UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM 10-K





(Mark
One)





☒
Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934For the
Fiscal Year Ended November 30,
2016☐
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934For the
Transition Period from __________ toCommission
File Number: 333-190690EXEO ENTERTAINMENT, INC.(Name
of small business issuer in its charter)





Nevada
45-2224704(State
or other jurisdiction of incorporation or
organization)
(I.R.S.
employer identification number)4478 Wagon Trail Ave.
Las Vegas, NV
89118(Address
of principal executive offices)
(Zip
code)





Issuer’s
telephone number: (702)
361-3188Securities
Registered Pursuant to Section 12(b) of the Act:





Title
of each class
Name of
each exchange on which registeredCommon Stock, $0.0001 par value per share
None; These securities are quoted on the OTC Bulletin Board (OTCBB)
and OTC Markets (OTCQB)


Securities
Registered Pursuant to Section 12(g) of the Act:None(Title
of class)


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


Yes
☐ No ☒





Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No
☒





Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐





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





1





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.:





Large
accelerated filer
☐
Accelerated
filer
☐Non-accelerated
filer (Do not check if a smaller reporting company)
☐
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 ☒





The
aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of November 30, 2016, the last
business day of the registrant's most recently completed fiscal
year end, is undeterminable. The total number of common stock held
by non-affiliates of the registrant as of this date was
7,507,943.  The
aggregate market value of such securities on November 30, 2016 was
determined by the Company to be $2,097,400 based upon the analysis
described in further detail in Item 5 of this report.





State
the number of shares outstanding of each of the issuer’s
classes of common equity, as of the last practicable date, which is
March 14, 2017: 25,156,317
Common Shares, 19,500 Series A, and 246,690 Series B Preferred
Shares.





DOCUMENTS INCORPORATED BY REFERENCE





Incorporated
by reference within this report are certain documents previously
filed with the Commission within Form S-1, as amended, which was
filed on August 16, 2013.  Such document(s) are listed in
Item 15 of this report.


















































2








EXEO ENTERTAINMENT, INC.


FORM 10-K


For the
year ended November 30, 2016





TABLE OF CONTENTS





PART I
4ITEM
1. DESCRIPTION OF BUSINESS
4ITEM
1A. RISK FACTORS
7ITEM
1B. UNRESOLVED STAFF COMMENTS
7ITEM
2. DESRIPTION OF PROPERTY
7ITEM
3. LEGAL PROCEEDINGS
7ITEM
4. MINE SAFETY DISCLOSURES
7PART II
8ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS AND MARKET INFORMATION FOR COMMON
STOCK
8ITEM
6. SELECTED FINANCIAL DATA
10ITEM
7. MANAGEMENT’S DISCUSSION AND PLAN OF
OPERATIONS
10ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
12ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
12ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
12ITEM
9A. CONTROLS AND PROCEDURES
12ITEM
9B. OTHER INFORMATION
13PART III
14ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
14ITEM
11. EXECUTIVE COMPENSATION
14ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
15ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
16ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
17ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
18SIGNATURES
20


















































3





PART
I





ITEM 1.
DESCRIPTION OF BUSINESS





OVERVIEW





Exeo
Entertainment, Inc. (the “Company” “we” or
“us”) designs, develops, licenses, manufactures, and
markets consumer electronics in the video gaming, music and smart
TV sector. Our current business objectives are:





·
Complete
product development and establish channels of distribution,
and·
Expand
SKUs within the headphone market for both music and
gaming





Activities to date





We
incorporated in the State of Nevada on May 12, 2011. We are a
development stage company. From our inception to date we have
generated minimal revenues and continue to operate at a loss. Our
activities have centered on the design and engineering of
peripherals in the video gaming, music, and smart TV
sector.





We
accomplished the following:





1)
We
completed the molds for the PsykoTM PC model and are working
on the molds for the PsykoTM console unit.2)
During
the six months ending May 31, 2015, we received inventory of the
KrankzTM Bluetooth Wireless Headsets, and the
Psyko®5.1 Surround Sound Gaming Headsets (with built-in
microphone) with external amplifier for Personal Computers. We also
approved the working prototypes of the similar type of Psyko®
Krypton headphones for use with gaming consoles (such as
Xbox®), and the Company is ready to go forward with the
manufacturing.3)
We are
currently working on molds for the ZaazTM
keyboard.





Products and Services





Products
under development include the PsykoTM 5.1 surround sound
gaming headphones for consoles, KrankzTM MAXX BluetoothTM
wireless headphones, ZaazTM Smart TV keyboards, the Extreme
Gamer®; a multi-disc video game changer, and an android based
portable gaming system. We are finalizing development on the
ZaazTM keyboard and will soon begin tooling for manufacturing.
The Extreme GamerTM and portable gaming system are still in
development.  We expect to release several new products
in fiscal years 2015 and 2016.





Strategy and Marketing Plan





Once
manufacturing is established, we intend on utilizing existing
consumer electronics distributers, such as Synnex Corp. (SNX) and
Ingram Micro to distribute our products to big box retailers such
as Best Buy, GameStop, and Fry’s Electronics.  We
do not have distribution agreements with these companies at this
time.





Competition














4





Psyko® KryptonTM Surround Sound Headphones











While
our Psyko® headphone offering differs from the competition in
the method of 5.1-surround sound delivery, we will face competition
from manufacturers with established channels of distribution,
mature capital structures, and significantly larger marketing
budgets. Well established gaming headphone manufacturers include
Turtle Beach; a private company, Tritton – a subsidiary of
Mad Catz Interactive (MCZ), and Astro Gaming which is a subsidiary
of Skullcandy (SKUL).





While
other headphone manufacturers replicate 5.1 surround sound through
Digital Signal Processing (DSP), the Psyko® headphones use a
patented method of sound delivery that does not require the use of
DSP. Management believes that the difference in audio quality is a
major differentiating factor between our product offering and what
is currently available on the market.







KrankzTM Headphones








The
driver design provides a deep bass sound with clear midrange audio
for a full-range for use up to 30’ distance.  These
headsets work with most mobile devices and have a retractable,
foldable design with built-in microphone and noise cancelling
feature. We expect to face competition from lifestyle headphone
companies such as Beats by Dr. Dre and Skull candy. These entities
are well established and have a loyal customer following. We expect
to carve out a niche within the market by initially marketing to
the X games demographic through endorsements and sponsorships in
Extreme sports such as motocross, supercross, snowboarding,
surfing, skating, and similar such sports.





ZaazTM Keyboard
















5





The
majority of the competition in the Bluetooth wireless keyboard
arena is concentrated amongst a few well-known companies such as
Logitech® (LOGI), Microsoft® (MSFT), Apple® (AAPL),
and Samsung® (SSNLF). While management believes that only
Samsung makes keyboards specifically designed to interact with
smart TVs, and that their keyboards only work with certain
Samsung® TVs, there can be no assurance that other companies
do not currently manufacture, or plan to manufacture, such units in
the future. Any such companies that manufacture keyboards capable
of connecting to a smart TV would further increase
competition.





The
Company intends on differentiating the ZaazTM keyboard through
a set of features designed specifically for smart TV users. The
ZaazTM keyboard features a customized set of “one touch
access keys” that allows users to access specific, user
defined features of the consumers smart TV. Examples include one
touch access to the following: Netflix®, Facebook®,
Hulu®, and Amazon®. Additionally, the ZaazTM
keyboard will differentiate itself by including a full size track
pad – built into the keyboard – to navigate, point,
click, and select.





Extreme Gamer®





The
Extreme Gamer® is a patent pending (patent application
12/543,296) multi-disc video game changer that connects to current
generation video game consoles offered by Nintendo®,
Microsoft®, and Sony®.





Management
believes from attending the Consumer Electronics Show (CES) on
January 11-13, 2013, having a booth and its products on display at
the Electronic Entertainment Expo (E3) on June 11 – 13, 2013
(booth 4010), and from regularly reading Video Gaming news from
sources such as IGN.com, EGNnow.com, 1up.com, and gamespot.com,
that no other company is currently manufacturing a multi-disc video
game changer. If such a unit is being made management is unaware of
its existence.





Sources and Availability of Suppliers and Supplies





Currently
we have access to an adequate supply of products, from various
manufacturers.  These companies and their products are
new, not well established, and are a subject to significant risk
and uncertainty.





Dependence on One or a few Major Customers





We do
not anticipate dependence on one or a few major customers into the
foreseeable future.





Patents, Trademarks, Licenses, Franchise Restrictions and
Contractual Obligations and Concessions





We
executed a license agreement with Psyko Audio Labs Canada to
manufacture and distribute the Carbon and Krypton line of patented
headphones. US Patent # 8,000,486 (for the Psyko KryptonTM
surround sound gaming headphones.)  With regard to
intellectual property rights associated with Psyko®
Headphones, we have a license to use this mark as well as the
patented technology.





We
entered into a license agreement with Digital Extreme Technologies,
Inc., a Delaware corporation, (also referred to as DXT) for use of
certain intellectual property associated with the products being
designed and developed by us. The Black Widow keyboard is now known
as the Zaaz keyboard. DXT worked to design and develop the Extreme
Gamer as well as the Black Widow keyboard. We continue to work
under a license agreement with DXT to advance the use of
technologies designed by DXT. There is no licensing fee paid to DXT
during the years ended November 30, 2014 and 2015





DXT
applied to the U.S. PTO for a patent of its Multi Video Game
Changer. The agency assigned an application number of 12/543,296 to
its application, which was published on February 25, 2010. The
proposed 10 disk Video Game Changer is designed to interface
directly with Sony PS3®, Nintendo Wii®, and Microsoft
Xbox 360®. The Company anticipates incorporating Blu-Ray®
compatible optics technology under a license agreement. This would
allow users to insert Blu-Ray® discs into the Video Game
Changer, and once connected to the video game console, to play
movies on television. Sony PS3® is now capable of playing
Blu-Ray® discs, but only with a capacity for a single disk.
This technology would provide for the loading of up to 10
DVD’s, CD’s or Blu-Ray® discs into a single
console that communicates with a video game console via USB.
Furthermore, users would be able to plug in any external hard disc
drive (“HDD”) directly into the console via an internal
ATPI port, allowing movies, music and pictures to be played
directly from the HDD.





