# UNITED
STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

# FORM
10-QSB

|[X] | QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|--- | --------------------------------------------------------------------------------

| | For
the quarterly period ended January 31, 2003
| | -----------------------------------------------

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

| | For
the transition period from ___________ to __________
| | --------------------------------------------------------

Commission File
Number: 000-26439

Stealth MediaLabs, Inc.

(Exact name of small business issuer as
specified in its charter)


|                                                              |  | 
|------------------------------------------------------------- |  | 
|NEVADA                                                        |  | 
|(State or other jurisdiction ofincorporation or organization) |  | 

11475 Commercial Ave.,
Suite 11, Richmond, IL                
        60071
(Address of principal executive offices)              
              
          (Zip Code)

Issuers
telephone number: (847) 356-0799

APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCYPROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes [  ]  No [X]

APPLICABLE
ONLY TO CORPORATE ISSUERS

State
the number of shares outstanding of each of the issuers classes of common
equity, as of the last practicable date: 21,602,184 shares at March 28, 2003.

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

---

# Stealth
MediaLabs, Inc.

# TABLE OF CONTENTS

PART I.
FINANCIAL INFORMATION

Stealth
MediaLabs, Inc.

THE COMPANY DID
NOT OBTAIN A REVIEW OF THESE INTERIM FINANCIAL STATEMENTS BY AN  INDEPENDENT ACCOUNTANT
USING PROFESSIONAL REVIEW STANDARDS AND PROCEDURES, ALTHOUGH THAT  REVIEW IS REQUIRED BY
PARAGRAPH (b) OF ITEM 310 OF REGULATION S-B.

|                                                                   | 
|------------------------------------------------------------------ | 
|                                                                   | 
|Item 1. Condensed Consolidated Financial Statements:               | 
|Condensed Consolidated Balance Sheet as of                         | 
|January 31, 2003 (unaudited) and October 31, 2002                  | 
|Condensed Consolidated Statements of Operations                    | 
|for the three months ended January 31,                             | 
|2003 and 2002 and the cumulative period from                       | 
|September 25, 2000 to January 31, 2003 (unaudited)                 | 
|Condensed Consolidated Statements of Cash Flows                    | 
|for the three months ended January 31,                             | 
|2003 and 2002 and the cumulative period from                       | 
|September 25, 2000 to January 31, 2003 (unaudited)                 | 
|Notes to Condensed Consolidated Financial Statements               | 
|Item 2. Management's Discussion and Analysis or Plan of Operations | 
|Item 3.  Controls and Procedures                                   | 
|PART II. OTHER INFORMATION                                         | 
|Item 1. Legal Proceedings                                          | 
|Item 2. Changes in Securities                                      | 
|Item 3. Defaults on Senior Securities                              | 
|Item 4. Submission of Matters to a Vote of Security Holders        | 
|Item 5. Other Information                                          | 
|Item 6. Exhibits and Reports on Form 8-K                           | 
|Signatures                                                         | 
|Certifications                                                     | 

2

---

# PART I.
FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

Stealth
MediaLabs, Inc.

THE COMPANY DID
NOT OBTAIN A REVIEW OF THESE INTERIM FINANCIAL STATEMENTS BY AN  INDEPENDENT ACCOUNTANT
USING PROFESSIONAL REVIEW STANDARDS AND PROCEDURES, ALTHOUGH THAT  REVIEW IS REQUIRED BY
PARAGRAPH (b) OF ITEM 310 OF REGULATION S-B.

Stealth
MediaLabs, Inc. and Subsidiary(A Development Stage Entity)
Condensed Consolidated
Balance SheetJanuary 31, 2003 (Unaudited) and October 31, 2002

|                                              | Jan 31, 03(unaudited) | Oct 31, 02
|--------------------------------------------- | --------------------- | ----------
|ASSETS                                        |                       |           
|Current Assets                                |                      
|Cash and cash equivalents                     |                       | 133,147   
|Inventory                                     |                       | 28,468    
|Prepaid Expenses                              |                       | 3,667     
|                                              |                       |           
|Total Current Assets                          |                       | 165,282   
|Property & Equipment, net                     |                       | 37,486    
|Intangible Assets, net                        |                       | 137,800   
|                                              |                       |           
|                                              |                       | 340,568   
|                                              |                       |           
|                                              |                       |           
|LIABILITIES & STOCKHOLDERS EQUITY            |                      
|Current Liabilities                           |                      
|Loans from an officer and director            |                       | 200       
|Accounts Payable                              |                       | 6,000     
|Accrued Liabilities                           |                       | 244,357   
|                                              |                       |           
|Total Current Liabilities                     |                       | 250,557   
|Commitments and Contingencies                 |                      
|Stockholders Equity                          |                      
|Common Stock; $.001par value;                 |                      
|authorized - 50,000,000 shares;               |                      
|issuued and outstanding - 21,602,184 at       |                      
|Jan. 31, 2003 and 21,786,799 at Oct. 31, 2002 |                       | 21,602    
|Additional Paid In Capital                    |                       | 3,176,500 
|Deferred Compensation                         |                       | (708,335  
|Subscription Receivable                       |                       | 0         
|Deficit accumulated in the develpments stage  |                       | (2,399,756
|                                              |                       |           
|Total Stockholders' Equity                    |                       | 90,011    
|                                              |                       |           
|                                              |                       | 340,568   
|                                              |                       |           
|                                              |                       |           

