10-K - Annual report [Section 13 and 15(d), not S-K Item 405]

Document Info
Form Name: 10-K
Filed: April 18, 2017
 
10K 10-K 1 neik_10k.htm ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2016


[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from   n/a


Commission file number: 333-90031


Northstar Electronics, Inc.

Name of small business issuer in its charter


Delaware

 

#33-0803434

State or other jurisdiction of

incorporation or organization

 

IRS Employer Identification No.


2020 General Booth Blvd, Unit 230,

Virginia Beach, VA, USA   23451

Address of principal executive offices and Zip Code


Issuer's telephone number (647-286-4594)


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

None


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

None


Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act [  ]


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 past 90 days.  (1) [ X ] Yes   [   ] No     (2) [X] Yes        [  ] No






Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [ X ]


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


Large accelerated Filer [  ]

Accelerated Filer [  ]

Non-accelerated filer    [  ]

Smaller reporting Company [X]

(Do not check if a smaller reporting company)

 


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 issuer's revenues for its most recent fiscal year: $0


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).


Note - If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

 

Aggregate market value of voting common equity held by non-affiliates as of June 30, 2016:  $630,000 approximately


Aggregate market value of non-voting common equity held by non-affiliates as of June 30, 2016:  Not Applicable


State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Outstanding shares of common stock as of March 10, 2017: 86,252,790


Documents incorporated by reference: None


Transitional Small Business Disclosure Format (Check one): Yes [  ]   No [X]








ii




INDEX


Risk Factors

1

PART I

1

  Item 1. Description of Business

1

  Item 2. Description of Properties

3

  Item 3. Legal Proceedings

3

  Item 4. Submission of Matters to a Vote of Security Holders

4

PART II

4

  Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

4

  Item 6. Management's Discussion and Analysis or Plan of Operation

4

  Item 7. Financial Statements

7

  Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

8

  Item 8A. Controls and Procedures

8

PART III

10

  Item 9. Directors, Executive Officers, Promoters and Control Persons

10

  Item 10. Executive compensation

10

  Item 11. Security Ownership of Certain Beneficial Owners and Management

10

  Item 12. Certain Relationships and Related Transactions

10

  Item 13. Exhibits and Reports on Form 8-K

10

  Item 14. Principal Accountants Fees and Services

10

SIGNATURES

12


Note Regarding Forward Looking Statements


Except for statements of historical fact, certain information contained herein constitutes 'forward looking statements'. Forward looking statements address our current plans, intentions, beliefs and expectations and are statements of our expected future economic performance. Statements containing terms like 'will', 'believes', 'does not believe', 'plans', 'expects', 'intends', 'estimates', 'anticipates', 'may' and other phrases of similar meaning or the negative or other variations of these words or other comparable words or phrases are considered to imply uncertainty and are forward looking statements.


Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of the Company to be materially different from any future results or achievements of the Company expressed or implied by such forward looking statements. Such factors include, but are not limited to changes in economic conditions, government regulations, contract requirements and abilities, behavior of existing and new competitor companies and other risks and uncertainties discussed in this annual Form 10-K report.


We cannot guarantee our future results, level of activity, performance or achievements. Neither I nor any other person assumes responsibility for the accuracy and completeness of these forward looking statements. We are under no duty to update any of the forward looking statements after the date of this report.


Risk Factors


Investment in our common stock involves a high degree of risk. Prospective investors should carefully consider the following risk factors in addition to other information in this annual report before purchasing our common stock.


Because we have a net loss from operations of $535,288 for the year ended December 31, 2016 and have accumulated losses of $12,916,626 from inception, we face a risk of insolvency and we remain dependent on equity and debt financing to help pay operating costs and to help cover operating losses.  Business financing is being pursued.


The Company had previously been dependent on contract manufacturing which did not deliver long term positive financial results, as had been expected. We are, at present, working to develop a business area in the aerospace sector.   Our future is uncertain if we fail to develop this business area.  Please also refer to our December 31, 2016 year end audited financial statements and notes thereto.


The auditor's report for our December 31, 2016 consolidated financial statements includes an additional paragraph that identifies conditions which raise doubt about our ability to continue as a going concern. The audited financial statements do not include any adjustments that might result from the outcome of this uncertainty.


PART I


Item 1. Description of Business


The business of the Company is primarily that of a holding company with subsidiaries. The Company's wholly owned subsidiary, National Five Holding Ltd, incorporated in British Columbia, Canada, holds a 60 percent share interest in Northstar Sealand Enterprises Ltd ("NSEL"). NSEL has been incorporated to pursue a manufacturing, marketing, sales and maintenance opportunity in the aviation industry and is in negotiations with a major aviation company.


Corporate History


The Company's wholly owned subsidiary, Northstar Network Ltd., (NNL), had carried out defense, aerospace and homeland security contract manufacturing. NNL has been discontinued due to insufficient working capital, quality issues with suppliers and design changes made by the customer. The lack of capital funding was predominantly responsible for the shutdown of NNL's operations.   