6





In
regard to intellectual property rights associated with
KrankzTM Bluetooth® wireless headphones, we do not have a
federally registered trademark as to the word marks Krankz or
Krankz Maxx. Therefore, we do not have the same presumptive rights
which might otherwise apply had we obtained a federally registered
trademark.  We believe we have intellectual property
rights to this mark under common law.  If we are unable
to register this mark, we may use an alternative name for these
headphones.





Subsidiaries





We do
not have any subsidiaries.





Reports to Security Holders





1.
 We will furnish
shareholders with annual financial reports certified by our
independent registered public accountants.





2.
 We are a reporting
issuer with the Securities and Exchange Commission. We file
periodic reports, which are required in accordance with Section
15(d) of the Securities Act of 1933, with the Securities and
Exchange Commission to maintain the fully reporting
status.





3.
 The public may read
and copy any materials we file with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20002. The
public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC
filings will be available on the SEC Internet site, located at
http://www.sec.gov.





ITEM
1A. RISK FACTORS





As a
“smaller reporting company”, we are not required to
provide the information required by this Item.





ITEM
1B. UNRESOLVED STAFF COMMENTS





The
Company has no unresolved staff comments.





ITEM 2.
DESRIPTION OF PROPERTY





We
currently lease 10,068 sq. ft. of office and warehouse space at
4478 Wagon Trail Avenue, Las Vegas, Nevada 89118.  The
original lease contains an option for a three year renewal; which
shall expire on September 30, 2016. The Company signed an
additional one year lease at the same terms as the prior lease. Our
monthly lease payment is $7,006. This location serves as our only
facility for day-to-day operations. We believe our current premises
are adequate for our current operations and we do anticipate that
we will require additional premises in the next 9-12
months.  We do not have any investments or interests in
any real estate.  Our Company does not invest in real
estate mortgages, nor does it invest in securities of, or interests
in, persons primarily engaged in real estate
activities.





ITEM 3.
LEGAL PROCEEDINGS





We know
of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or
any of their respective affiliates, or any beneficial stockholder,
is an adverse party or has a material interest adverse to our
interest. Our address for service of process in Nevada is Business
Filings, Incorporated located at 311 S. Division Street, Carson
City, Nevada 89703.





ITEM 4.
MINE SAFETY DISCLOSURES





None.











7





PART II





ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND MARKET INFORMATION FOR COMMON STOCK





The
Company’s common stock is traded on the over-the-counter
market and quoted on the Over-The-Counter Bulletin Board (OTCBB)
under the trading symbol “EXEO”.  Our common
stock is also quoted on OTCQB, a segment of OTC Link LLC and OTC
Markets Group. As of the date of this report, there is a limited
public market for our common stock. For purpose of this Item, the
existence of limited or sporadic quotations should not of itself be
deemed to constitute an “established public trading
market,” if any, for our common stock. We can provide no
assurance that our shares will be actively traded on the OTC or,
that the public market will achieve or continue with any particular
daily volume or price for our listed securities.





On
December 24, 2012, the Company filed an amendment to its Articles
of Incorporation to change the par value of its common stock from
$0.001 to $0.0001 and to add to the authorized capital of
the  Company 1,000,000 Series A Preferred Stock at par
value $0.0001. On January 13, 2014, the Company filed a Certificate
of Designation to add to the authorized capital of the Company
1,000,000 Series B Preferred Stock at par value $0.0001. The
Company has no other class of stock authorized by the State of
Nevada.





On
January 14, 2014, the Board of Directors of Exeo Entertainment,
Inc. (the “Company” adopted a resolution pursuant
to the Company’s Certificate of Incorporation, as amended,
providing for the designations, preferences and relative,
participating, optional and other rights, and the qualifications,
limitations and restrictions, of the Series B
Convertible  Preferred Stock.





On
January 18, 2014, the Company filed a Certificate of Designations
for a Series B Convertible Preferred Stock. The authorized number
of Series B Convertible Preferred Stock is 1,000,000 shares, par
value 0.0001. The holders of shares of Series B Convertible
Preferred Stock shall vote as a separate class on all matters
adversely affecting the Series B Stock.  The
authorization or issuance of additional Common Stock, Series B
Convertible Preferred Stock or other securities having liquidation,
dividend, voting or other rights junior to or on a parity with, the
Series B Convertible Preferred Stock shall not be deemed to
adversely affect the Series B Convertible Preferred Stock. In each
case the holders shall be entitled to one vote per
share.





Recent Sales of Unregistered Securities





Common Stock





The
Company has 100,000,000 shares at $0.0001 par value common stock
authorized and 24,764,129 and 24,255,231 shares issued and
outstanding at November 30, 2016 and 2015, respectively. During the
month of March, 2015, one accredited investor, previously known by
the officers of the Company, as well as having been a prior
investor in the common stock of the Company, subscribed to 322,188
shares of common stock of the Company upon the exercise of his
common stock warrants. The Company accepted this subscription at a
discounted price of $0.31037 per share. Prior private party sales
of the Company’s common stock occurred in August, 2014 and
such sales by the Issuer were at $0.80 per share. The discount in
sales price represented by this transaction cannot be reasonably
ascertained due to the lack of recent sales of issuer securities.
Reasons for such discount may include various factors such as the
dollar amount of the single transaction, limitations upon the
immediate marketability of the common stock of the company,
restrictive legends applied to this stock certificate, and price
volatility, if applicable, as reflected in the open market. At the
time of this subscription,the Common shares of the Company were
quoted at $1.00 per share and were not actively trading on the OTC
BB and OTC Markets- QB. For the reasons stated above, the price
quotation in the open market should not be relied upon for purpose
of the determination of the discount rate applied to this sales
transaction. As of the date of this filing, the shares have not
been issued and are recorded to stock payable. The shares were
issued in January 2017.





On
November 20, 2015, the Company issued 114,631 shares of common
stock for services totaling $91,705.  The shares were
valued based on the stock price on the market at the time which was
$0.80 per share.





During the year ended November 30, 2016, the Company received
subscriptions for 525,237 shares of common stock for cash totaling
$389,900. As of November 31, 2016, 16,339 shares have not been
issued to an investor. The price per share is equal to eighty-five
percent of the average daily “Ask Price” as quoted on
the OTC Electronic Bulletin Board Quotation System for the ten
trading days immediately preceding the Closing. In addition, for
each share of common stock purchased, each investor shall receive
two warrants. Warrant A shall provide the investor the right to
purchase one additional share of the Company’s common stock
equal to one hundred percent of the average daily “Ask
Price” as quoted on the OTC Electronic Bulletin Board
Quotation System for the ten trading days immediately preceding the
Closing. Warrant B shall provide the investor the right to purchase
one additional share of the Company’s common stock equal to
one hundred twenty-five percent of the average daily “Ask
Price” as quoted on the OTC Electronic Bulletin Board
Quotation System for the ten trading days immediately preceding the
Closing.





8





Equity Issuance Costs





We incurred equity issuance costs of $1,446 and $3,403 for the
years ended November 30, 2016, and 2015,
respectively.  Rather than expense these costs, such
items are charged against the Company’s equity. Our employees
coordinate various matters associated with the sales of issuer
securities to accredited investors.  Equity issuance
costs include such wages. These costs also include mailing,
copying, courier, and other miscellaneous costs associated with the
duplication and delivery of our offering circular to investors and
paying for the return delivery of signed stock subscription
agreements.





Preferred Stock





Issuances of Series B Convertible Preferred Stock





During
the year ended November 30, 2015, forty-five accredited investors
subscribed to 206,640 shares, in total, of Series B Preferred Stock
in exchange for cash consideration of $1,033,200, in total, at
$5.00 for each share.  The Company relies upon an
exemption from registration under the Securities Act of 1933
pursuant to Regulation D, Section 506. The Company agreed to pay
interest on such funds at 12% per annum. Each person executed a
stock subscription agreement and delivered funds in exchange for
the delivery of Series B Convertible Preferred Shares at a price of
$5.00 per share. Stock warrants were not sold or included in the
offering to such investors.





During
the year ended November 30, 2016, twelve accredited investors
subscribed to 45,050 shares, in total, of Series B Preferred Stock
in exchange for cash consideration of $225,250, in total, at $5.00
for each share. The Company relies upon an exemption from
registration under the Securities Act of 1933 pursuant to
Regulation D, Section 506. The Company agreed to pay interest on
such funds at 12% per annum. Each person executed a stock
subscription agreement and delivered funds in exchange for the
delivery of Series B Convertible Preferred Shares at a price of
$5.00 per share. Stock warrants were not sold or included in the
offering to such investors.





All
shares of redeemable convertible preferred stock have been
presented outside of permanent equity in accordance with ASC 48-10,
Classification and Measurement of
Redeemable Securities. The Company accretes the carrying
value of its Series A and B redeemable convertible preferred stock
to its estimate of fair value (i.e. redemption value) at period
end. The estimated fair value of the Series A and Series B
redeemable convertible preferred stock at November 30, 2016 was
$134,112 and $1,431,294, respectively.





Incentive Stock Option Grants to Officers





Pursuant
to the 2012 Employees/Consultants Stock Compensation Plan, on July
15, 2012, the Company granted 2,000,000 shares to each of its two
officers and directors.  The option agreement provides
the employee has no more than five years from the date of the grant
to exercise the options at an exercise price of $0.25 per
share.  The employee may only exercise such options based
upon the contracted vesting schedule, which provides that the
options vest on a pro-rata basis over 60 months of future services
to be rendered by such employee.





The
fair value of the options is calculated using the Black-Scholes
method as of the date of grant.  The current stock price
at the dates of grant, which is July 15, 2012 and August 15, 2012,
is $0.25 based on the private sale to accredited investors of
common shares to investors for the eleven months prior to the date
of grant. Several industry comparables to this Company were used in
order to determine an approximation of the volatility. Further
information regarding the determination of the volatility and the
assumptions used during the course of preparing an analysis using
the Black-Scholes method may be found in Note G to the
Company’s financial statements.