See
accompanying notes to these condensed consolidated financial statements

3

---

Stealth
MediaLabs, Inc. and Subsidiary(A Development Stage Entity)
Condensed Consolidated
Statement of OperationsFor the three months ended January 31, 2003 and 2002 and for the Period
from September 30, 2000 (Commencement of Operations) to January 31, 2002(Unaudited)

|                                     | Three monthsended 1/31/03 | Three monthsended 1/31/02 | September 25, 2000(Commencement)to January31, 2003
|------------------------------------ | ------------------------- | ------------------------- | --------------------------------------------------
|Revenue                              |                           | 0                         | .00                                               
|Cost of Goods Sold                   |                           | 0                         | .00                                               
|                                     |                           |                           |                                                   
|Gross Profit                         |                           | 0                         | .00                                               
|Expense                              |                          
|Business Promotion Expense           |                           | 27,995                    | .07                                               
|Depreciation and Amortization        |                           | 9,107                     | .17                                               
|General & Administrative Expens      |                           | 83,009                    | .06                                               
|Research & Development               |                           | 37,470                    | .00                                               
|                                     |                           |                           |                                                   
|Total Expense                        |                           | 157,581                   | .30                                               
|                                     |                           |                           |                                                   
|Operating Loss                       |                           | (157,581                  | .30)                                              
|Other (Income) Expense               |                          
|Interest Income                      |                           | 31                        | .37                                               
|Interest Expense                     |                           |                           | 0                                                 
|                                     |                           |                           |                                                   
|Net Other Income (Expense)           |                           | 31                        | .37                                               
|                                     |                           |                           |                                                   
|Net Loss to Common Stockholders      |                           | (157,549                  | .93)                                              
|                                     |                           |                           |                                                   
|                                     |                           |                           |                                                   
|Basic and Diluted Loss Per Share     |                           | (0.0                      | 07)                                               
|                                     |                           |                           |                                                   
|                                     |                           |                           |                                                   
|Weighted Average Number of Shares of |                          
|Common Stock Outstanding             |                           | 21,492,3                  | 55                                                
|                                     |                           |                           |                                                   
|                                     |                           |                           |                                                   

See
accompanying notes to these condensed consolidated financial statements

4

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Stealth
MediaLabs, Inc. and Subsidiary(A Development Stage Entity)
Condensed Consolidated
Statement of Cash FlowsThree months ended January 31, 2003 and 2002 and for the Period
from September 30, 2000 (Commencement of Operations) to January 31, 2002(Unaudited)