Our second wholly owned subsidiary Northstar Technical Inc., (NTI), had been involved in underwater sonar sensors primarily related to the fishing industry. NTI has been discontinued due to several issues in the commercial fishing industry. The time taken for new technology developments using underwater communicating techniques was long. The timeframe for market introduction was also lengthy. Although NTI's sonar system was initially a success in a fast changing industry, NTI could not keep up with the larger competitors' products. The Company did not consummate the signing of a Letter of Intent to acquire a development stage company specializing in advanced sonar technologies and systems.



1





Homeland Security and Military Defense:

The Company had expected that design and manufacture of homeland security and anti-terrorism systems would have  grown rapidly as the United States Department of Homeland Security and the United States Navy had planned to ramp up efforts to protect ports, other  onshore high value assets and ships.  However, the timing of their actions taken were too late for the Company to adequately participate.


Research and Development:

The Company expended efforts during the year .in developing operational knowledge of the industrial single engine Turbo Prop airplane, conducting research into Supply Chain Management Systems applicable to  this project, carrying out market research in different geographical areas, in conducting research into the most efficient procedures to obtain the Type Certificate for the airplane and in developing the most cost effective ways to carry out production of the airplane.


DESIGN ENGINEERING AND CONTRACT MANUFACTURING


The Company has considerable experience in contract manufacturing and has produced electronic and mechanical systems under contract to defense and aerospace companies. Products were built according to designs provided by our customers for whom the Company provided production engineering, contract manufacturing of components, sourcing and procurement of parts, assembly of full systems, testing and shipping. For several contracts, the Company also was doing electronic and mechanical design work.


The Company's former customers included Lockheed Martin MS2, Lockheed Martin Canada, Lockheed Martin Aeronautics and L-3.


NEW DIRECTION


We are now moving in a new direction whereby we intend to build our own systems in the civilian aviation sector. We believe that this affords improved control over the business outcomes compared to the contract manufacturing business.


The Company is working on plans to obtain worldwide rights to a single engine airplane with industrial applications. If successful, we intend to manufacture and market the airplane internationally and provide Maintenance, Repair and Overhaul (MRO) services in close proximity to customers. The Company's wholly owned subsidiary, National Five Holding Ltd, is a 60% shareholder of Northstar Sealand Enterprises Ltd (NSEL). NSEL, has experience in working on certified commercial aircraft and government military contracts, and has access to an established aircraft assembly and parts manufacturing facility.


Marketing

NSEL has started market assessments in several large international markets where there appears to be volume sales potential for the single engine airplane. They have also begun to explore potential marketing partnerships with other aviation companies. Projections made by NSEL show a potential growth in demand for suitable single engine aircraft, subject to economic factors. Preliminary plans have been started on methods to achieve market presence, including direct sales, magazine ads, web site, and participation in trade shows.



2





Technology Protection

The Company currently owns no proprietary technology requiring protection with respect to its activities. It intends to acquire proprietary technology and, if successful, intends to put appropriate protection measures in place.


Need for Government Approvals

If the Company is successful in acquiring the rights to the aforementioned single engine airplane, there will be required government approvals applicable to our expected future activities.

The approvals would likely be for an in country Type Certificate and other certificates, as required, in other countries where the airplane would be marketed.


Effect of Existing or Probable Government Regulations

 If successful with the acquisition of the rights to the single engine airplane, the Company intends to abide by the applicable regulations in each country where it intends to carry out marketing and sales. The costs of meeting the regulatory requirements can be high and the Company will do its best efforts to procure the funds required.


Costs and Effects of Compliance with Environmental Laws

The Company incurred no costs or adverse effects in its compliance with any environmental laws.


PRODUCTION


The Company has experience in carrying out work requiring multiple subcontractors to perform specialized tasks.  The ability to integrate the work of multiple components to create a complete system will be NSEL's main area of business - system integration.


EMPLOYEES


As of December 31, 2016 the Company has a team of highly experienced consultants who provide administration, marketing and engineering services under contract.


PUBLIC INFORMATION


The Company electronically files with the Securities and Exchange Commission (SEC) all its reports, including but not limited to its annual and quarterly reports. The SEC maintains an internet site (http://www.sec.gov) that contains reports and other information regarding issuers that do file electronically. The Company maintains a web site address at www.northstarelectronics.com


Item 2. Description of Properties


The Company maintains an office at:


3959 W 36th Avenue, Vancouver BC Canada  V6N 2S7






3





Item 3. Legal Proceedings


There are no known undisclosed legal filings registered or contemplated against the Company.


The Company is liable to repay CAD$3,079,475 in assistance received from the Atlantic Canada Opportunity Agency (ACOA) by the Company's two subsidiaries, Northstar Technical Inc. (NTI) and Northstar Network Ltd.(NNL). The Company, for reasons of expediency, became a cosigner of the agreements the subsidiaries had with ACOA. Subsequently, ACOA claimed that NTI and NNL were delinquent in their payments and, eventually, in early 2013 ACOA launched legal action in Newfoundland where the two subsidiaries had operated. The Company was not in a financial position at the time to launch a defense and ACOA received a judgment unopposed. The Company intends to approach ACOA .with an offer of settlement within the next several months.