There
were 4,000,000 stock options outstanding to the Company’s
management as of November 30, 2016, and within this group,
3,500,000 stock options were capable of being exercised at November
30, 2016. The remaining number of options are not exercisable as of
November 30, 2016, as each of the two officers had not yet
completed the “incentive”, i.e. the future monthly
terms in office in order to exercise such options.  The
weighted average exercise price is $0.25 per share and the weighted
average remaining life is 20.5 months.





Stock Warrants Issued to Investors





There were no stock warrants granted by the Company from inception
through August 16, 2012.  For each common share purchased
by an investor, for no additional consideration, each investor
acquired a warrant to purchase an additional two shares at the
fixed price of $1.00 per share.  During the period from
August 16, 2012 to August 31, 2013, in connection with a private
placement, the Company raised $1,250,000 from the sale of
securities. 2,500,000 stock warrants to purchase common stock were
granted in conjunction with the purchase by each investor of our
common stock.  The terms of the stock warrant include the
right to exercise all or a portion of the warrants granted, shall
be no more than 2 years from the date of grant of the warrant, and
the exercise price is $1.00 per warrant.  The warrant may
not be transferred or assigned in whole or in part by the grantee.
As of November 30, 2015, there were 48,750 warrants outstanding.
During the year ended November 30, 2016, the Company issued
1,050,474 warrants. As of November 30, 2016, there were 1,099,224
warrants outstanding, with a weighted average exercise price of
$1.03 and the weighted average remaining life is 24.8
months.





9





Dividends





There
are no restrictions in our Articles of Incorporation or bylaws that
restrict us from declaring dividends. The Nevada Revised Statutes,
however, prohibit us from declaring dividends where, after giving
effect to the distribution of the dividend:





(A)
 We would not be
able to pay our debts as they become due in the usual course of
business; or





(B)
 Our total assets
would be less than the sum of our total liabilities, plus the
amount that would be needed to satisfy the rights of shareholders
who have preferential rights superior to those receiving the
distribution.





We have
neither declared nor paid any cash dividends on our capital stock
and do not anticipate paying cash dividends in the foreseeable
future. Our current policy is to retain any earnings in order to
finance the expansion of our operations. Our board of directors
will determine future declaration and payment of dividends, if any,
in light of the then-current conditions they deem relevant and in
accordance with the Nevada Revised Statutes.





ITEM 6.
SELECTED FINANCIAL DATA





As a
“smaller reporting company”, we are not required to
provide the information required by this Item.





ITEM 7.
MANAGEMENT’S DISCUSSION AND PLAN OF OPERATIONS





Comparison of Twelve Month Results –for the fiscal years
ended November 30, 2016 and 2015, respectively





Revenues and Gross Profit


Revenues
for the twelve months ended November 30, 2016 and 2015 were $28,767
and $27,247, respectively. Gross profit for the periods ended
November 30, 2016 and 2015 were $8,773 and $16,192, respectively.
The Company has incurred significant costs in research and
development activities. See discussion below for further
information. At November 30, 2016, the Company had incurred an
accumulated deficit of $5,714,983 since inception.





Costs and Expenses


Total cost and expenses increased to $1,355,316 for the year ended
November 30, 2016 as compared to $1,333,626 for the year ended
November 30, 2015. These increases in the fiscal year ended
November 30, 2016, were primarily due to the increasing costs
associated with public relations, royalty fees, sponsorships and
advertisement of our audio headphone products.





Research and Development Costs





The
Company incurred $23,080 and $7,850 for research and development
costs during the fiscal years ended November 30, 2016 and 2015,
respectively. These costs relate to hardware engineering, design
and development of the KrankzTM Bluetooth wireless audio
headphones, the ZaazTM Keyboard, the Extreme Gamer®, and
the Psyko KryptonTM 5.1 surround sound gaming headphones for
personal computers. A similar unit under development connects to
current generation video game consoles offered by Nintendo®,
Microsoft®, and Sony®.





Other Income and Expenses


During
the course of our business, we experienced a gain from foreign
currency transactions of $8,940 in the year ended November 30, 2016
as compared to a gain of $22,031 for the year ended November 30,
2015. This gain is due to royalty payments owed to a foreign
company.





During
the year ended November 30, 2016, we had other losses totaling
$312. This losses are associated with the refund of
deposits.





10





Interest
expense associated with obligations to related parties was $4,586
in the twelve months ended November 30, 2016, compared to $4,699 in
the period ended November 30, 2015.  Interest expense was
$1,389 and $968 in the twelve months ended November 30, 2016 and
2015, respectively.





Effect of Inflation


Inflation
has not had a significant impact on the Company’s operations
or cash flows.





Liquidity and Capital Resources





Long-Term Debt / Note Payable and Other Commitments





Other
than what is described in this Item, the Company had no material
commitments for capital expenditures at November 30, 2016 or
November 30, 2015. On May 25, 2011, Exeo Entertainment, Inc.
entered into an exclusive license agreement with Digital Extreme
Technologies, Inc. whereby Exeo Entertainment, Inc. will
manufacture and market the Extreme Gamer and Zaaz keyboard. Exeo
Entertainment, Inc. will pay Digital Extreme Technologies, Inc. a
5% royalty fee on gross sales of both products.





On June
10, 2013, Exeo Entertainment, Inc. entered into a license agreement
with Psyko Audio Labs, Canada whereby Exeo Entertainment. Inc. will
manufacture and market the Psyko Krypton and Carbon line of gaming
headphones. The Company will owe a 5% royalty on all headphone
sales to Psyko Audio Labs.  Payments are due quarterly on
January 15, April 15, July 15, and October 15. For the year ended
November 30, 2016, the Company has made a total of $50,000 towards
this obligation and no royalty invoices have been received from
Psyko Audio Labs. In fiscal year 2016, the Company incurred
increasing minimum royalty expenses as follows: $72,497 (CDN
$100,000), $77,770 (CDN $100,000), $76,823 (CDN $100,000), and
$75,072 (CDN $100,000) in each of the four quarters,
respectively. The total minimum royalty fee expense in fiscal
year ended November 30, 2016 and 2015 were $327,095 and $311,594,
respectively. Prepaid expenses as of November 30, 2016 and 2015
consist of royalty fees of $1,840 and $1,840, respectively, paid to
Psyko Audio Labs. These prepaid expenses shall be applied towards
royalty expenses incurred in the first quarter of the following
fiscal year. Unless the Royalty Agreement is modified by Psyko
Audio Labs Canada and the Company, at January 1, 2016, the Company
is obligated to pay minimum monthly royalties of $80,000 (CDN
$100,000) per quarter for the remaining term of the
contract.  No such modification has been made as of the
date of this report. The Company carries the risk of currency
exchange rate fluctuations as our royalty obligation under the
license agreement is stated in Canadian dollars.





The
Company has an office and warehouse rental lease obligation through
September 30, 2016, which equals $70,060 as of November 30, 2015.
The monthly minimum rental payment is $7,006. Rent expense was
$84,072 and $84,072 for the fiscal years ended November 30, 2016
and 2015, respectively.





Obligation to Purchase Additional Inventory of the Psyko Krypton
5.1 surround sound headsets





In
early September, 2014 the Company issued a purchase order for the
acquisition of $200,000 in inventory for the Psyko®
KryptonTM 5.1 surround-sound gaming headphones with amplifiers
made for use with personal computers. Sometime thereafter, the
Company and the manufacturer agreed to divide the single purchase
order in to several separate purchase orders of $40,000
each.  On December 5, 2014, the Company paid the first
installment of $40,000.  The headphone units were shipped
to the Company and were received and accepted on December 30,
2014.  On January 9, 2015, the Company paid $80,000 for
two additional installments under this agreement. The headphone
units were shipped to the Company and were received and accepted on
January 28, 2015. It is possible, but not probable, that the
Company remains liable for the $80,000 balance as to this
September, 2014 purchase order, even if the Company does not order
additional inventory.





Cash Flow Information





The Company had working capital of approximately $(358,326) and a
current ratio of 0.53 at November 30, 2016. The Company had working
capital of $183,520 and a current ratio of 1.38 at November 30,
2015. The decrease in working capital and the current ratio at
November 30, 2016 as compared to November 30, 2015, was primarily
due to financing activities (an decrease of $531,396 from fiscal
year 2015 to 2016. The Company believes it has insufficient cash
resources to meet its liquidity requirements for the next 12
months.





During
the twelve months ended November 30, 2016, the Company had cash and
cash equivalents of approximately $131,001 as compared to cash and
cash equivalents of $427,663 at November 30, 2015. This represents
a decrease of $296,662.





Cash used in Operating Activities


The
Company used approximately $868,629 of cash for operating
activities in the twelve months ended November 30, 2016, as
compared to using $965,612 of cash for operating activities in the
twelve months ended November 30, 2015.





11





Cash used for Investing Activities


Investing
activities for the twelve months ended November 30, 2016, used
approximately $3,930 of cash as compared to using $40,701 of cash
in the twelve months ended November 30, 2015. This increase in use
is attributable to the acquisition of equipment in fiscal year
ended November 30, 2015, as compared to fiscal year ended November
30, 2016.





Cash Provided by Financing Activities


Financing
activities for the twelve months, ended November 30, 2016, provided
$575,897 of cash as compared to providing $1,107,293 of cash in the
twelve months ended November 30, 2015.





The
Company’s principal sources and uses of funds are investments
from accredited investors. The Company would need to raise
additional capital in order to meet its business plan. Management
intends to secure additional funds using borrowing or the further
sale of Regulation D, Section 506 securities to accredited
investors in the future.





There
is no assurance that Company may secure funding, or whether it can
do so on terms acceptable to it, or at all, and its liquidity would
be severely compromised.





The
accompanying financial statements have been prepared assuming that
the company will continue as a going concern which contemplates,
amongst other things, the realization of assets and satisfaction of
liabilities in the course of business.





We
anticipate that our future liquidity requirements will arise from
the need to fund our growth, pay our current obligations and future
capital expenditures. The primary sources of funding for such
requirements are expected to be cash generated from operations and
raising additional funds from private sources and/or debt
financing.