|                                                                       | Three monthsended Jan. 31, 2003 | Three monthsended Jan. 31, 2002 | September 25, 2000(Commencement)to Jan. 31, 2003
|---------------------------------------------------------------------- | ------------------------------- | ------------------------------- | ------------------------------------------------
|Cash Flows from Operating Activities                                   |                                 |                                 |                                                 
|Net Loss                                                               |                                 | (157,550                        | )                                               
|Adjustments to reconcile Net Income to net cash provided by operations |                                
|Consuting fees paid by issuance of warrants                            |                                 | --                              |                                                 
|Amortization of Loan Discount                                          |                                 | --                              |                                                 
|Non-cash interest expense                                              |                                 | --                              |                                                 
|Amortization of Deferred Compensation                                  |                                 | 12,000                          |                                                 
|Inventory purchases                                                    |                                 | (28,468                         | )                                               
|Prepaid Expenses                                                       |                                 | (3,667                          | )                                               
|Depreciation and amortization                                          |                                 | 11,707                          |                                                 
|                                                                       |                                 |                                 |                                                 
|Changes in liabilites                                                  |                                 | --                              |                                                 
|Accounts Payable                                                       |                                 | (438                            | )                                               
|Accrued Payroll - related party                                        |                                 | --                              |                                                 
|Accrued Expenses                                                       |                                 | 1,967                           |                                                 
|                                                                       |                                 |                                 |                                                 
|Net cash used in Operating Activities                                  |                                 | (164,449                        | )                                               
|Cash Flows from Investing Activities                                   |                                
|Purchase of fixed assets                                               |                                 | --                              |                                                 
|                                                                       |                                 |                                 |                                                 
|Net Cash used in Investing Activities                                  |                                 | --                              |                                                 
|Cash Flows from Financing Activities                                   |                                
|Net proceeds from convertible debt                                     |                                 | --                              |                                                 
|Loans from director and officers                                       |                                 | --                              |                                                 
|Repayment of loans from directors and officers                         |                                 | --                              |                                                 
|Net proceeds from exercise of warrants                                 |                                 | --                              |                                                 
|Net proceeds from issuance of common stock                             |                                 | 125,000                         |                                                 
|Collection of subscription receivable                                  |                                 | --                              |                                                 
|Proceeds of borrowings from bank                                       |                                 | --                              |                                                 
|Repayment of bank loan                                                 |                                 | --                              |                                                 
|                                                                       |                                 |                                 |                                                 
|                                                                       |                                 |                                 |                                                 
|Net cash provided by Financing Activities                              |                                 | 125,000                         |                                                 
|                                                                       |                                 |                                 |                                                 
|Net cash (decrease) increase for period                                |                                 | (39,449                         | )                                               
|Cash anda Cash Equivalents, Beginning of period                        |                                 | 172,596                         |                                                 
|                                                                       |                                 |                                 |                                                 
|Cash anda Cash Equivalents, end of period                              |                                 | 133,147                         |                                                 
|                                                                       |                                 |                                 |                                                 
|                                                                       |                                 |                                 |                                                 

See
accompanying notes to the condensed consolidated financial statements for  additional
information relating to non-cash investing and financing activities  concerning prepaid
consulting fees, issuance of common stock related to  convertible debt and warrants and
related party payables during the periods.

5

---

Stealth
MediaLabs, Inc. and Subsidiary(A Development Stage Entity)
Notes to Condensed Financial Statements (Unaudited)
January 31, 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE
COMPANY DID  NOT OBTAIN A REVIEW OF THESE INTERIM FINANCIAL STATEMENTS BY AN  INDEPENDENT
ACCOUNTANT  USING PROFESSIONAL REVIEW STANDARDS AND PROCEDURES, ALTHOUGH THAT  REVIEW IS
REQUIRED BY  PARAGRAPH (b) OF ITEM 310 OF REGULATION S-B.

Note 1  Basis
of Presentation

The
accompanying unaudited condensed financial statements have been  prepared in accordance
with accounting principles generally accepted in the  United States of America for
interim financial information and with the  instructions of Form 10-QSB and Article 310
of Regulation S-B. Accordingly, they  do not include all of the information and footnotes
required by accounting  principles generally accepted in the United States of America for
complete  financial statements. The preparation requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial  statements
and the reported amount of revenues and expenses during the reporting  period. Actual
results may differ from these estimates. In the opinion of  management, all adjustments
(consisting of normal recurring accruals) considered  necessary for a fair presentation
have been included. Operating results for the  three month period ended January 31, 2003
are not necessarily indicative of the  results that may be expected for the year ending
October 31, 2003.

The
combination of the Company and BitzMart, Inc. has been treated as a  recapitalization of
the Company. The Company was the legal acquirer in the  merger. BitzMart, Inc. was the
accounting acquirer since its stockholders  acquired a majority ownership interest in the
Company. Consequently, the  historical financial information included in the financial
statements of the  Company prior to October 30, 2002 is that of BitzMart, Inc. All
historical share  and per share data presented for transactions occurring prior to the
October 30,  2002 merger have been restated to reflect the share exchange ratio of 1 for
6.4226.

Development
Stage Enterprise

The
Company is  a Development Stage Enterprise, as defined in Statement of Financial
Accounting Standards  ("SFAS") No. 7 "Accounting and Reporting  for
Development Stage  Enterprises".  Under SFAS No. 7, certain additional financial
information is  required to be included in the financial  statements for the period from
inception of the  Company to the current balance sheet date.

Since
the inception of the Company, management has focused on the process of raising  capital
through private placement of common stock and warrants, effecting its business  merger,
and performing research and development activities.

Principles
of Consolidation

These
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Watermark Technology, Inc. (WTI), a
Florida corporation, incorporated in 2000 and RollingDream, Inc., an Illinois
corporation incorporated in 2003. All intercompany transactions have been
eliminated on consolidation.