Item 4. Submission of Matters to a Vote of Security Holders


There have been no changes since the previous filing.  The Company has filed with the SEC an SB-1 registration statement April 2000, an S-8 registration November 2000 and quarterly reports (form 10QSB) for June and September 2000 and for March, June and September 2001, 2002, 2003, 2004, 2005, 2006 and 2007, form 10Q's for March, June and September 2008, 2009, 2010, 2011, 2012 - 2014 and 2015 and annual reports (form 10KSB) for December 31, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and form 10K for 2008, 2009, 2010, 2011 and the years 2012 thru 2014 and for 2015.


























4






PART II


Item 5. Market for Registrant's Common Equity and Related Stockholder Matters


No change since previous filing.


Item 6. Management's Discussion and Analysis or Plan of Operation


Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements".  Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Actual results may materially differ from any forward-looking statements.  Factors that might cause or contribute to such differences include, among others, competitive pressures and constantly changing technology and market acceptance of the Company's products and services.  The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


The following discussion, comparison and analysis should be read in conjunction with the Company's accompanying audited consolidated financial statements for the years ended December 31, 2016 and 2015 and the notes related thereto. The discussion of results, causes and trends should not be construed to infer conclusions that such results, causes or trends necessarily will continue in the future.


DISCUSSION


The following table sets forth for the years indicated items included in the Company's consolidated statement of operations:


 

2016

 

2015

 

 

 

 

Total revenue

$

-

 

$

-

 

 

 

 

 

 

Cost of goods sold

 

-

 

 

-

 

 

 

 

 

 

Gross margin

 

-

 

 

-

 

 

 

 

 

 

Expenses

 

535,288

 

 

(332,517)

 

 

 

 

 

 

Net income (loss)

$

(535,288)

 

$

332,517

Net income (loss) per share

$

(0.01)

 

$

(0.00)


During the years ended December 31, 2016 and 2015, the Company attempted to adequately recover from the loss of its contracts and to improve its internal systems and continued working toward attaining suitable new contracts.



5





A shortage of working capital in support of operations has been an issue as the Company took measures to provide that support. Sufficient capital was not raised and consequent business operations were kept at a minimum.


New financing opportunities were pursued during the 2016 and 2015 fiscal years. In 2014 and 2013, the Company generated nominal gross revenues of $10,526 and $7,410, respectively, from consulting work.

The Company experienced operating losses of $ 535,288 for 2016, and a gain of $332,517 for 2015 while maintaining an office and continuing its search for its next opportunity.


Discontinued NETMIND operations: the Company was unable to finance its operations and could not attract personnel to manufacture and market the NETMIND product.


Defense Sonar Development Contract Opportunity

Discontinued


Contract Manufacturing and System Integration

Although the Company remains open to carrying out work in contract manufacturing and system integration, we are not actively pursuing contracts at this time in those areas.  


Results of Operations


Revenues decreased significantly in the years 2016 and 2015 resulting in negligible cash flow. The Company generated $0 in contract and $0 sales revenues during this period.


During 2016 the Company incurred costs of $180,000 on market assessments, type certificate matters, supply chain management planning, quality control, first assembly plans, follow-on production plans, and maintenance, repair and overall planning related to the acquisition of the worldwide rights to the single engine industrial Turbo Prop airplane.


Liquidity and Capital Resources


The Company used cash in operations of $(65,189) in 2016 compared to cash used by operations of $(51,178) in 2015 and $(3,198) in 2014. In 2016 the Company raised equity financing of $ 37,500. In 2015 the Company raised equity financing of $55,000 (2014: $0 and 2013: $0).


The Company's working capital and capital requirements will depend on many factors, including the ability of the Company to obtain aircraft sales in order to generate sufficient funds to cover the current level of operating expenses. During the most recent fiscal year (2016) the Company increased its current debt by $483,042 (2015 decreased by $381,053).   


The Company is attempting to negotiate a secure equity financing in the short term.


With respect to the trade payables, the Company's suppliers have been reasonably cooperative with the Company to date.





6






The Company will maintain its focus on reducing the outstanding amounts payable with settlements and debt financing. The Company expects its suppliers will continue to be supportive in the future, and the Company will continue with its communications regarding future prospects.


The Company is liable to repay CAD$3,079,475 in assistance received from the Atlantic Canada Opportunity Agency (ACOA) by the Company's two subsidiaries, Northstar Technical Inc. (NTI) and Northstar Network Ltd.(NNL). The Company, for reasons of expediency, became a cosigner of the agreements the subsidiaries had with ACOA. Subsequently, ACOA claimed that NTI and NNL were delinquent in their payments and, eventually, in early 2013 ACOA launched legal action in Newfoundland where the two subsidiaries had operated. The Company was not in a financial position at the time to launch a defense and ACOA received a judgment unopposed. The Company intends to approach ACOA .with an offer of settlement within the next several months.


The availability of sufficient future funds will depend to an extent on the timing of the expected acquisition of the rights to the single engine Turbo Prop airplane.. Accordingly, the Company will be required to issue securities to finance start-up and working capital requirements for the expected new aviation business and ongoing general business expansion. There can be no assurance whether or not such future financings will be available or on satisfactory terms.



Item 7. Financial Statements


NORTHSTAR ELECTRONICS, INC.

Index to Consolidated Financial Statements December 31, 2016 and 2015 (U.S. Dollars)


Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements















7






[neik_10k002.gif]



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of Northstar Electronics, Inc.


