Consolidated Financial Statements
(unaudited)
 
4. Derivative Liabilities (continued)

·
The stock price for the valuation of the derivative instruments at June 30, 2018 was $0.058 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 302% - 398%; 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.

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

   
$
   
         
Balance, December 31, 2017
   
157,506
 
Reclassification of derivative liabilities upon conversion
   
(13,026
)
Debt discount
   
211,916
 
Gain due to change in fair value of the derivative
   
(20,391
)
         
Balance, June 30, 2018
   
336,005
 

5.
Related Party Transactions

a)
As at June 30, 2018, the Company was owed $nil (December 31, 2017 - $nil) in trade accounts receivable, net of allowance for doubtful accounts of $59,926 (December 31, 2017 - $59,926) 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 June 30, 2018, the Company owed $36,888 (December 31, 2017 - $36,888) to the President of the Company, which is non-interest bearing, unsecured, and due on demand.
c)
On April 9, 2018, the Company entered into an agreement pursuant to which the Company will repurchase 372,137 common shares held by a significant shareholder in exchange for the Company's intangible assets. The agreement also released the Company of all obligations and liabilities to the significant shareholder, including the shareholder's right to acquire 30% of the Company's outstanding common stock, leading to a $455,741 (2017 – $nil) gain on settlement of liability. As at June 30, 2018, the Company recorded a liability for shares issuable of $nil (December 31, 2017 - $479,516) relating to the common shares that were to be issued. During the six months ended June 30, 2018, the Company recorded a gain of $23,776 (2017 – $409,188) in the fair value of the shares issuable to the significant shareholder.
d)
During the six months ended June 30, 2018, the Company generated net service revenues of $nil (2017 - $147,881) for sales revenue to a significant shareholder.
e)
During the six months ended June 30, 2018, the Company incurred payroll expense of $178,378 (2017 - $240,275) to management and officers of the Company.
f)
During the six months ended June 30, 2018, the Company incurred research and development costs of $nil (2017 - $38,002) to a company owned by the mother of the President of the Company. As at June 30, 2018, the Company was owed $413 (December 31, 2017 - $413) 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 expenses.

F-10
- 13-


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

6.
Loan Payable

As at June 30, 2018, the Company owes $120,000 (December 31, 2017 - $120,000) in a loan payable to a non-related party. The loan is unsecured, bears interest at 10% per annum, and is due on demand.

7.
Common Shares

a)
On January 9, 2018, the Company issued 250,000 common shares for the conversion of $6,587 of convertible debenture and $3,038 of accrued interest. Refer to Note 3(c).

b)
On January 17, 2018, the Company issued 102,543 common shares for the conversion of $1,770 of convertible debenture and $91 of accrued interest. Refer to Note 3(b).

c)
On January 25, 2018, the Company issued 147,373 common shares for the conversion of $1,770 of convertible debenture and $94 of accrued interest. Refer to Note 3(b).

d)
On February 12, 2018, the Company issued 350,000 common shares for the conversion of $3,863 of convertible debenture and $564 of accrued interest. Refer to Note 3(c).

e)
On February 16, 2018, the Company issued 1,061,266 common shares at a fair market value of $53,063 as compensation to the Chief Operating Officer of the Company. Refer to Note 9(d).

f)
On March 12, 2018, the Company issued 500,000 common shares to the lender as additional compensation for a loan payable. Refer to Note 3(f).

8.
Revenue Concentration Disclosure

The Company had one product that accounted for approximately 85% (2017 - 100%) of gross revenue for the six months ended June 30, 2018 and 100% (December 31 - 2017 - 100%) of accounts receivable as at June 30, 2018.

9.
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. On June 25, 2018, the Company settled this lawsuit through the mutual agreement to pay the third party $200,000 up front (paid on August 30, 2018) and $200,000 in equal, monthly increments of $6,667 over 30 months

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 the date of the report.
 
F-11
- 14-

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

9.
Commitment and Contingencies (continued)

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 and 911 help buttons 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.

d)
On January 30, 2018, the Company entered into an employment agreement and appointed a Chief Operating Officer to the Company for an initial term of two years, effective February 1, 2018. Pursuant to the agreement, the Company is to pay an annual base salary of $180,000 per annum, pay accrued quarterly bonuses after six months of employment at a rate of 4% of gross revenues received, issue 500,000 shares of Series A Preferred stock at a fair value of $0.001 upon execution of the agreement, and issue 1,061,266 common shares per fiscal quarter during the term of the agreement. Refer to Notes 7(e) and 10(c).

e)
On February 1, 2018, the Company appointed the Chief Operating Officer of the Company to the Board of Directors. In compensation for services to be rendered, the Company will issue 750,000 common shares, which will vest quarterly over a three-year period. During the six months ended June 30, 2018, $3,125 (2017 - $nil) of expense had been recorded.

g)
On June 1, 2018, the Company received notice that a third party was seeking compensation for design patent infringement and copyright infringement. The claims appear to concern an out-of-use version of the product generally known as the "911 Help Now Pendant". The Company intends to defend itself against the claims, have requested and been granted an extension to discuss settlement with the plaintiff, and is unable to estimate the likelihood of any outcome as at the date of the report.