Research
and Development Costs

The
cost of research, development and product improvement expenditures are charged
to expense as they are incurred. Research, development and product improvement
costs included in operating expenses amounted to $37,470 and $73,600. for the
quarters ended January 31, 2003 and January 31, 2002, respectively.

For
further information, refer to the financial statements and footnotes  thereto included in
the Companys annual report on Form 10-KSB for the year  ended October 31, 2002 as
filed with the Securities and Exchange Commission.

6

---

Note 2  Going
Concern

The
Company is in the development stage. The Company currently is pursuing
additional financing to fund the product development and marketing efforts
during the coming year. Existing funds are insufficient to execute the marketing
alliance plan for revenue development and make programming modifications to the
decoder application requested by specific operating system vendors. There are no
assurances the Company will receive funding necessary to continue the execution
of the encoder marketing and decoder distribution plans, potentially resulting
in the liquidation of the Company.

Note 3 
Accrued Liabiliites

Accrued
liabilities consist of the following at January 31:

|                                                | 2003 | 2002    
|----------------------------------------------- | ---- | --------
|Accrued employee compensation and benefit costs |      | $156,788
|Accrued professional fees and insurance         |      | 87,569  
|                                                |      |         
|                                                |      | $244,357
|                                                |      |         
|                                                |      |         

The
Company does not have any liability or asset protection insurance policies, and  is not
aware of any contingencies which would require an accrual for potential  loss.

Note
4  Leases

On
December 1, 2002, the Company entered into a lease agreement and moved into a  new
facility. The lease period is for three years and rent is $1,243 per month.

Future
lease obligations are as follows:

|                                  | 
|--------------------------------- | 
|February through October 31, 2003 | 
|2004                              | 
|2005                              | 
|                                  | 
|                                  | 
|                                  | 
|                                  | 

7

---

Note 5 
Supplemental Disclosures of Cash Flow Information

In
the  Statement of Cash Flows, the following non-cash adjustments were made for the  three
months ended January 31, 2003 and 2002:

In
November 2001, the Company issued 321,130 shares of its common stock in exchange for  $150,000
of consulting services.

On
December 8, 2002, the Company issued 250,000 shares of common stock and  warrants to
purchase 300,000 additional shares to four investors who are  existing stockholders in a
private placement. The proceeds of $125,000 was  earmarked for accounting, auditing and
legal services related to required  financial reporting and related matters.

On
December 22, 2002, the Company issued 350,000 shares of common stock and warrants to
purchase up to 175,000 shares,  valued at  $175,000 and $66,177 respectively.  The shares
were issued for advisory services from Westminster  Securities who was retained to assist
the Company with future marketing and  development of our business and handling of our
investor relationships over the  next five years. The value of these securities was
charged to deferred  compensation and will be amortized over five years. Deferred
amortization of  $12,000 is reflected in the cash flows statement for the three months
ended  January 31, 2003.

Note 6 
Capital Stock Activity in the Three Months Ended January 31, 2003

On
December 8, 2002, the Company issued 250,000 shares of common stock and warrants  to 4
investors. The Company agreed to utilize the proceeds of $125,000 solely to  pay
professional fees and related expenses incurred in meeting the  Companys
obligations under the Securities Act of 1934, and to file a  registration statement in
early 2003 under the Securities Act of 1933.

On
December 22, 2002, the Company issued 350,000 shares of common stock valued at  $175,000,
for advisory services from Westminster Securities who was retained to  assist the Company
with future marketing and development of our business and  handling of our investor
relationships over the next five years.

Warrants

On
December 8, 2002, the Company granted 300,000 warrants to purchase shares of  common
stock at $.50 to four stockholders. The warrants expire in 3 years.

On
December 22, 2002, the Company granted 175,000 warrants to purchase common stock  at $.50
per share valued at $66,177, for advisory services from Westminster  Securities who was
retained to assist the Company with future marketing and  development of our business and
handling of our investor relationships over the  next five years. The warrants expire in
5 years.

8

---

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion and analysis explains our results of operations for our
last Quarter ending January 31, 2003, our financial condition and liquidity and
our plan of operations for the balance of this fiscal year. You should review
our discussion and analysis of financial condition and results of operation in
conjunction with our financial statements and the related notes.

General
Overview

Stealth
MediaLabs was organized and incorporated under the laws of Nevada on February 4,
1999 as Kidstoysplus.com, Inc. BitzMart, Inc. was incorporated in Colorado on
October 31, 2000. On October 30, 2002, an acquisition transaction was completed
in which we acquired all outstanding stock of BitzMart in exchange for an amount
of our common stock equal to approximately 88% of our issued and outstanding
shares following the transaction. Our corporate name was changed to Stealth
MediaLabs and BitzMarts officers and certain of its directors became our
officers and directors and we changed our fiscal year end from January 31 to
October 31. The transaction was considered a recapitalization of BitzMart for
financial reporting purposes and accordingly our financial statements and this
discussion and analysis pertain to BitzMart and its business and operations, as
the previous business and assets of Kidstoysplus were transferred to certain of
its stockholders prior to the transaction.