We have audited the accompanying consolidated balance sheet of Northstar Electronics, Inc. ("the Company") as at December 31, 2016, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders' deficit and cash flow for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  The financial statements of Company as at December 31, 2015 and the year then ended, before adjustments, were audited by other auditors whose report dated May 20, 2016, expressed an unqualified opinion on those statements.


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


In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2016, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.


We also audited the adjustments described in Note 12 that were applied to restate the 2015 financial statements to correct errors. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2015 financial statements of the company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2015 financial statements taken as a whole.


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, to date, the Company has reported losses since inception from operations and requires additional funds to meet its obligations and fund the costs of its operations.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans in this regard are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ DMC

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

April 18, 2017





F-1






NORTHSTAR ELECTRONICS, INC.

Consolidated Balance Sheets

December 31


(US Dollars)

 

2016

 

2015 (Restated - Note 12)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

Cash

$

6,078

$

23,752

Prepaid expenses

 

7,292

 

-

 

 

 

 

 

Total Current Assets

 

13,370

 

23,752

 

 

 

 

 

Total assets

$

13,370

$

23,752

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

Accounts payable and accrued liabilities (note 4)

$

806,445

$

576,614

Loans payable (note 5)

 

434,291

 

424,276

Due to directors (note 6)

 

314,550

 

238,936

Legal liability (notes 7 and 12)

 

2,706,869

 

2,539,287

 

 

 

 

 

Total Current Liabilities

 

4,262,155

 

3,779,113

 

 

 

 

 

Total Liabilities

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

 

Common Stock (note 10)

 

 

 

 

Authorized:

 

 

 

 

100,000,000 Common shares with

 a par value of $0.0001 each

 

 

 

 

20,000,000 Preferred shares with

a par value of $0.0001 each

 

 

 

 

Issued and outstanding:

 

 

 

 

86,887,609 Common shares

(79,396,847 - 2015

 

8,639

 

7,940

597,716 Preferred shares

(617,590 - 2015)

 

436,209

 

456,209

Additional Paid-in Capital

 

8,194,737

 

8,105,572

Accumulated Deficit

 

(12,888,370)

 

(12,325,082)

 

 

 

 

 

Total Stockholders' Deficit

 

(4,248,785)

 

(3,755,361)

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

$

13,370

$

23,752


See notes to consolidated financial statements


Nature of operations and going concern (note 1)



F-2





NORTHSTAR ELECTRONICS, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Years Ended December 31

(US Dollars)


 

 

2016

 

2015 (Restated -Note 12)

Expenses

 

 

 

 

Research and development

$

120,000

$

-

Travel, marketing and business development

 

60,000

 

4,926

Management fees (note 6)

 

85,000

 

50,000

Administration

 

42,500

 

27,050

Consulting

 

-

 

2,460

Rent and storage

 

6,223

 

-

Professional fees

 

25,530

 

6,250

Investor relations

 

5,390

 

-

Office and miscellaneous

 

6,568

 

20,634

Filing and transfer agent fees

 

12,239

 

-

Foreign exchange (gain) loss

 

68,564

 

(440,238)

 

 

 

 

 

Net Income (loss) before other items

 

(432,012)

 

328,918

 

 

 

 

 

Other items

 

 

 

 

Interest expense (Notes 7 and 10)

 

(103,274)

 

(102,180)

Gain on settlement of account payable

 

-

 

105,779

Net and comprehensive gain (loss)

$

(535,288)

$

332,517

 

 

 

 

 

Earnings (Loss) Per Share (Basic)

$

(0.01)

$

0.00

Earnings Per Share (Dilutive)

$

-

$

0.00

 

 

 

 

 

Weighted Average Number of Common

Shares Outstanding (Basic and Diluted)

 

82,593,602

 

75,084,347
















See notes to consolidated financial statements



F-3





NORTHSTAR ELECTRONICS, INC.

Consolidated Statements of Changes in Stockholders' Deficit

Years Ended December 31

(US Dollars)


 

Number of

Shares

 

Par

Value

 

Additional

Paid-In

Capital

 

 

Accumulated

Deficit

 

Preferred

Shares

 

Total

Stockholders'

Deficit

Balance, December 31, 2014 (Restated - note 12)

70,771,847

$

7,078

$

8,051,434

 

$

(12,657,599)

$

456,209

$

(4,142,878)

Issuance on conversion of preferred C shares (note 10)

8,625,000

 

862

 

54,138

 

 

-

 

-

 

55,000

Net income

-

 

-

 

-

 

 

332,517

 

-

 

332,517

Balance, December 31, 2015 (Restated -note 12)

79,396,847

 

7,940

 

8,105,572

 

 

(12,325,082)

 

456,209

 

(3,755,361)

Issuance for cash (note 10)

4,161,494

 

416

 

37,084

 

 

-

 

-

 

37,500

Issuance on conversion of preferred C shares (note 10)

1,747,435

 

125

 

19,875

 

 

-

 

(20,000)

 

-

Issuance for interest (note 10)

181,833

 

18

 

4,346

 

 

-

 

-

 

4,364

Issuance for goodwill (note 10)

1,400,000

 

140

 

27,860

 

 

(28,000)

 

-

 

-

Net loss

-

 

-

 

-

 

 

(535,288)

 

-

 

(535,288)

Balance, December 31,2016

86,887,609

$

8,639

$

8,194,737

 

$

(12,888,370)

$

436,209

$

(4,248,785)



























See notes to consolidated financial statements



F-4





NORTHSTAR ELECTRONICS, INC.