Going Concern Consideration





Our
independent auditors included an explanatory paragraph in their
report on the accompanying financial statements expressing concerns
about our ability to continue as a going concern. We agree with
this assessment.  Our financial statements contain
additional note disclosures describing the circumstances that lead
to this disclosure by our independent auditors.





Off-Balance Sheet Arrangements





We have
no off-balance sheet arrangements.





Forward-Looking Statements





Many
statements made in this report are forward-looking statements that
are not based on historical facts. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements. The
forward-looking statements made in this report relate only to
events as of the date on which the statements are
made.





ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK





As a
“smaller reporting company”, we are not required to
provide the information required by this Item.





ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
information requested by this item is set forth in Item 15(a) of
this Report.





ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS





None.





ITEM
9A. CONTROLS AND PROCEDURES







Evaluation of Disclosure Controls and Procedures





Our management has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Report. Based on the management evaluation,
we concludedthat our disclosure controls and procedures are not
effective to provide reasonable assurance that information we are
required to disclose in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and
forms, and that such information is accumulated and communicated to
our management, including our principal executive officer and
principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure. Management is in the process of determining
how to most effectively improve our disclosure controls and
procedures.





12





Management’s Report on Internal Control over Financial
Reporting








Our management is responsible for establishing and maintaining
adequate internal control, as is defined in the Securities Exchange
Act of 1934. These internal controls are designed to provide
reasonable assurance that the reported financial information is
presented fairly, that disclosures are adequate and that the
judgments inherent in the preparation of financial statements are
reasonable. There are inherent limitations in the effectiveness of
any system of internal controls, including the possibility of human
error and overriding of controls. Consequently, an effective
internal control system can only provide reasonable, not absolute,
assurance with respect to reporting financial
information.





Our internal control over financial reporting includes policies and
procedures that: (i) pertain to maintaining records that in
reasonable detail accurately and fairly reflect our transactions;
(ii) provide reasonable assurance that transactions are recorded as
necessary for preparation of our financial statements in accordance
with generally accepted accounting principles and the receipts and
expenditures of company assets are made and in accordance with our
management and directors authorization; and (iii) provide
reasonable assurance regarding the prevention or timely detection
of unauthorized acquisition, use or disposition of assets that
could have a material effect on our financial
statements.





Management has undertaken an assessment of the effectiveness of our
internal control over financial reporting based on the framework
and criteria established in the Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”). Based upon this
evaluation, management concluded that our internal control over
financial reporting was not effective as of November 30, 2016. The
Company has resourced outside consultants to assist in implementing
the necessary financial controls over the financial reporting and
the utilization of internal management and staff to effectuate
these controls.





This annual report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to
the temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in this annual
report.





Changes in Internal Control Over Financial Reporting





There were no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that
have materially affected, or reasonably likely to materially
affect, our internal control over financial reporting.





Limitations on Effectiveness of Controls and
Procedures





In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the
fact that there are resource constraints and that management is
required to apply its judgment in evaluating the benefits of
possible controls and procedures relative to their
costs.





ITEM
9B. OTHER INFORMATION





Material Contracts





U.S. Distribution Agreement with Global Marketing
Partners





As of November 30, 2016, the Company has received no revenue on the
following contract with Global Marketing Partners, Inc. On April
30, 2014, the Company entered into a non-exclusive contract with
Global Marketing Partners, Inc., a California corporation doing
business in Agoura Hills, California (the
“Agreement”).  The Agreement provides the
Company with an avenue for the distribution of its products through
various retailers. Global serves as a marketing partner to
facilitate and administer the distribution of the Company’s
products.  A key component includes the introduction of
the Company’s products to retailers using the distribution
channel operated by Speed Commerce, formerly known as Navarre. The
Company hopes to participate in a one-stop shop form of an
arrangement via Global to access the retailers via Speed
Commerce.  Using this arrangement, the Company is not
responsible for entering into agreements with each
retailer.








13








PART III





ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





The
name, age and position of each of our directors and executive
officers are as follows:





Name

Age

PositionJeffrey
Weiland

52

President
and DirectorRobert
S. Amaral

47

CEO,
Treasurer, Secretary and Director





Jeffrey A. Weiland, Age 52, President/Director





Mr.
Weiland has over 20 years’ experience in management, sales
and marketing, and product development.  Mr. Weiland was a
Sergeant in the United States Marine Corps and served from 1985 -
1993.  Mr. Weiland was awarded several military service
medals, including the Navy Achievement Medal, and received various
letters of appreciation and meritorious masts, personal
commendations, and good conduct medals.  He was honorably
discharge after serving in Desert Storm.  From 1993 - 1997,
Mr. Weiland was a metrology supervisor for Gensia Laboratories,
LTD/Sicor Pharmaceuticals, based in Irvine California.  Mr.
Weiland received his Bachelor of Science in Business Management,
from the University of Phoenix in 1997. From 1997 - 2003, Mr.
Weiland was the National Marketing Director for Guardian
Technologies USA based in Irvine, California. From 2003 - 2007, Mr.
Weiland was a sole proprietor of Weiland Media, which focused on
new product development.  From 2008 - 2011, Mr. Weiland
devoted 100 percent of his efforts to Digital Extreme Technologies,
Inc. Prior to joining our Company, Mr. Weiland had not previously
served as an officer or director of any public
company.





Robert S. Amaral, Age 47, CEO,
Secretary/Treasurer/Director





Mr.
Amaral received his MBA in 1997 from Southern Oregon University. In
1996 he received his Bachelor’s Degree in Marketing from
Southern Oregon State College. From 1997 – 2000 he was the
Director of Marketing of CG Leasing Inc., which later merged with
USA Capital Leasing. From 2000 – 2001 Mr. Amaral was a
proprietor of a company named Finance Marketing Group, which
generated lease finance applications from small businesses across
the United States. In 2001, he worked as a Series 3 licensed
commodity broker with U.S. Options Corp and Concorde Trading Group.
In 2002 Mr. Amaral started Amaral Consultancy where he focused on
funding development stage companies. Companies which Mr. Amaral
performed contract labor for: L&L Financial, which subsequently
changed its name to L& L Energy (LLEN); VSI Wireless, which was
acquired by SARS Corporation (SARO.PK); Advanced Ultrasound
Imaging, a private healthcare company located in Scottsdale, AZ;
American Eagle Motorcycles based in Carlsbad, CA; and Ambient
Control Systems located in El Cajon, CA. From 2008 –
2011 Mr. Amaral focused his energies on Digital Extreme
Technologies, Inc.  Prior to joining our Company, Mr.
Amaral had not previously served as an officer or director of any
public company.





Significant Employees





We have
no significant employees other than the officers and directors
described above.





Section 16(A) Beneficial Ownership Reporting Compliance Pursuant to
Item 405 of Regulation S-K





Section
16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten
percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based on its
review of the copies of such forms received by it, the Company
believes that during the fiscal year ended November 30, 2016 all
such filing requirements applicable to its officers and directors
were complied with exception that reports were filed late or not
filed at all by the following persons:





Name
and Principal Position
Number
of late reports
Number
of untimely reports
Number
of Known Failures to File a Required FormRobert
S. Amaral, CEO
0
0
0Jeffrey
A. Weiland, Pres.
0
0
0





ITEM
11. EXECUTIVE COMPENSATION





14





Summary Compensation Table





The
following table sets forth certain compensation information for:
(i) each person who served as the chief executive officer of our
Company at any time during the year ended November 30, 2016,
regardless of compensation level, and (ii) each of our other
executive officers, other than the chief executive officer, serving
as an executive officer at any time during the year ended November
30, 2016. The foregoing persons are collectively referred to herein
as the “Named Executive Officers.” Compensation
information is shown for fiscal years ended November 30, 2016 and
2015, respectively.





SUMMARY COMPENSATION TABLE





ANNUAL COMPENSATION
LONG TERM COMPENSATION

TOTALCash
Bonus
($)
Stock Awarded
($)
Stock Options *
($)
Non-Equity
Incentive Plan Comp. ($)
All Other
Compensation ($)
Total
Compensation ($)Robert
S. Amaral
CEO,
Treasurer,
2016
$78,200
0
0
$100,002
0
0
$178,202Secretary. &
Director
2015
$65,750
0
0
$100,002
0
0
$165,752Jeffrey
A. Weiland
President
&
2016
$72,000
0
0
$100,002
0
0
$172,002Director
2015
$66,000
0
0
$100,002
0
0
$166,002





* Stock Options - Outstanding Equity Awards at 2014 Fiscal
Year-End





Pursuant
to the 2012 Employees/Consultants Stock Compensation Plan, on July
15, 2012, we granted 2,000,000 shares to each of our two officers
and directors. The option agreement provides the employee has no
more than five years from the date of the grant to exercise the
options at an exercise price of $0.25 per share. The employee may
only exercise such options based upon the contracted vesting
schedule, which provides that the options vest on a pro-rata basis
over 60 months of future services to be rendered by such employee.
There were no additional awards through the end of our fiscal year
2016.





Employment Contracts, Termination of Employment, Change-in-Control
Arrangements





Employment Arrangements





As of
November 30, 2016, we were a party to employment agreements with
Jeffrey A. Weiland (dated June 1, 2015) and Robert S. Amaral (dated
June 1, 2015), each of which is described directly
below.





Employment Agreements with Jeffrey A. Weiland and Robert S.
Amaral





Term and Compensation





The
initial term of employment of each of Mr. Weiland and
Mr. Amaral under their respective employment agreements is
until such time the employment agreements are terminated by either
party pursuant to the terms of the employment
agreements.





Pursuant
to his employment agreement, Mr. Weiland is entitled to an
initial base salary of $72,000. Pursuant to his employment
agreement, Mr. Amaral is entitled to an initial base salary of
$78,200.





Severance





Each
employment agreement provides for a severance equal to one
month’s pay, less taxes and social security required to be
withheld upon a termination by us without cause upon thirty (30)
days written notice.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT





Security Ownership of Certain Beneficial Owners and
Management





The
following table sets forth information regarding the beneficial
ownership of our common stock as of November 30, 2015,
for:





●
 each person, or
group of affiliated persons, known by us to beneficially own more
than 5% of our common stock;





●
 each of our
executive officers;





●
 each of our
directors; and





15





●
 all of our
executive officers and directors as a group.