10.
Subsequent Events

a)
On September 17, 2018, the Company issued 442,448 common shares for the conversion of $1,270 of convertible debenture and $190.08 of accrued interest

b)
On September 20, 2018, the Company issued 350,000 common shares for loan fees and 350,000 common shares due to extension of debt. Refer to Note 3(e).

c)
On October 27, 2018, the Company issued 500,000 shares of Series A Preferred stock at a fair value of $0.001 to the Chief Operating Officer of the Company. Refer to Note 9(d).

d)
On November 14, 2018, the Company repurchased 372,137 common shares held by a significant shareholder in exchange for the Company's intangible assets, pursuant to an agreement entered into on April 9, 2018. Refer to Note 5(c).



F-12
- 15-



ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this prospectus.
 
Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking.  Forward-looking statements are, by their very nature, uncertain and risky.  Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in "Risk Factors".
 
Although the forward-looking statements in this Registration Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
 
Our financial statements are stated in United States Dollars (USD or US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common stock" refer to the common shares in our capital stock.

Overview
 
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, 2018, there has been no activity within the subsidiary. 
 
Results of Operations
 
For the Six months Ended June 30, 2018 and June 30, 2017
 
Our results of operations for the Six months ended June 30, 2018 and June 30, 2017 are summarized below.
 
 
 
Six months Ended
June 30,
2018
   
Six months Ended
June 30,
2017
 
Revenues
 
$
1,795,609
   
$
1,789,265
 
Cost of Sales
 
$
(1,410,871
)
 
$
(901,944
)
Total operating expenses
 
$
571,514
   
$
1,169,745
 
Loss from operations
 
$
(186,776
)
 
$
(282,424
)
Net income
 
$
56,256
   
$
101,645
 
 

For the Six months ended June 30, 2018 revenues increased by approximately $6,344, or 0.35%, as compared to the Six months ended June 30, 2017.
 
 
 
- 16-

 
 
 
 
For the Six months ended June 30, 2018, cost of sales increased by approximately $508,927 or 56.43%, as compared to the Six months ended June 30, 2017.
 
For the Six months ended June 30, 2018, gross profit amounted to $384,738 as compared to $887,321 in the Six months ended June 30, 2017, amounting to a decrease of $502,583, or 56.64%. For the Six months ended June 30, 2018 and 2017, gross profit margins were at 21.43% and 49.59%, respectively. The decrease in gross profits was mainly attributed to the increase in the cost of goods sold.
 
For the Six months ended June 30, 2018 and 2017, we incurred operating expenses of $571,514 and $1,169,745, respectively, and a net income of $56,256 and $101,645, respectively. The operating expenses are costs related to amortization, consulting, general and administrative, payroll, professional fees, research and development, and share based compensation. Operating expenses decreased by approximately $598,231 or 51.14%.

Generally, the decrease in net income was due to the reduction in operating expense of by 51.14% as well as gains on change in fair value of derivative liabilities of $20,391 and gain on settlement of liability of $455,741 for the six month period ended June 30, 2018, which represent a change of $22,612 in gains on change in fair value of derivative liabilities and $455,411 for the six month period ended June 30, 2018 compared to the six month period ended June 30, 2017.
 
Liquidity and Capital Resources
 
 
For the Six months Ended June 30, 2018 and 2017
 
The following table provides detailed information about our net cash flows:
 
 
 
For the
Six months
Ended
June 30,
2018
   
For the
Six months Ended
June 30,
2017
 
Cash Flows
           
Net cash provided by (used in) operating activities
 
$
(239,195
)
 
$
(371,409
)
Net cash used in investing activities
 
$
(3,898
)
 
$
-
 
Net cash provided by financing activities
 
$
484,000
   
$
72,613
 
Net change in cash
 
$
240,907
   
$
(298,796
)

Operating Activities
 
For the Six months Ended June 30, 2018 and 2017
 
Cash used in operating activities for the Six months ended June 30, 2018 consisted of net income as well as the effect of changes in operating assets and liabilities as well as adjustments to reconcile net income to net cash used in operating activities. Cash used in operating activities of $239,195 consisted of net income of $56,256. The net loss was offset by accretion of discount on convertible notes of $247,711, amortization of intangible assets of $339, change in fair value of make whole expense with related party of $23,776, gain on change in fair value of derivative liabilities of $20,391, gain on settlement of liability of $455,741and share based compensation of $56,689.
 