Consolidated Statements of Cash Flows

Years Ended December 31

(US Dollars)



 

2016

 

2015

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

Net income (loss)

$

(535,288)

 

$

332,517

Items not involving cash:

 

 

 

 

 

    Gain on settlement of account payable

 

-

 

 

(105,779)

    Issuance of shares for interest

 

4,364

 

 

-

    Foreign exchange loss (gain)

 

68,672

 

 

(440,238)

Changes in Non-Cash Working Capital:

 

 

 

 

 

    Prepaid expenses

 

(7,292)

 

 

-

    Accounts payable and accrued liabilities

 

229,829

 

 

12,500

    Due to directors

 

75,614

 

 

44,778

    Interest accrual

 

98,910

 

 

102,180

Cash Used in Operating Activities

 

(65,189)

 

 

(51,178)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Issuance of share capital for cash

 

37,500

 

 

55,000

Loan advances

 

10,015

 

 

2,642

Cash Provided by Financing Activities

 

47,515

 

 

57,642

 

 

 

 

 

 

Increase (Decrease) in Cash

 

(17,674)

 

 

6,464

Cash, Beginning

 

23,752

 

 

17,288

Cash, Ending

$

6,078

 

$

23,752

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

Income taxes paid

$

-

 

$

-

Interest paid

$

-

 

$

-

 

 

 

 

 

 

Non-cash transactions

 

 

 

 

 

Common shares issued for interest

$

4,364

 

$

-

Common shares issued for goodwill

$

28,000

 

$

-












See notes to consolidated financial statements



F-5





NORTHSTAR ELECTRONICS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2016 and 2015

(US Dollars)


1. NATURE OF OPERATIONS AND GOING CONCERN


Northstar Electronics Inc (the "Company") was incorporated on May 11, 1998 in the state of Delaware. The Company is doing research and development on single engine aircrafts for business use.


The Company's business activities are conducted in Canada.  However, the financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") with all figures translated into United States dollars for financial reporting purposes.


The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will be able to continue as a going-concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2016 the Company incurred a net loss of $535,288 (2015: net income of $332,517) and had a working capital deficiency of $4,248,785 (2015: $3,755,361). Continuation as a going concern is dependent upon the ability of the company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management indends to obtain additional funding by issuing debt and equity financing.


2. SIGNIFICANT ACCOUNTING POLICIES


a. Cash and Cash Equivalents

Cash and cash equivalents consist of commercial accounts, trust accounts and interest-bearing bank deposit. Items are considered to be cash equivalents if the original maturity is three months or less.


b. Research and development

Research and development costs are expensed to operations as incurred.


c. Foreign currency translation

The functional currencies of the Company and its subsidiary were determined as the US dollar, which is the currency of their primary economic environment.  Amounts incurred in Canadian dollars are translated into the functional currency as follows:


(i)

Monetary assets and liabilities at the rate of exchange in effect as at the balance sheet date;




F-6





2. SIGNIFICANT ACCOUNTING POLICIES (continued)


(ii)

Non-monetary assets and liabilities at the exchange rates prevailing at the time of the acquisition of the assets or assumption of the liabilities; and

(iii)

Revenues and expenditures at rates approximating the average rate of exchange for the year.


d. Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period.  Actual results could differ from these estimates.


e. Income taxes

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


f. Basic and diluted net loss per share

The Company computes net income (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 income (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 excluded all dilutive potential shares if their effect is anti-dilutive.


g. Segments of an enterprise and related information

ASC 280, "Segment Reporting" establishes guidance for the way that public companies report information about operating segments in annual consolidated financial statements and requires reporting of selected information about operating segments in interim consolidated financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.



F-7





2. SIGNIFICANT ACCOUNTING POLICIES (continued)


h. Fair value measurements

Effective January 1, 2008 the Company adopted ASC 820, Fair Value Measurements. ASC 820 provides a definition of fair value, establishes a hierarchy for measuring fair value under generally accepted accounting principles and requires certain disclosures about fair values used in the financial statements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:


Level 1 - Quoted prices in active markets for identical assets or liabilities.


Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


i. Comparative figures

Certain comparative figures have been adjusted to conform to the current year's presentation.


j. Recently adopted accounting pronouncements

Recent accounting pronouncements issued by the Financial Accounting Standards Board or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.


3. FINANCIAL INSTRUMENTS


Fair values

The carrying values of accounts payable and loans payable approximate their fair values because of the short maturity of these financial instruments.


Interest rate risk

The Company is not exposed to significant interest rate risk due to the fixed rates of interest on its monetary assets and liabilities.


Credit risk

The Company is exposed to credit risk with respect to its cash. The Company deposits cash with a high credit quality financial institution as determined by rating agencies.





F-8





3. FINANCIAL INSTRUMENTS (continued)


Currency risk

The Company is subject to currency risk as certain of the assets and liabilities are denominated in Canadian dollars. The exchange rate conversion to US dollars may vary from time to time.


Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Company is reliant upon related parties and share issuance as its sources of cash.  The Company has received financing from related parties and share issuance in the past; however, there is no assurance that it will be able to do so in the future.


4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


 

2016

 

2015

Accounts payable

$

483,945

 

$

476,614

Accrued liabilities

 

322,500

 

 

100,000

   

$

806,445

 

$

576,614


5. LOANS PAYABLE


 

2016

 

2015

Demand loans

$

417,364

 

$

407,349

Interest payable

 

16,927

 

 

16,927

   

$

434,291

 

$

424,276


The demand loans are non-interest bearing, unsecured with no fixed terms of repayment.


6. RELATED PARTY TRANSACTIONS


a.

The amount of $314,550 (December 31, 2015: $238,936) due to a director of the Company has no specific terms of repayment, is non-interest bearing and unsecured.


b.

The Company accrued management fees payable of $85,000 in total to a director of the Company for his services as an officer of the Company during the year ended December 31, 2016 (2015: $50,000).


7. LEGAL LIABILITY


During 2000 to 2008, the Company's former subsidiaries Northstar Technical Inc. ("NTI") and Northstar Network Ltd. ("NNL") received funding from Atlantic Canada Opportunities Agency ("ACOA") to fund their projects. In 2013, ACOA filed claims against NTI, NNL and the Company for repayments of advances due to events of default.  The advances and interests ACOA claimed totaled CAD 3,079,475 ($2,293,593).  In accordance with the agreements signed between NTI, NNL and the Company, the Company was jointly and severally liable for the obligations. Further, the claim amount bears a daily interest of $358 from February 15, 2013 to settlement. As the Company discontinued NTI and NNL in the fiscal year of 2011, the opening balance of 2015 fiscal year was restated to reflect this legal liability of $2,874,480 (note 12).



F-9





7. LEGAL LIABILITY (continued)


During the year ended December 31, 2016, the Company accrued interest in the amount of $98,910 (2015: $102,180).


 

2016

 

2015

Legal liability

$

2,293,592

 

$

2,224,920

Interest payable

 

413,277

 

 

314,367

   

$

2,706,869

 

$

2,539,287


8. STOCK OPTIONS AND WARRANTS


Stock option activity for the years ended December 31, 2016 and 2015 are as follows:


 

Number of

Shares

 

Exercise Price

per Share

 

Weighted

Average

Exercise

Price

Balance December 31, 2014

50,000

 

$0.50

 

$0.50

Cancelled/Expired

 (50,000)

 

--

 

--

Balance December 31, 2015 and 2016

--

 

--

 

--


Warrants


 

Number of

Shares

 

Exercise Price

per Share

 

Weighted

Average

Exercise

Price

Balance December 31, 2015 and 2016

829,940

 

$0.15 - $0.75

 

$0.64


As at December 31, 2016 the outstanding warrants are as follows:


 

Exercise

 

Number of Warrants

Expiry Date

Price

 

2016

 

2015

Open (1)

$ 0.50

 

389,170

 

389,170

Open (1)

$ 0.75

 

389,170

 

389,170

Open (2)

$ 0.25

 

51,600

 

51,600

Total outstanding and exercisable

 

 

829,940

 

829,940

Weighted average outstanding life of

options (years)

 

 

Open

 

Open


(1)

These warrants were issued in 2005. The expiry date of the warrants are six months after the closing bid price for the common stock of the Company has been over $0.65 and $1.00 per share respectively for five consecutive trading days.


(2)

These warrants were issued in 2008 and they do not have an expiry date.




F-10






9. INCOME TAXES


Income taxes vary from the amount that would be computed by applying the estimated combined statutory income tax rate (34%) for the following reasons:


 

2016

 

2015

Income (Loss) before income taxes

$

(535,288)

 

$

332,517

Income tax rate

 

34%

 

 

34%

 

 

 

 

 

 

Expected income tax expense (recovery)

 

(181,998)

 

 

113,056

Increase (decrease) due to:

 

 

 

 

 

Change in valuation allowance

 

181,998

 

 

(113,056)

Provision for income taxes

$

--

 

$

--


Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  


 

2016

 

2015

Deferred tax asset attributable to:

 

 

 

 

 

Non-capital loss

$

2,782,180

 

$

2,600,182

Less: change in valuation allowance

 

(2,782,180)

 

 

(2,600,182)

  

$

--

 

$

--


The Company's carried losses for income tax purposes are $8,182,881 which may be carried forward to apply against future income tax, expiring between 2026 and 2036.  The future tax benefit of these loss carry-forwards has been offset with a full valuation allowance.  These losses expire as follows:


2026

$

681,591

2027

 

718,441

2028

 

1,791,899

2029

 

1,039,431

2030

 

1,272,447

2031

 

1,807,955

2032

 

335,829

2033

 

--

2034

 

--

2035

 

--

2036

 

535,288

 

$

8,182,881






F-11





9. INCOME TAXES (continued)


The Company has adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" - an interpretation of SFAS 109. (FIN 48), as codified in ASC 740. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions.


The Company did not file its U.S. federal income tax returns, including, without limitation, information returns on Internal Revenue Service ("IRS") Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations for the years ended December 31, 2007 through 2016. Failure to furnish any information with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to certain civil penalties.