We
develop and market our proprietary software and services for professional media
content developers, distributors, owners and users. StealthChannel permits
embedding large amount of indelible, hidden, highly compressed data within
analog or digital audio and audio/video streams. Our target markets include
movie and video studios and developers, television networks, record labels,
terrestrial and satellite radio networks, advertisers, post-productions studios
and distributors of most forms of digitizable and analog media. We believe that
our StealthChannel technology enables additional profitability for distributors
of digitized media. We believe we have, during our first two fiscal years of
operation, advanced the strategic and tactical planning and development of the
StealthChannel software and technology. We
are pursing strategic alliances with other technology vendors to join in their
efforts to distribute the StealthChannel software to third party users with the
software products of the other vendors.

Beginning late in the fiscal year ended
October 31, 2002, and continuing through the present we have also developed and
test marketed resales of pre-owned motor vehicles which we purchase, and
retrofit with satellite TV and radio systems, a laptop PC with wireless Internet
access, DVD, and video game entertainment systems.  Generally, we have purchased
used SUV vehicles, retrofitted them with these technology enhancements and
resold the vehicle using the Ebay Internet auction system. We have
designated this project as RollingDream and we believe that if successful
we may be able to generate minimal cash flow to support our administrative costs
during the next few months.

Our
ability to focus on and execute our business plan has been severely hampered
since our inception by our limited financial resources. As a result, much of our
effort since inception have been devoted to the pursuant of financing. Financial
advisers and placement agents selected by us did not materially assist us in the
capital raising process and we believe we were deterred by poor advice and
assistance we received. We pursued and completed the acquisition transactions
described above, pursuant to which we became a public-reporting corporation
subject to the reporting obligations of the Securities Exchange Act of 1934 at
the advice of some of the advisers and consultants. We expected that becoming a
public reporting entity would assist us to raise additional capital. However, as
explained elsewhere in this Report, a majority of the $525,000 which we raised
in anticipation of becoming public were consumed by charges and expenses in
connection with the offering, transaction costs and expenses incurred in
complying with public reporting obligations. In short, had BitzMart foregone the
advice to be acquired by a public entity, it would likely have been in a better
position to obtain required financing and to commercialize the StealthChannel
technology. Notwithstanding these developments, we are now in a position going
forward to provide liquidity to the stockholders, make available to the
investing public the results of our operations and development of our business
and proceed with our business plans as the capital resources become available.

9

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Results
of Operations

Quarter
ended January 31, 2003 (2003) and Quarter ended January 31, 2002 (2002)

Revenue. During
the first quarter of 2003, we did not have any sales of RollingDream vehicles. We
had  no revenue in connection with our attempts  to complete and commercialize the
StealthChannel technology.  Accordingly,
we had no cost of cost of goods sold.

Research
and Development.In 2003 we had $ 37,470 of research and development expense  paid to
unrelated parties compared to $ 73,600 in 2002 . The decrease was due to  our lack of
operating capital.

Business
Promotion Expenses. In 2003 we had $ 27,995 of business promotion and marketing
expense  compared to $ 33,340.49 in 2002. The decrease was due to our lack of operating
capital.

Depreciation
Expense. Depreciation and amortization expense increased to $9,107 in 2003 from
$3,706 in  2002 due to new additions that occurred in fiscal 2002.

General
and administrative expenses. General and administrative expenses increased  to
$83,009 in 2003 compared to $47,341 in 2002. The 2003 increase over 2002 was
attributable to non-cash stock- and warrant-based compensation for consulting  services
and amortization of deferred compensation.

Net
cash used in operating activities since inception was $2.2 million. All
expenditures are the result of research and development expenses, general and
administrative expenses and business promotion expenses and marketing expenses.

Interest
Income/Expense. Interest income decreased to $31 in 2003 from $784 in 2002  due to
lower interest rates paid and a lower average cash balances. There was no  interest
expense in either period.

Income
Tax expense.Due to operating losses, there was no income tax provision in  2003 or
in 2002. The Company had losses that resulted in net operating loss  carryforwards for
tax purposes that may be offset against future taxable income  amounting to approximately
$667,331 on October 31, 2002, which expire in 2022  and $362,364 on October 31, 2001
which expire in 2021. However, these  carryforwards and credits may be significantly
limited due to changes in the  ownership of the Company as a result of future equity
offerings.