We have
determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute
beneficial ownership of securities to persons who possess sole or
shared voting power or investment power with respect to those
securities. The person is also deemed to be a beneficial owner of
any security of which that person has a right to acquire beneficial
ownership within 60 days. Unless otherwise indicated, the persons
or entities identified in this table have sole votingand investment
power with respect to all shares shown as beneficially owned by
them, subject to applicable community property laws, and the
address for each person listed in the table is c/o Exeo
Entertainment, Inc., 4478 Wagon Trail Ave., Las Vegas, Nevada
89118.





The
percentage ownership information shown in the table below is
calculated based on 24,764,129 shares
of our common stock issued and outstanding as of February
29, 2017.





Title Of
Class

Name, Title and
Address of Beneficial Owner of Shares
Amount of Beneficial
Ownership
Percent of
ClassCommon

Jeffrey A.
Weiland
President/Director
8,628,093
34.84%Common

Robert S.
Amaral
Chief Executive
Officer/Director
8,628,093
34.84%All Directors and
Officers as a group (2 persons)
17,256,186
69.68%





We are
unaware of any contract or other arrangement the operation of which
may at a subsequent date result in a change in control of our
Company.





Except
for the Stock Options and Warrants set forth in Item 5 of this
report, we do not have any
issued and outstanding securities that are convertible into common
stock. Other than the shares covered by the registration statement
filed with the Commission on August 16, 2013 using Form S-1, as
amended, we have not registered any shares for sale by security
holders under the Securities Act. None of our stockholders are
entitled to registration rights.





DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION





Insofar
as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to our directors, officers or
persons controlling us, we have been advised that it is the
Securities and Exchange Commission’s opinion that such
indemnification is against public policy as expressed in such act
and is, therefore, unenforceable.





CHANGE IN CONTROL





We are
not aware of any arrangement that might result in a change in
control in the future.





ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





Leasehold Interest in Real Estate





On
October 25, 2012, the Company signed a lease for its current office
and warehouse. The Company executed a one year extension effective
October 1, 2014. The original lease contains an option for a three
year renewal; which shall expire on September 30, 2016. The Company
signed an additional one year lease at the same terms as the prior
lease. The typical monthly rent expense is $7,006, which includes
base rent of $5,496 and common area maintenance of $1,510. The
Company is not obligated to pay a security deposit to the
management company. A deposit to secure the current lease was made
by DXT in 2009.  DXT will receive the security deposit at
the end of the lease.





Note Payable for Vehicle Financing Obligations





On
September 27, 2012, the Company acquired a pre-owned company
vehicle on credit. The original cost basis was $49,824. On November
13, 2015, the Company traded the vehicle for a new leased vehicle
for $6,714 due at signing. The Company is obligated to pay a total
of $48,944 for 36 months with a monthly payment of
$1,196.56.





On
November 13, 2015, the Company acquired a pre-owned company vehicle
on credit. The original cost basis was $56,963. The Company paid
$5,000 as a down payment. The amount financed by the seller is
$48,259, and the Company makes monthly payments of $866. The
Company is obligated to pay a total of $51,963 over the course of
the loan. This note bears interest at the annual percentage rate of
2.9%, and the term is 60 months. The total finance charge
associated with this note is $3,704.





16





Director Independence





We are
not at this time required to have our board comprised of a majority
of “independent directors.” Our determination of
independence of directors is made using the definition of
“independent director” contained in Rule 4200(a)(15) of
the Marketplace Rules of the NASDAQ Stock Market
(“NASDAQ”) , even though such definitions do not
currently apply to us because we are not listed on NASDAQ. We have
determined that none of our directors currently meet the definition
of “independent” due to the fact that our directors
also serve as our executive officers.





ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES





The
following table sets forth fees billed to us by our independent
auditors for the years ended 2015 and 2014 for (i) services
rendered for the audit of our annual financial statements and the
review of our quarterly financial statements, (ii) services
rendered that are reasonably related to the performance of the
audit or review of our financial statements that are not reported
as Audit Fees, and (iii) services rendered in connection with tax
preparation, compliance, advice and assistance.





SERVICES
2016
2015Audit
fees
$23,046
$18,750Audit-related
fees
-
-Tax
fees
-
-All other
fees
-
-Total
fees
$23,046
$18,750





Audit
fees and audit related fees represent amounts billed for
professional services rendered for the audit of our annual
financial statements and the review of our interim financial
statements. Before our independent accountants were engaged by to
render these services, their engagement was approved by our
directors.

















































17





ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES





Item 15(a) Financial Statements





Index
to Financial Statements:


Exeo
Entertainment, Inc.'s audited Financial Statements, as described
below, are attached hereto.





EXEO
ENTERTAINMENT, INC.





TABLE
OF CONTENTS





NOVEMBER
30, 2016 AND 2015














PAGEReport
of Independent Registered Public Accounting Firm
F-1Report of
Independent Registered Public Accounting Firm
F-2Balance
Sheets
F-3Statements of
Operations
F-4Statement of
Stockholders’ (Deficit)
F-5Statements of Cash
Flows
F-6Notes
to Financial Statements
F-7




































































18














REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM








To the Board of Directors and Stockholders of


Exeo Entertainment, Inc.








We have
audited the accompanying balance sheets of Exeo Entertainment, Inc.
as of November 30, 2016 and the related statements of income,
stockholders’ equity (deficit), and cash flows for year ended
November 30, 2016. Exeo Entertainment, Inc.’s management is
responsible for these financial statements. Our responsibility is
to express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. The company is not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our 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, assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Exeo
Entertainment, Inc. as of November 30, 2016 and the related
statements of income, stockholders’ equity (deficit), and
cash flows for the year ended November 30, 2016 in conformity with
accounting principles generally accepted in the United States of
America.





The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
A to the financial statements, the Company has minimal revenues,
has negative working capital at November 30, 2016, has incurred
recurring losses and recurring negative cash flow from operating
activities, and has an accumulated deficit which raises substantial
doubt about its ability to continue as a going concern.
Management’s plans concerning these matters are also
described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.








/s/ AMC Auditing





AMC
Auditing


Las
Vegas, Nevada


March
15, 2017











F-1














PCAOB Registered Auditors – www.sealebeers.com








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM








To the Board of Directors and Stockholders of


Exeo Entertainment, Inc.








We have
audited the accompanying balance sheets of Exeo Entertainment, Inc.
as of November 30, 2014 and 2015, and the related statements of
income, stockholders’ equity (deficit), and cash flows for
each of the years in the two-year period ended November 30, 2015.
Exeo Entertainment, Inc.’s management is responsible for
these financial statements. Our responsibility is to express an
opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. The company is not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our 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, assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Exeo
Entertainment, Inc. as of November 30, 2014 and 2015, and the
related statements of income, stockholders’ equity (deficit),
and cash flows for each of the years in the two-year period ended
November 30, 2015, in conformity with accounting principles
generally accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
A to the financial statements, the Company has minimal revenues, ,
has incurred recurring losses and recurring negative cash flow from
operating activities, and has an accumulated deficit which raises
substantial doubt about its ability to continue as a going concern.
Management’s plans concerning these matters are also
described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.





/s/ Seale and Beers, CPAs





Seale
and Beers, CPAs


Las
Vegas, Nevada


March
1, 2016


























F-2


EXEO
ENTERTAINMENT, INC.


BALANCE
SHEETS


(audited)





November
30,
2016
November
30,
2015ASSETSCurrent
assetsCash and
equivalents
$131,001
$427,663Inventory
227,085
231,610Prepaid
expenses
51,869
1,840Accounts
Receivable
-
-Total
current assets
409,955
661,113Property
and equipment, net
64,943
92,953TOTAL
ASSETS
$474,898
$754,066LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’
EQUITY (DEFICIT)LiabilitiesCurrent
liabilitiesAccounts payable
and accrued expenses
$33,044
$20,328Accrued interest
payable – related party
14,139
9,553Payroll
liabilities
113,752
88,901Due to related
parties
75,000
75,000Royalty
payable
523,032
273,712Notes
payable
9,314
10,099Total
current liabilities
768,281
477,593Long-term
liabilitiesNotes
payable
29,840
41,864Total
long-term liabilities
29,840
41,864Total
liabilities
798,121
519,457Series A redeemable
convertible preferred stock; $0.0001 par value,
1,000,000 shares authorized; 19,500 shares issued and outstanding;
0 shares unissued as of November 30, 2016 (liquidation preference
of $65,683). Stated at redemption value
134,113
119,487Series B redeemable
convertible preferred stock; $0.0001 par value,
1,000,000 shares authorized; 246,690 and 201,640 shares issued and
outstanding; 0 and 5,000 shares unissued as of November 30, 2016
and 2015 (liquidation preference of $506,325). Stated at redemption
value.
1,431,415
1,087,906Stockholders’
equity (deficit)Convertible
Preferred Stock Series A - 15%, $0.0001 par value,
1,000,000 shares authorized, 19,500 and 19,500 shares issued,
respectively
-
-Convertible
Preferred Stock Series B - 15%, $0.0001 par value,
1,000,000 shares authorized, 246,690 and 61,500 shares issued,
respectively
-
-Common stock -
$0.0001 par value, 100,000,000 shares authorized;
24,764,129 and 24,255,231 shares issued and outstanding,
respectively.
2,476
2,425Additional paid-in
capital
3,711,256
3,135,349Stock
payable
112,500
100,000Deficit
accumulated
(5,714,983)
(4,210,558)Total
stockholders’ equity (deficit)
(1,888,751)
(972,784)LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’
EQUITY (DEFICIT)
$474,898
$754,066





The
accompanying notes are an integral part of these financial
statements.





F-3


EXEO
ENTERTAINMENT, INC.