The Company did not file the information reports for the years ended December 31, 2007 through 2011 concerning its interest in foreign bank accounts on TDF 90-22.1, "Report of Foreign Bank and Financial Accounts" ("FBARs"). For not complying with the FBAR reporting and recordkeeping requirements, the Company is potentially subject to civil penalties up to $10,000 for each of its foreign bank accounts.


In addition, because the Company did not generate any income in the United States or otherwise have any U.S. taxable income, the Company does not believe that it owes U.S. federal income taxes in respect to any transactions that the Company or any of its subsidiaries may have engaged in through December 31, 2016. However, there can be no assurance that the IRS will agree with the position, and therefore the Company ultimately could be held liable for U.S. federal income taxes, interest and penalties.


10. COMMON STOCK


During the year ended December 31, 2015, the Company issued 64,500 preferred Class C shares for $55,000 which were converted into 9,122,868 common shares. Of the 9,122,868 common shares, 8,625,000 were issued during 2015 and the remaining 497,868 were issued during 2016. The full value of $55,000 was recorded in 2015 fiscal year.


During the year ended December 31, 2016, the Company issued 4,164,494 common shares for $37,500.





F-12





10. COMMON STOCK (continued)


During the year ended December 31, 2016, the Company issued 1,400,000 common shares with a fair value of $28,000 to a shareholder for goodwill. The shareholder has been actively supporting the Company by subscribing to its preferred and common shares. As this was a benefit to a specific shareholder, the fair value of this issuance was recorded to accumulated deficit.


During the year ended December 31, 2016, a preferred Class C shareholder converted 19,875 shares with value of $20,000 to 1,249,567 common shares. The Company issued 181,833 common shares with a fair value of $4,346 for the interest accrued on the 19,875 preferred Class C shares.


Preferred Shares


Issued for cash:

All classes of the preferred shares bear interest at 10% per annum paid semiannually not in advance and are convertible to shares of common stock of the Company after two years from receipt of funds at a 20% discount to the then current market price of the Company's common stock. The preferred shares may be converted after six months and before two years under similar terms but with a 15% discount to market. At December 31, 2016, the outstanding number of preferred Classes A, B and C shares are 582,716 (December 31, 2015: 582,716), 15,000 (December 31, 2015: 15,000) and nil (December 31, 2015: 64,500), respectively.


11. LOSS PER SHARE


The potentially dilutive securities that were excluded from the earnings (loss) per share calculation consist of 829,940 warrants (2015: 829,940).


12. PRIOR YEAR RESTATEMENTS


During the year ended December 31, 2011, the Company discontinued NTI and NNL but failed to recognize the legal liability that arose from the ACOA claims (note 7).  The Company recorded the original claim amount of $7,500,000 as a contingent liability reserve in equity.  Further, the Company recorded the loss on discontinued operation in the amount of $4,072,358 to accumulative other comprehensive income (loss). The cumulative translation adjustment of $28,256 related to the discontinued operations were not transferred to accumulated deficit. The impact of this error was that the current liability was understated by $2,874,481 and stockholders' deficit was understated by $2,874,481 as at December 31, 2011, and net loss was understated by $2,539,287 as at December 31, 2015.


During the year end December 31, 2015, the Company recorded a gain on settlement of accounts payable in the amount of $105,779 to accumulative comprehensive income. The impact of this error was that the accumulative comprehensive income was overstated by $105,779 and the net income was understated by $105,779.




F-13





12. PRIOR YEAR RESTATEMENTS (continued)


Summarized below is the effects of these restatements on the consolidated statement of financial position as at January 1, 2015:


 

Previously

Stated

 

Restated

 

Change

Liabilities:

 

 

 

 

 

Legal liability and accrued interest

$

--

 

$

2,874,481

 

$

2,874,481

Stockholders' deficit:

 

 

 

 

 

 

 

 

Accumulative other comprehensive income

 

3,455,898

 

 

--

 

 

 (3,455,898)

Accumulated deficit

$

(13,239,016)

 

$

(12,657,599)

 

$

581,417


Summarized below is the effects of these restatements on the consolidated statement of financial position as at December 31, 2015:


 

Previously

Stated

 

Restated

 

Change

Liabilities:

 

 

 

 

 

Legal liability and accrued interest

$

--

 

$

2,539,287

 

$

2,539,287

Stockholders' deficit:

 

 

 

 

 

 

 

 

Accumulative other comprehensive income

 

3,561,677

 

 

--

 

 

 (3,561,677)

Accumulated deficit

$

 (13,347,472)

 

$

 (12,325,082)

 

$

1,022,390


Summarized below is the effects of these restatements on the consolidated statement of operations and comprehensive loss as at December 31, 2015:


 

Previously

Stated

 

Restated

 

Change

Expenses:

 

 

 

 

 

Foreign exchange gain

$

2,864

 

$

440,238

 

$

437,374

Other items:

 

 

 

 

 

 

 

 

Interest expense

 

--

 

 

102,180

 

 

 (102,180)

Gain on settlement of accounts payable

 

--

 

 

105,779

 

 

105,779

Net income (loss)

 

 (108,456)

 

 

332,517

 

 

440,973

Earnings (loss) per share (basic and dilutive)

$

(0.00)

 

$

0.00

 

$

--


The prior year restatement did not have an impact on the statement of cash flow for the year end December 31, 2015.