Noncash
Charges

Included
in the expenses described above are certain non-cash charges totaling $23,707 in  2003
compared to $3,706 in 2002. A summary of those non-cash charges in each of  the reported
quarters is as follows:

|     | Item | Amount Charged                       
|---- | ---- | -------------------------------------
|2003 |      | Depreciation                         
|     |      | Amortization of deferred compensation
|     |      |                                      
|     |      |                                      
|2002 |      | Depreciation                         

10

---

Of
the  $ 2,399,758 in net losses realized from commencement of operations to January  31,
2003, $786,000 or 33% was due to non-cash charges related to our issuance of  common
stock and warrants entitling the holders to purchase additional shares of  our common
stock in the future, for services and other assistance provided to  us.

Capital
Raising Charges and Expenses

In
2001 and 2002 we engaged several entities to assist us in raising capital, for
financial advice, for investment banking and other assistance. In 2001, we
completed a private placement of our common stock in which we sold 1,084,039
shares and received total gross proceeds of $503,453. After payment of placement
fees and expenses, and other offering costs, we had net proceeds of
approximately $420,000. In December 2001, we completed an additional placement
to three investors from the first placement. In this second placement we sold
1,023,518 shares (including shares issued upon exercise of warrants issued to
the investors) for total gross proceeds of $210,527. After payment of placement
agent fees and other cash expenses the Company had net proceeds of approximately
$153,000.

In
the fourth quarter of 2002, two investors (who had also been participants in the
December 2002 placement) purchase $325,000 of our 12% Convertible Notes,
convertible at $0.50 per share, and also received warrants to purchase up to
1,750,000 additional shares of common stock, also at $0.50 per share. At the
time of completion of our acquisition transaction described above, one of the
warrant holders exercised 400,000 warrants for $200,000, and the convertible
notes and accrued interest were converted into 660,500 shares of our common
stock. We expected that when the acquisition transaction was completed, the
remaining 1,350,000 warrants would also be exercised for proceeds of around
$675,000 which would have been sufficient capital to enable us to implement our
business plan through 2003. After payment of placement fees, and a required loan
to an affiliate of the placement agent, placement agent expenses and related
offering expenses, the Company received net cash proceeds of only approximately
$235,000.

In
addition, in connection with completing the acquisition transaction, we issued
warrants and stock, valued at $301,750 for financial reporting purposes, to a
consultant who assisted in completing the acquisition transaction. The issuance
of these securities, and the subsequent cancellation of the placement
agents obligation to repay our loan of a portion of the offering proceeds
to an affiliate of the placement agent, and the offering costs and compensation
expenses to the consultant together totaled approximately $551,000 which
substantially exceeded the net cash we received in connection with the second
placement and the reverse merger transaction.

In
summary, the 2002 acquisition transaction diluted the ownership interest of the
original BitzMart shareholders, resulted in only minimal net cash proceeds,
substantially increased our general and administrative expenses by requiring us
to become subject to the reporting obligations of the Securities Exchange Act of
1934 and diverted the time of our management and directors away from
implementing our business plan and conducting our business as we had
anticipated. In early December 2002, we terminated all relationships with the
placement agent and financial advisers who had recommended the acquisition
transaction. Subsequently, we retained Westminster Securities to assist us with
future marketing and development of our business and handling of our investor
relationships. We issued 350,000 shares of our common stock and warrants to
purchase up to an additional 175,000 shares at $.50 to Westminster Securities
for services to be rendered over the next five years.

11

---

Liquidity
and Capital Resources

As
of January 31, 2003, we had cash or cash equivalents of $133,147. We had
accounts payable and accrued liabilities in the amount of $250,557. Our auditors
have expressed substantial doubt as to our ability to continue as a going
concern without additional financing. We do not anticipate that our cash on hand will
be sufficient to enable us to meet our anticipated expenditures.

Since
our inception through the end of the first quarter 2003, we have received
approximately $1.83 million in cash investments from our Founders and from
private investors. Due to capital raising and legal compliance expenses that
were higher than we anticipated, approximately $1,025,000 of these investments
were available to implement our business plans. When BitzMart was formed in
October 2000, we estimated that $1.5 Million to $3.0 million would be required
to fund our business plans We have been able to raise only a fraction the of
capital required. As of January 31, 2003, we had a working capital deficiency of
approximately $596,000. We have used the net proceeds we received from
these investments for research and development associated with the
StealthChannel technology, for business development activities to establish
marketing alliances and for additional fund raising activities. This result
occurred in general due to the general downturn in equity markets, specific
concern by potential investors over technology companies and because we lacked
sufficient initial capitalization to promptly demonstrate the potential and
efficacy of the StealthChannel technology to potential investors and joint
venture participants.