STATEMENTS
OF OPERATIONS


(audited)





One
year ending November 30, 2016
One
year ending November 30, 2015REVENUES
$28,767
$27,247COST
OF GOOD SOLDCost of direct
materials, shipping and labor
(19,994)
(11,055)GROSS
PROFIT
8,773
16,192OPERATING
EXPENSESGeneral and
administrative
787,077
793,528Executive
compensation
362,630
343,109Professional
fees
176,946
173,950Depreciation
31,940
29,709TOTAL
OPERATING EXPENSES
1,358,593
1,340,296INCOME
(LOSS) FROM OPERATIONS
(1,349,820)
(1,324,104)OTHER
INCOME (EXPENSE)Gain (Loss) from
foreign currency transactions
8,940
22,031Other
loss
312
(9,694)Interest expense -
related party
(4,586)
(4,699)Interest
expense
(1,389)
(968)TOTAL
OTHER INCOME (EXPENSES)
3,277
6,670NET
INOME (LOSS)
(1,346,543)
(1,317,434)DIVIDEND
OF REDEEMABLE PREFERRED STOCK
(157,882)
(68,612)NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
$(1,504,425)
$(1,386,046)NET
LOSS PER SHARE: BASIC
$(0.06)
$(0.05)WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC24,365,101
24,147,019





The
accompanying notes are an integral part of these financial
statements.








F-4


EXEO
ENTERTAINMENT, INC.


STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)


(audited)





Additional


TotalCommon
Shares
Paid-In
Subscriptions
Deficit
Stockholders'Shares
Amount
Capital
Payable
Accumulated
Equity
(Deficit)Balance, November
30, 2014
24,140,600
$2,414
$2,839,003
$-
$(2,824,512)
$16,905Contributed
capital


8,052


8,052Cash received for
sale ofcommon
stock



100,000

100,000Stock options
granted to officers


200,004


200,004Shares issued for
services at $0.80
114,631
11
91,693


91,705Per
shareEquity issuance
costs


(3,404)


(3,404)Net loss for the
year endedNovember 30,
2015




(1,386,046)
(1,386,046)Balance, November
30, 2015
24,255,231
$2,425
$3,135,349
$100,000
$(4,210,558)
$(972,784)Cash received for
sale ofCommon
stock



75,000

75,000Shares issued for
cash at $0.80per
share
508,898
51
377,349
(62,500)

314,900Stock options
granted to officers


200,004


200,004Equity issuance
costs


(1,446)


(1,446)Net loss for the
year endedNovember 30,
2016




(1,504,425)
(1,504,425)Balance, November
30, 2016
24,764,129
$2,476
$3,711,256
$112,500
$(5,174,983)
$(1,888,751)





The
accompanying notes are an integral part of these financial
statements.








F-5


EXEO
ENTERTAINMENT, INC.


STATEMENTS
OF CASH FLOWS


(audited)





One
year ending November 30, 2016
One
year ending November 30, 2015CASH
FLOWS FROM OPERATING ACTIVITIESNet loss for the
period
$(1,346,543)
$(1,317,434)Adjustments
to reconcile net loss to net cash used in operating
activitiesDepreciation
31,940
29,709Stock-based
compensation to officers
200,004
200,004Shares issued for
services
-
91,705Changes
in assets and liabilitiesDecrease (Increase)
in pre-paid expenses
(50,029)
(1,840)Increase in
accounts receivable
-
110Decrease (Increase)
in inventory
4,586
(216,653)(Decrease) Increase
in accounts payable and accrued expenses
12,716
(18,185)Decrease in accrued
interest - related party
4,525
4,699Increase in payroll
liabilities
24,851
22,710Increase in royalty
payable
249,320
239,563Net
Cash Used in Operating Activities
(868,630)
(965,612)CASH
FLOWS FROM INVESTING ACTIVITIESAcquisition of
property and equipment
(3,930)
(40,701)Cash
Flows Used in Investing Activities
(3,930)
(40,701)CASH
FLOWS FROM FINANCING ACTIVITIESProceeds from
issuance of common stock, net of issuance costs
388,456
104,649Proceeds from
issuance of preferred stock, net of issuance costs
200,250
979,687Proceeds from
related party debt
-
-Payments to related
party debt
-
(10,000)Payments on notes
payable - auto loan (principal)
(12,809)
32,957Cash
Flows Provided by Financing Activities
575,897
1,107,293Net
increase in cash and cash equivalents
(296,663)
100,980Cash
and cash equivalents, beginning of the period
427,663
326,684Cash
and cash equivalents, end of the period
$131,001
$427,664SUPPLEMENTAL
CASH FLOW INFORMATION:Cash paid for
interest
$1,389
$3,606Dividend of
redeemable preferred stock
$157,882
$68,612





The
accompanying notes are an integral part of these financial
statements.





F-6







EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note A: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





This
summary of significant accounting policies of Exeo Entertainment,
Inc. (the “Company”) is presented to assist in
understanding the Company’s financial statements. The
financial statements and notes are representations of the
Company’s management, who is responsible for their integrity
and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied
to the preparation of the financial statements. The Company will
adopt accounting policies and procedures based upon the nature of
future transactions.





Nature of Business


The
Company was incorporated in Nevada on May 12, 2011. The Company is
based in Las Vegas, Nevada, and designs, develops, licenses,
manufactures, and distributes its products. The Company plans to
market the ZaazTM
Keyboard, to be used with Samsung’s Smart TV® as
well as other smart devices, the Extreme GamerTM, and other new
peripheral products for the video gaming industry, including the
Psyko KryptonTM
surround sound gaming headphones.





Basis of Presentation


The
financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America and are presented in US
dollars.





Accounting Basis


The
Company uses the accrual basis of accounting and accounting
principles generally accepted in the United States of America
(“GAAP” accounting).  The Company has adopted
a November 30 fiscal year end.





Foreign Currency Transactions


Transaction gains and losses, such as those resulting from the
settlement of nonfunctional currency receivables or payables,
including intercompany balances, are included in foreign currency
gain (loss) in our consolidated statements of earnings.
 Additionally, payable and receivable balances denominated in
nonfunctional currencies are marked-to-market at month-end, and the
gain or loss is recognized in our statements of
operations.





Cash and Cash Equivalents


The
Company considers cash on hand, cash in banks, certificates of
deposit, time deposits, and U.S. government and other short-term
securities with maturities of three months or less when purchased
as cash and cash equivalents.





Fair Value of Financial Instruments


The
Company’s financial instruments consist of cash and cash
equivalents, accounts payable, notes payable, and accrued expenses.
The carrying amount of these financial instruments approximates
fair value due either to length of maturity or interest rates that
approximate prevailing market rates unless otherwise disclosed in
these financial statements.





Inventory


Inventories are
stated at cost, not to exceed fair market value. The cost of the
Company’s inventory ($227,085 and $231,610 at November 30,
2016 and November 30, 2015, respectively) has been determined using
the first-in first-out (FIFO) method. The reduction in current
costs as compared to LIFO costs of inventory equals zero at
November 30, 2016 and November 30, 2015, respectively.





F-7





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note A: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Property and Equipment


Property and
equipment are stated at the lower of cost or fair value.
Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets, as follows:





Description
Estimated
LifeFurniture &
Equipment
5
yearsVehicles
5
years





The
estimated useful lives are based on the nature of the assets as
well as current operating strategy and legal considerations such as
contractual life. Future events, such as property expansions,
property developments, new competition, or new regulations, could
result in a change in the manner in which the Company uses certain
assets requiring a change in the estimated useful lives of such
assets.





Maintenance and
repairs that neither materially add to the value of the asset nor
appreciably prolong its life are charged to expense as incurred.
Gains or losses on disposition of property and equipment are
included in the statements of operations. There were no
dispositions during the periods presented.





Impairment of Long-Lived Assets


The
Company evaluates its property and equipment and other long-lived
assets for impairment in accordance with related accounting
standards. No impairments were recorded at November 30, 2016 and
2015. For assets to be held and used (including projects under
development), fixed assets are reviewed for impairment whenever
indicators of impairment exist. If an indicator of impairment
exists, the Company first groups its assets with other assets and
liabilities at the lowest level for which identifiable cash flows
are largely independent of the cash flows of other assets and
liabilities (the “asset group”). Secondly, the Company
estimates the undiscounted future cash flows that are directly
associated with and expected to arise from the completion, use and
eventual disposition of such asset group. The Company estimates the
undiscounted cash flows over the remaining useful life of the
primary asset within the asset group. If the undiscounted cash
flows exceed the carrying value, no impairment is indicated. If the
undiscounted cash flows do not exceed the carrying value, then an
impairment is measured based on fair value compared to carrying
value, with fair value typically based on a discounted cash flow
model.





Management Estimates


The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.




















F-8





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note A: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Revenue Recognition


The
Company recognizes revenue when products are fully delivered or
services have been provided and collection is reasonably assured.
For the years ended November 30, 2016 and 2015, the Company
recognized $28,767 and $27,247 in revenue,
respectively.





Basic Income (Loss) Per Share


Basic
income (loss) per share is calculated by dividing the
Company’s net loss applicable to common shareholders by the
weighted average number of common shares during the period. Diluted
earnings per share is calculated by dividing the Company’s
net income available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted
number of shares adjusted for any potentially dilutive debt or
equity.





Stock-Based Compensation


Pursuant to ASC
Topic 718, the Company recorded the fair value of the stock options
on a monthly basis over the vesting period as stock-based
compensation expense. The fair value of the options is calculated
using the Black-Scholes method as of the date of grant. In fiscal
year 2012, the Company adopted an incentive stock option plan for
its employees. In fiscal year 2012 the Company granted stock
options to three officers of the Company. These are described in
Note G - Stock Options and Warrants.





Concentrations of Risk


The
Company’s bank accounts are deposited in insured
institutions. The maximum insured by the FDIC per bank account is
not an issue here since the Company’s bank accounts do not
bear any interest and the FDIC limits far exceed balances on
deposit. The Company’s funds were held in a single account.
At November 30, 2016 and 2015, the Company’s bank balance did
not exceed the insured amounts.





Accounting for Research and Development Costs


The
Company records an expense in the current period for all research
and development costs, which include Hardware Development Costs.
The Company does not capitalize such amounts. Pursuant to ASC Topic
730 Research and Development, once we determine that our Extreme
Gamer video game console is technologically feasible and a working
model is put into use, the Company will capitalize Software
Development costs associated with its products. Once this occurs we
will determine a useful life of our software and apply a reasonable
economic life of five years or less. At this time, our software
development costs only relate to the Extreme Gamer and Zaaz
keyboard hardware. The software development costs cannot be
separated from the associated hardware development. We do not
develop stand-alone software for sale to the retail consumers,
rather we develop software in order to operate the designed
hardware. The software is designed to be encoded within chips
inside the hardware. Thus, it has been determined that the current
software development costs, which are intertwined within the
hardware development, are to be expensed rather than capitalized
pursuant to ASC Topic 730.