Cash used in operating activities for the Six months ended June 30, 2017 consisted of net income as well as the effect of changes in operating assets and liabilities as well as adjustments to reconcile net income to net cash used in operating activities. Cash used in operating activities of $(371,409) consisted of a net income of $101,645. The net income was partially offset by accretion of discount on convertible debentures of $10,875, amortization of intangible assets of $72,975, change in fair value of make whole expenses with related parties of $(409,188), and loss on change in fair value of derivative liabilities of $2,221.
 
Investing Activities
 
For the Six months Ended June 30, 2018 and 2017
 
For the Six months Ended June 30, 2018 and 2017 we used cash flow from investing activities of $(3,898) and $0.00, respectively.
 
 
 
- 17-

 
 
 
Financing Activities 
 
For the Six months Ended June 30, 2018 and 2017

For the Six months ended June 30, 2018 and 2017 net cash provided by financing activities was $484,000 and $72,613, respectively.
 
We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
 
We are dependent on our product sales to fund our operations and may require the sale of additional common stock to maintain operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.
 
If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
 
ITEM 4. CONTROLS AND PROCEDURES
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2018. Based on such review and evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2018, the disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (b) is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the fiscal quarter ended June 30, 21018 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
 
 
- 18-

 
 

 
PART II - OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
We are not a party to any material litigation, nor, to the knowledge of management, is any litigation threatened against us that may materially affect us, other than as listed below:
 
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.   As of the date of this report, the Company is in negotiations to settle the litigation. The estimated settlement payment of $400,000 has been recorded in accounts payable and accrued liabilities as at December 31, 2017.

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.

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 and 911 help buttons 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.

On June 1, 2018, the Company received notice that a third party was seeking compensation for design patent infringement and copyright infringement. The claims appear to concern an out-of-use version of the product generally known as the "911 Help Now Pendant". The Company intends to defend itself against the claims, have requested and been granted an extension to discuss settlement with the plaintiff, and is unable to estimate the likelihood of any outcome as at the date of the report.
 
ITEM 1A. RISK FACTORS

As a smaller reporting company we are not required to provide risk factors. Please refer to our registration statement under Form S-1 for more information regarding risks related to the securities of the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
None.
 
Item 4. Mine Safety Disclosures
 
Not applicable.
 
ITEM 5. OTHER INFORMATION
 
a)
Not applicable.

b)
During the quarter ended June 30, 2018, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 


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ITEM 5. EXHIBITS
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
Assignment Agreement between the Company, Peter Kremer, and PBPubCrawl.com, LLC dated June 14, 2010.
S-1
10/07/10
10.1
 
10.2
Form of Management Agreement between the Company and Peter Kremer dated June 22, 2010.
S-1
10/07/10
10.2
 
10.3
Promissory Note between the Company and Sun Valley Investments dated August 5, 2010.
S-1
10/07/10
10.3
 
10.4
Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010.
S-1
10/07/10
10.4
 
10.5
Settlement Agreement between the Company and Sun Valley Investments dated May 25, 2012.
8-K
08/11/12
10.1
 
10.6
Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012.
8-K
08/11/12
10.2
 
10.7
Debt Forgiveness Agreement with Hermaytar SA.
10-K/A-2
07/21/14
10.7
 
10.8
Consulting Agreement with Still Goin Inc. dated March 17, 2016.
10-Q
8/22/16
10.1
 
10.9
Consulting Agreement with Type A Partners Inc. dated March 17, 2016.
10-Q
8/22/16
10.2
 
14.1
Code of Ethics.
S-1
10/07/10
14.1
 
21.1
List of Subsidiaries.
S-1
10/07/10
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.
     
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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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
Stealth Technologies, Inc.
 
 
 
Date: November 30, 2018
By:
BRIAN McFADDEN
 
 
Brian McFadden
 
 
Chief Executive Officer (principal executive officer and principal financial officer)

















































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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
Assignment Agreement between the Company, Peter Kremer, and PBPubCrawl.com, LLC dated June 14, 2010.
S-1
10/07/10
10.1
 
10.2
Form of Management Agreement between the Company and Peter Kremer dated June 22, 2010.
S-1
10/07/10
10.2
 
10.3
Promissory Note between the Company and Sun Valley Investments dated August 5, 2010.
S-1
10/07/10
10.3
 
10.4
Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010.
S-1
10/07/10
10.4
 
10.5
Settlement Agreement between the Company and Sun Valley Investments dated May 25, 2012.
8-K
08/11/12
10.1
 
10.6
Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012.
8-K
08/11/12
10.2
 
10.7
Debt Forgiveness Agreement with Hermaytar SA.
10-K/A-2
07/21/14
10.7
 
10.8
Consulting Agreement with Still Goin Inc. dated March 17, 2016.
10-Q
8/22/16
10.1
 
10.9
Consulting Agreement with Type A Partners Inc. dated March 17, 2016.
10-Q
8/22/16
10.2
 
14.1
Code of Ethics.
S-1
10/07/10
14.1
 
21.1
List of Subsidiaries.
S-1
10/07/10
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.
     
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








- 22-