We
are also seeking secured financing of a minimum of $100,000 and up
to $1,000,000 to implement our RollingDream line of business for the next 12
months. We would expect that if we succeed achieving significant additional
financing for RollingDream, that resulting cash flow retained from sales will
fund a substancial portion of the StealthChannel research and development that
we can foresee over the next year. We do not plan to seek equity investments for
this purpose, although certain types of equity incentives may be offered to
secured lenders in exchange for favorable terms. We have not received any
commitment from any lender for this project, In February 2003 our CEO and his
spouse personally borrowed $50,000 and lent it to us for the RollingDream
business, and in March, the CEO and one of our stockholders arranged to borrow
and re-lend to RollingDreams and additional $75,000 for the same purpose. We
intend to make satisfactory compensation arrangements with these lenders for
this lending facility and for any future similar arrangements. If we are unable
to borrow additional funds for this project we plan to proceed more slowly and
fund each vehicle with proceeds from sales of retrofitted vehicles.

Despite
our efforts, we have so far been unable to secure additional debt or equity investments
from third parties.  Accordingly, certain of the founding stockholders, including the
President of  the Company (the Founders), have proposed and plan to invest
approximately $320,000 in equity and to loan an additional $320,000 to  Registrant, for a
total of at least $640,000. Approximately $120,000 of the loan  was advanced in February
and March 2003, as discussed above.

The
expected terms for the $320,000 equity investment would be common stock at $0.08 per
share (4.0 million shares of common stock) plus warrants to purchase up to an  additional
20 million shares at $0.10 per share during a three year period. The  debt would be
represented by a one year secured debenture with interest at 15%  per annum, payable
quarterly, with provisions that if the principal and interest  is not fully paid at
maturity, in addition to the Debentureholders right  to pursue collection of the
debt, a number of bonus shares of our common dtock would be issued to each
Debentureholder, equal to the unpaid  principal plus accrued interest at maturity divided
by $0.08 per share  (bonus shares); and five (5) three year stock purchase
warrants  exerciseable at $0.10 per share for each bonus share issued.

The
issuance of these securities will be materially dilutive to existing  stockholders and
warrantholders of the Company, but we have has concluded  that no other financing on any
better terms is available to the Company.  We intend to permit other stockholders who
have made material cash  investments in the Company or its predecessor, BitzMart, Inc.
during the past two  years to invest in equity and debt of the Company on the same terms,
described above, that will be offered to the Founders, and has proposed that such
investors match the proposed  investment of the Founders.

12

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We
have authorized in the corporate charter to issue up to 50,000,000 shares of  common
stock. Issuance of common stock described above would exhaust our  authorized common
stock, before any warrants are exercised.  Accordingly, we expect to request that our
stockholders approve  amendments to our Articles of Incorporation of to increase the
number of authorized shares of Common Stock to at least 150,000,000 shares. The  Founders
of the Company hold sufficient Common Stock to assure that such an  amendment will
ultimately be approved.

The
Founders, including our President, do not intend that we will use any of the proceeds
from the additional investment they intend to make for expenses related to continuing to
comply with reporting requirements  under the Securities Exchange Act of 1934, as amended
(1934 Act).  The proceeds from the investments will be used  primarily to
continue to develop our StealthChannel technology and the RollingDream business.
Accordingly, unless  significant additional equity investments by outside investors or
existing stockholders or warrant  holders is received, we anticipate that we will become
delinquent in filing required reports  under the 1934 Act.  As a result, it is likely
that our stock will be removed from the OTCBB market and there would probably be no
public market for our shares.

In
addition to the adverse effect our limited financial resources is having on  our
business, we are unable to pay or make other financial arrangements with our independent
auditors  to have that firm  review  this  Quarterly  Report on Form  10-QSB for the
quarter  ended  January 31,  2003.  We are therefore filing our  Form 10-QSB  for the
first  quarter, unaudited,  without  benefit from such a  review by the auditors, which
is required by Regulation SB.

We
anticipate that if we can raise approximately $250,000 in equity during the fiscal year,
we will be able to meet our fixed operating expenses, and meet our obligations  under our
license.  However, we would not have sufficient financial resources to continue to meet
our filing obligation under the 1934 Act.  We believe our estimates of our capital
requirements to be  reasonable. The capital requirements are only estimates and can
change for many  different reasons, some of which are beyond our control. We cannot make
assurances that we will successfully complete any financing transaction in a  timely
manner, if at all. If we are unable to obtain financing to fund the  business development
activities, we will be unable to continue as a going  concern.