This
conclusion is also based upon our decision to devote further
research and development costs in the support of our product
interface to the video game players: Sony PS3® (and other
products such as Nintendo Wii® and Microsoft Xbox
360®).











F-9





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note A: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Liquidity and Going Concern





The
Company has incurred an accumulated deficit of ($5,714,983) since
inception. The Company incurred significant initial research and
product development costs, including expenditures associated with
hardware engineering and the design and development of its hardware
components and prototypes associated with the ZaazTM keyboard,
the Extreme Gamer, and the Psyko KryptonTM surround sound
gaming headphones. The Company also incurred costs associated with
its acquisition of property, plant and equipment for its 10,000
square foot office and warehouse.





These
factors create substantial doubt about the Company’s ability
to continue as a going concern. The financial statements do not
include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible
inability of the Company to continue as a going
concern.





The
ability of the Company to continue as a going concern is dependent
on the Company generating cash from the sale of its common stock or
obtaining debt financing and attaining future profitable
operations.





Management’s
plan includes selling its equity securities and obtaining debt
financing to fund its capital requirement and ongoing operations;
however, there can be no assurance the Company will be successful
in these efforts.





Recent Accounting Pronouncements





The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash
flow.





Note
B: PROPERTY AND
EQUIPMENT





The
Company owned property and equipment, recorded at cost, which
consisted of the following at November 30, 2016 and November 30,
2015:





November
30, 2016
November
30, 2015Furniture and
fixtures
$21,499
$21,499Office &
computer equipment
37,982
34,051Vehicles
96,943
96,943Subtotal
156,424
152,494Less: Accumulated
depreciation
(91,481)
(59,541)Property
and equipment, net
$64,943
$92,953





Depreciation
expense was $31,940 and $29,709 for the years ended November 30,
2016 and 2015.





Note
C: HARDWARE DEVELOPMENT
COSTS





The
Company incurred $23,080 and $7,850 for research and development
costs for the years ended November 30, 2016 and 2015, respectively.
These costs relate to hardware engineering, design and development
of the KrankzTM and Krankz MaxxTM Bluetooth Wireless
Headset and the Psyko Krypton® surround sound gaming
headphones for personal computers.





Note
D: PREPAID
EXPENSES





At
November 30, 2016 and 2015, the balance of prepaid expenses on the
balance sheet of the Company is $51,869 and $1,840, respectively,
which primarily relates to a deposit on inventory not delivered and
a prepayment of an annual fee for investor relations.








F-10





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note
E: PATENT AND
TRADEMARKS





In June
2013, the Company executed a license agreement with Psyko Audio
Labs Canada to manufacture and distribute the Carbon and Krypton
line of patented headphones. US Patent # 8,000,486 (for the Psyko
KryptonTM surround sound gaming headphones). On April 2, 2015,
Krank Amplifiers, LLC submitted to the U.S. Patent and Trademark
Office a request for a design mark as to “Krank
Amplifiers”) for registry on the Principal Register (serial
number 86585697). This design mark includes the name Krank
Amplifiers. The requested goods and services category is for IC
009, which is the same category in which our Company would request
as to our common law trademark “KrankzTM.” This
amplifier company submitted its mark on the basis of 1B – not
yet in commerce, while our Company has used the name KrankzTM
in commerce for several years, well before Krank Amplifiers. As of
the date of this report, no office action has been taken by the
U.S. PTO. We may no longer be able to use the common law trademark
“KrankzTM” if Krank Amplifiers is granted its
trademark and we do not file an opposition to such mark or we do
not prevail in the defense of our mark in the U.S. Trademark and
Trial Appeal Board (TTAB).





Note F: COMMON
STOCK





The
Company has 100,000,000 shares at $0.0001 par value common stock
authorized and 24,764,129 and
24,255,231 shares issued and outstanding at November 30, 2016 and
November 30, 2015, respectively. During the month of March, 2015,
one accredited investor, previously known by the officers of the
Company, as well as having been a prior investor in the common
stock of the Company, subscribed to 322,188 shares of common stock
of the Company upon the exercise of his common stock warrants. The
Company accepted this subscription at a discounted price of
$0.31037 per share. Prior private party sales of the
Company’s common stock occurred in August, 2014 and such
sales by the Issuer were at $0.80 per share. The discount in sales
price represented by this transaction cannot be reasonably
ascertained due to the lack of recent sales of issuer securities.
Reasons for such discount may include various factors such as the
dollar amount of the single transaction, limitations upon the
immediate marketability of the common stock of the company,
restrictive legends applied to this stock certificate, and price
volatility, if applicable, as reflected in the open market. At the
time of this subscription, the Common shares of the Company were
quoted at $1.00 per share and were not actively trading on the OTC
BB and OTC Markets- QB. For the reasons stated above, the price
quotation in the open market should not be relied upon for purpose
of the determination of the discount rate applied to this sales
transaction. As of the date of this filing, the shares have not
been issued and are recorded to stock payable. The shares were
issued in January 2017.





During
the year ended November 30, 2015, the Company issued 114,631 shares
of common stock for services totaling $91,705. The shares were
valued based on the stock price on the market at the time which was
$0.80 per share.






































F-11





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note F: COMMON STOCK
(CONTINUED)





During the year
ended November 30, 2016, t the Company received subscriptions for
525,237 shares of common stock for cash totaling $389,900. As of
November 31, 2016, 16,339 shares have not been issued to an
investor. The price per share is equal to eighty-five percent of
the average daily “Ask Price” as quoted on the OTC
Electronic Bulletin Board Quotation System for the ten trading days
immediately preceding the Closing. In addition, for each share of
common stock purchased, each investor shall receive two warrants.
Warrant A shall provide the investor the right to purchase one
additional share of the Company’s common stock equal to one
hundred percent of the average daily “Ask Price” as
quoted on the OTC Electronic Bulletin Board Quotation System for
the ten trading days immediately preceding the Closing. Warrant B
shall provide the investor the right to purchase one additional
share of the Company’s common stock equal to one hundred
twenty-five percent of the average daily “Ask Price” as
quoted on the OTC Electronic Bulletin Board Quotation System for
the ten trading days immediately preceding the
Closing.





Note
G: STOCK OPTIONS AND
WARRANTS





Stock-Based Compensation to Employees





Pursuant to the
employee incentive stock option plan, on July 15, 2012, the Company
granted 2,000,000 shares to each of its two officers and directors.
The option agreement provides the employee has no more than five
years from the date of the grant to exercise the options at an
exercise price of $0.25 per share. The employee may only exercise
such options based upon the contracted vesting schedule, which
provides that the options vest on a pro-rata basis over 60 months
of future services to be rendered by such employee. In addition, on
August 15, 2012, the Company granted 100,000 incentive stock
options to another officer of the Company. This employee received
the right to exercise the options on the date of grant at an
exercise price of $0.25 per share. As the officer was fully vested
in his right to such exercise at the time of the grant, the Company
recorded the entire fair value of his stock options at the date of
grant.





The
fair value of the options is calculated using the Black-Scholes
method as of the date of grant. The factors used to calculate fair
value of the stock options include the following: 1) Risk free
interest rate, 2) Volatility of returns of the underlying asset, 3)
current stock price, 4) Term of the Option, and 5) The exercise
price. The risk free interest rate used in this calculation equals
0.63% and 0.80% for the stock options granted on July 15, 2012 and
August 15, 2012, respectively. The term of the option is 5 years
from the date of the grant. The exercise price is $0.25 per share.
The current stock price at the dates of grant, which is July 15,
2012 and August 15, 2012, is $0.25 based on the sale of common
shares to investors for the eleven months prior to the date of
grant. Several industry comparables to this Company were used in
order to determine an approximation of the volatility. The
approximate volatility based on these comparables is approximately
458%.






































F-12





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2016


(Audited)





Note
G: STOCK OPTIONS AND
WARRANTS (CONTINUED)





The
following is a summary of the status of all of the Company’s
stock options issued to the Company’s management as of
November 30, 2016 and 2015 and the changes from December 1, 2014 to
November 30, 2016.





# of
Options

Weighted Average
Exercise Price

Weighted Average
Remaining LifeOutstanding
November 30, 2014

4,000,000

$0.25

-Granted

-

$
-

-Exercised

-

$
-

-Cancelled

-

$
-

-Outstanding at
November 30, 2015

4,000,000

$0.25

-Granted

-

$
-

-Exercised

-

$
-

-Cancelled

-

$
-

-Outstanding at
November 30, 2016

4,000,000

$0.25

8.50
monthsExercisable at
November 30, 2016

3,500,000

$0.25

8.50
monthsOutstanding at
November 30, 2015

4,000,000

$0.25

20.50
monthsExercisable at
November 30, 2015

2,700,000

$0.25

20.50
months





Stock Warrants Issued to Investors





Prior
to March 3, 2014, the Company issued 48,750 common stock warrants
to Series A Preferred Stock purchasers in February and March 2014.
All of the warrants expired in February and March
2017.





The
following is a summary of the status of all of the Company’s
stock warrants as of November 30, 2016 and 2015, and the changes
from December 1, 2014 to November 30, 2016.





# of
Warrants

Weighted Average
Exercise Price

Weighted Average
Remaining LifeOutstanding at
November 30, 2014

1,841,250

$1.00

-Granted

-

$1.00

-Exercised

-

$
..80

-Cancelled

(1,792,500)

$
-

-Outstanding at
November 30, 2015

48,750

$2.00

15
monthsGranted

1,050,474

$1.09

36
monthsExercised

-

$
-

-Cancelled

-

$
-

-Outstanding at
November 30, 2016

1,099,224

$1.03

24.8
monthsExercisable at
November 30, 2016

1,099,224

$1.03

24.8
monthsOutstanding at
November 30, 2015

48,750

$2.00

3
monthExercisable at
November 30, 2015

48,750

$2.00

3
month








F-13





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2015


(Audited)





Note H: PREFERRED
STOCK





Issuances of Series A Convertible Preferred Stock





Since
March 3, 2014, the Company has not offered or sold any Series A
Convertible Preferred Stock and has no intent to do so during
fiscal year ended November 30, 2016.