13. SUBSEQUENT EVENT


Subsequent to December 31, 2016, the Company issued 2,500,000 common shares for $25,000.




F-14






Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


There are no reportable disagreements on accounting or financial disclosure issues.


Item 8A. Controls and Procedures


Management's Annual Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).


Framework used by Management to Evaluate the Effectiveness of Internal Controls over Financial Reporting


I maintain internal controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC.  This information is accumulated and communicated to our executive officers to allow timely decisions regarding required disclosure within certain policies and procedures. These policies and procedures include:


-

maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of  assets;

-

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.


For the year ended December 31, 2016 management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), an Internal Control - Integrated Framework issued in 1992, to evaluate the effectiveness of our internal control over financial reporting.


Management's Assessment of the Effectiveness of Internal Controls over Financial Reporting as of December 31, 2016


Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that our internal control over financial reporting was effective as of December 31, 2016.





8





Attestation Report of the Registered Accounting Firm


This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.


Factors Considered in Determining Effectiveness of Internal Controls and Procedures


Our President/Chief Executive Officer/Chief Financial Officer, has evaluated the effectiveness of our internal controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of December 31, 2016.  


Our internal controls over financial reporting are designed by, or under the supervision of, our President/Chief Executive Officer/Chief Financial Officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, and provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Our internal control over financial reporting includes those policies and procedures that provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, that our receipts, expenditures and business transactions are being made in accordance with authorizations of our management and directors and that all of our reporting obligations are met.


Management's Assessment of the Effectiveness of Disclosure Controls over Financial Reporting as of December 31, 2016


Management conducted an evaluation of the effectiveness of our disclosure control over financial reporting and determined that our disclosure control over financial reporting was not effective as of December 31, 2016. Procedures and controls regarding complying with disclosure reporting requirements was not adequate in that the affirmation regarding disclosure controls and procedures did not meet the technical SEC and Sarbanes Oxley requirements. In the future, management will review the form of the 10-K to ensure that the affirmations meet the disclosure affirmation requirements and the internal control affirmation requirements. Measures have been taken to ensure this weakness in disclosure controls is remedied, principally by input from the Company's legal securities counsel with respect to the disclosure obligations of the Company and from adequate allocation of resources.










9





PART III


Item 9. Directors, Executive Officers, Promoters and Control Persons;


Compliance with Section 16(a) of the Exchange Act


Name of Director

 

Age

 

Office

Wilson Russell, PhD

 

71

 

President and Principal Financial Officer


Item 10. Executive compensation


During the year 2016 the Company paid or accrued as payable $85,000 (2015 $50,000; 2014 $50,000) to Wilson Russell, the Company's President, for his services.


Item 11. Security Ownership of Certain Beneficial Owners and Management


Class

Name and Address

Number of

Shares

Percentage of

Shares*

 

 

 

 

Common

Wilson Russell

9,014,721

11.35%

 

3959 36th Ave. W

 

 

 

Vancouver, B.C.

 

 

 

Canada  V6N 2S7

 

 

 

 

 

 

Common

All officers and directors as a group:

9,014,721

11.35%


*Based on 86,887,609 shares of common stock issued and outstanding December 31, 2016


Item 12. Certain Relationships and Related Transactions


None


Item 13. Exhibits and Reports on Form 8-K


No change in exhibits since previous filing.


No Form 8K was filed during the fourth quarter of 2016.


Item 14. Principal Accountants Fees and Services


During the year 2016 the Company's auditors received approximately $16,500 in remuneration for audit and related services. No other services were provided to the Company by its auditors and principal accountants


During the year 2015 the Company's auditors received approximately $6,250 in remuneration for audit and related services. No other services were provided to the Company by its auditors and principal accountants.



10





During the years 2012, 2013 and 2014 the Company's auditors received approximately $15,000 in remuneration for audit and related services. No other services were provided to the Company by its auditors and principal accountants.


During 2011, the Company's auditors and principal accountants received approximately $98,113 in remuneration for audit and related (quarterly review) services. No other services were provided to the Company by its auditors and principal accountants.


During 2010, the Company's auditors and principal accountants received approximately $100,000 in remuneration for audit and related (quarterly review) services. No other services were provided to the Company by its auditors and principal accountants.


During 2009, the Company's auditors and principal accountants received approximately $96,382 in remuneration for audit and related (quarterly review) services. No other services were provided to the Company by its auditors and principal accountants.


During 2008, the Company's auditors received approximately $44,900 in remuneration for audit and related (quarterly review) services. No other services were provided to the Company by its auditors and principal accountants.


During 2007, the Company's auditors received approximately $52,300 in remuneration for audit and related (quarterly review) services. No other services were provided to the Company by its auditors and principal accountants.

























11






SIGNATURES


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


Northstar Electronics, Inc.

(Registrant)


By (Signature and Title):

 /s/ WILSON RUSSELL

Date April 18, 2016

Wilson Russell, PhD,

 

Chief Executive Officer and

Chief Financial Officer
































12