We
expect net losses to continue through at least the present fiscal year, as we
will have significant expenses in connection with completing the development of
our technology, our efforts to market the technology to third parties and
co-venturers and related expenses.

Subsequent
Events

In
the  first quarter2003 we received a notice of breach of our license of patents and
technology used in our  StealthChannel technology. The notice gave us until April 24,
2003 to pay a minimum of  $10,170 then owed under the license agreement. We paid the
amount owed in March,  2003, but we are required to make additional payments totaling a
minimum of at least $ 15,000 to the licensor  in April 2003. Presently we lack the cash
assets to assure that we will be  in a position to pay this obligation when it becomes
due or within the grace period allowed, or that we will be  able to make other future
minimum royalty payments to the licensor in the  future.  If our license should be
terminated due to our inability to meet our financial  obligations to the licensor, we
would not be able to pursue any portion of our  StealthChannel business plan and our
Company would fail.

In
February 2003, the Company formed RollingDream, Inc., a wholly-owned subsidiary
incorporated in the State of Illinois.  RollingDream was licensed by the State of
Illinois to conduct business as an automobile dealer in late January.  As of the
date of this report, RollingDream has generated gross sales of $87,672 in the
second quarter.

ITEM 3.
CONTROLS AND PROCEDURES

(a)
Evaluation of Disclosure Controls and Procedures. Our Chief Executive
Officer who is our only employee and also serves as the principal financial
officer evaluated the effectiveness of our disclosure controls and procedures
(as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of a date
within 90 days prior to the filing date of this annual report (the
Evaluation Date). Based on such evaluation, he concluded that, as of
the Evaluation Date, our disclosure controls and procedures were reasonably
effective in alerting him on a timely basis to material information relating to
our company (including our consolidated subsidiaries) required to be included in
our reports filed or submitted under the Exchange Act. However, because of our
limited staff and other resources and our relative inexperience in filing
reports under the Exchange Act, he concluded that our disclosure controls and
procedures should be improved as our resources permit.

13

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(b)Changes in Internal Controls. Since the Evaluation Date, there have not been  any
significant changes in our internal controls or in other factors that could
significantly affect such controls. We have taken steps to formalize our regular  and
recurring transaction recording procedures, and we have retained a  consultant on a
temporary basis to assist us to properly record and report our  financial condition.
However, we had insufficient cash resources available to have our independent auditor
review this report prior to filing

# PART
II

# OTHER
INFORMATION

ITEM 1.  LEGAL
PROCEEDINGS

None

ITEM 2.
CHANGES IN SECURITIES

None

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

None

ITEM 5.  OTHER
INFORMATION

None

14

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ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K

(1)
Reports on Form 8-K:

We
filed the following Current Reports on Form 8-K during the first quarter of
2003 and through the date of this report:

|Date of Report           | Date Filed        | Items Reported                                                                                    
|------------------------ | ----------------- | --------------------------------------------------------------------------------------------------
|October 30, 2002         | November 8, 2002  | Item 1. Changes in Control, Item 2.  Acquisition or Disposition of Assets, Item 5.  Other Events. 
|December 13, 2002        | December 20, 2002 | Item 5.  Other Events.                                                                            
|January 15, 2003         | January 30, 2003  | Item 4. Changes in Registrants Certifying Accountant, Item 7. Financial Statements and Exhibits. 
|March 18, 2003           | March 18, 2003    | Item 5. Other Events, Item 7. Financial Statements and Exhibits, Item 9. Regulation FD Disclosure.
|October 30, 2002 amended | March 10, 2003    | Item 7. Financial Statements and Exhibits.                                                        
|April 7, 2003            | April 7, 2003     | Item 5.  Other Events.                                                                            

Item 7.
Financial Statements and Exhibits.

(2)
Exhibits (none)

15

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# Signatures

In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  April 21,
2003

Stealth
MediaLabs, Inc.

| | By:  /s/ Howard Leventhal
      Howard Leventhal, President and CEO;
      Treasurer and Principal Accounting Officer
| | ---------------------------------------------------------------------------------------------------------------------

---

CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICERAND
PRINCIPAL FINANCIAL OFFICER

I,
Howard E. Leventhal, Chief Executive Officer of Stealth MediaLabs, Inc., certify that:

1.
I have reviewed this quarterly report on Form 10-QSB of Stealth MediaLabs, Inc.;

2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.
Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4.
The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

| | a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;   b) evaluated the
effectiveness of the registrants disclosure controls and procedures as of
a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and   c) presented in this quarterly report
our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.
The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

| | a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------

6.
The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: April 21,
2003

/s/
Howard E. LeventhalHoward E. Leventhal
Chief Executive Officer andPrincipal Financial Officer