Issuances of Series B Convertible Preferred Stock





On January 14, 2014, the Board of Directors of
Exeo Entertainment, Inc. (the “Company” adopted
a resolution pursuant to the Company’s Certificate of
Incorporation, as amended, providing for the designations,
preferences and relative, participating, optional and other rights,
and the qualifications, limitations and restrictions, of the Series
B Convertible  Preferred Stock.





On January 18, 2014, the Company filed a
Certificate of Designations for a Series B Convertible Preferred
Stock. The authorized number of Series B Convertible Preferred
Stock is 1,000,000 shares, par value 0.0001. The holders of
shares of Series B Convertible Preferred Stock shall vote as a
separate class on all matters adversely affecting the Series B
Stock.  The authorization or issuance of additional
Common Stock, Series B Convertible Preferred Stock or other
securities having liquidation, dividend, voting or other rights
junior to or on a parity with, the Series B Convertible Preferred
Stock shall not be deemed to adversely affect the Series B
Convertible Preferred Stock. In each case the holders shall be
entitled to one vote per share.  During the conversion period, each Series B
Preferred share may be converted to common stock at a fixed
conversion price of $1.25 per share or the Variable Conversion
Price set forth in the Company’s Certificate of Designation.
Series B stock bears interest at 12% per annum, paid annually, with
principal paid at maturity twenty-four (24) months after the date
of issuance of the stock. See table below in this note. Principal
repayment may not apply if the stockholder exercises the right to
convert all preferred stock to common stock during the conversion
period.





During
the year ended November 30, 2015, forty-five accredited investors subscribed to 206,640 shares,
in total, of Series B Preferred Stock in exchange for cash
consideration of $1,033,200, in total, at $5.00 for each share. As
of November 30, 2016, the shares have been issued and have been
presented outside of permanent equity in accordance with ASC
48-10, Classification and
Measurement of Redeemable Securities. The Company relies upon an exemption from
registration under the Securities Act of 1933 pursuant to
Regulation D, Section 506. The Company agreed to pay interest on
such funds at 12% per annum. Each person executed a stock
subscription agreement and delivered funds in exchange for the
delivery of Series B Convertible Preferred Shares at a price of
$5.00 per share. Stock warrants were not sold or included in the
offering to such investors.





During
the year ended November 30, 2016, twelve accredited investors subscribed to 45,050 shares,
in total, of Series B Preferred Stock in exchange for cash
consideration of $225,250, in total, at $5.00 for each share. As of
November 30, 2016, the shares have been issued and have been
presented outside of permanent equity in accordance with ASC
48-10, Classification and
Measurement of Redeemable Securities. The Company relies upon an exemption from
registration under the Securities Act of 1933 pursuant to
Regulation D, Section 506. The Company agreed to pay interest on
such funds at 12% per annum. Each person executed a stock
subscription agreement and delivered funds in exchange for the
delivery of Series B Convertible Preferred Shares at a price of
$5.00 per share. Stock warrants were not sold or included in the
offering to such investors.

















F-14





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2015


(Audited)





Note H: PREFERRED STOCK
(CONTINUED)





All
shares of redeemable convertible preferred stock have been
presented outside of permanent equity in accordance with ASC 48-10,
Classification and Measurement of
Redeemable Securities. The Company accretes the carrying
value of its Series A and B redeemable convertible preferred stock
to its estimate of fair value (i.e. redemption value) at period
end.





The
estimated fair value of the Series A and Series B redeemable
convertible preferred stock at November 30, 2016 was $134,112 and
$1,431,414, respectively.





The
estimated fair value of the Series A and Series B redeemable
convertible preferred stock at November 30, 2015 was $119,487 and
$1,087,906, respectively.





We
incurred equity issuance costs of $1,446 and $3,403 for the years
ended November 30, 2016 and 2015, respectively.  Rather
than expense these costs, such items are charged against the
Company’s equity. Our employees coordinate various matters
associated with the sales of issuer securities to accredited
investors.  Equity issuance costs include such wages.
These costs also include mailing, copying, courier, and other
miscellaneous costs associated with the duplication and delivery of
our offering circular to investors and paying for the return
delivery of signed stock subscription agreements.





Note I: RELATED PARTY
TRANSACTIONS





Notes Payable to Officer





An
officer received promissory notes from the Company in exchange for
loans from the officer for $85,000. The terms of the notes provide
that the Company shall repay the principal of each note in full
within nine months of the date of each note. In addition, the
Company is obligated to pay interest at a flat rate of 6.00% upon
maturity of each note. At the sole discretion of the officer, the
notes may be extended for an additional nine month term. The
Officer agreed to extend the notes for an additional nine month
period. The maturity dates after the extensions are reflected
below. In November 2015, the Company made a $10,000 payment to an
officer towards the entire principal of one note dated December,
2013. The Company made no payment towards $14,139 accrued
interest.





Date of Each Note
Amount of Each Note
Accrued Interest through the Maturity Date
Maturity Date of Each NoteDecember 30, 2013
$ 25,000
$4,666
September 29, 2016January 24, 2014
$ 50,000
$9,473
October 23, 2016





























F-15





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2015


(Audited)





Note I: RELATED PARTY
TRANSACTIONS (CONTINUED)





Compensation of Officers





The
Company entered into officer compensation agreements with two
officer/directors whereby each receives $60,000 per annum as cash
compensation. The Company pays each officer $5,000 per month.
During June 2015, the Company increased the total monthly
compensation to a total of $12,500 per month for both
officers.





The
amount paid to the two officers in total was $150,200 and $143,105
during the years ended November 30, 2016 and 2015, respectfully. In
addition, each officer/director received additional compensation in
the form of non-cash incentive stock options granted on July 15,
2012. Each person received 2,000,000 stock options. For further
discussion of the terms of the grant of stock options, see Note
G.





Note
J: COMMITMENTS AND
CONTINGENCIES





Royalty Payable Obligation





At
January 1, 2015, the Company is obligated to pay minimum monthly
royalties of approximately $80,000 (CDN $100,000) per quarter for
the remaining term of the Psyko Audio Labs
contract.   The company carries the risk of currency
exchange rate fluctuations as our royalty obligation under the
license agreement is stated in Canadian dollars.  For the
years ended November 30, 2016 and 2015, the Company has made a
total of $50,000 and $50,000 towards this obligation and no royalty
invoices have been received from Psyko Audio Labs. Royalty payable
was $523,032 and $273,712 as of November 30, 2016 and 2015. For the
years ended November 30, 2016 and 2015, royalty expense and the
related gain on foreign currency transactions were $327,095 and
$311,594, respectively.





Operating Lease Obligation





On
October 25, 2012, the Company signed a lease for its current office
and warehouse. The Company executed a one year extension effective
October 1, 2014. The original lease contains an option for a three
year renewal; which shall expire on September 30, 2016. The Company
signed an additional one year lease at the same terms as the prior
lease. The typical monthly rent expense is $7,006, which includes
base rent of $5,496 and common area maintenance of $1,510. The
Company is not obligated to pay a security deposit to the
management company.





As of
November 30, 2016 and 2015, the monthly minimum rental payment is
$7,006. Rent expense was $84,072 and
$84,072 for the years ended November 30, 2016 and 2015,
respectively.





Note Payable for Vehicle Financing Obligations





On
September 27, 2012, the Company acquired a pre-owned company
vehicle on credit. The original cost basis was $49,824. On November
13, 2015, the Company traded the vehicle for a new leased vehicle
for $6,714 due at signing. The Company is obligated to pay a total
of $48,944 for 36 months with a monthly payment of
$1,196.





On
November 13, 2015, the Company acquired a pre-owned company vehicle
on credit. The original cost basis was $56,963. The Company paid
$5,000 as a down payment. The amount financed by the seller is
$48,259, and the Company makes monthly payments of $866. The
Company is obligated to pay a total of $51,963 over the course of
the loan. This note bears interest at the annual percentage rate of
2.9%, and the term is 60 months. The total finance charge
associated with this note is $3,704.





F-16





EXEO
ENTERTAINMENT, INC.


Notes
to Financial Statements


November
30, 2015


(Audited)





Note
K: SUBSEQUENT
EVENTS





In
December 2016, the Company agreed to issue 50,000 shares of common
stock for services.





In
December 2016 and January 2017, the Company sold 32,000 shares of
common stock in exchange for cash of $16,000.





In
January 2017, the Company issued 322,188 shares to an investor and
reduced the stock payable by $100,000.





In
January and February 2017, the Company sold units consisting of
96,638 shares of common stock, 96,638 warrant A and 96,638 of
warrant B for total cash of $75,000.

























































































F-17





Item 15(B) Exhibits





INDEX
TO EXHIBITS





Exhibit

Description3.1

Articles of
Incorporation (1)3.2

Amendment to
Articles of Incorporation (1)3.3

Bylaws
(1)3.4

Certificate of
Designation (for Series A Preferred Stock) (1)3.5

Certificate of
Designation for Series B Convertible Preferred Stock
(2)10.1

Employment
Agreement (Jeffrey Weiland, President) (1)10.2

Employment
Agreement (Robert S. Amaral, CEO) (1)10.3

Consulting
Agreement (Hildebrandt Consulting) (1)10.4

Exclusive License
Agreement (Psyko Audio Labs) (1)10.5

Exclusive License
Agreement (Digital Extreme Technologies, Inc.) (1)10.6

Project
Management Agreement (Elite Product Management) (1)10.7

2012
Employees/Consultants Stock Compensation Plan Agreement
(1)31.1

Certification of Chief Executive Officer
pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200231.2

Certification of Chief Financial Officer
pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1

Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200299.1

Press release issued on
September 12, 2014 (3)





(1)
Not
filed herewith, but this exhibit is incorporated by reference.
Previously filed as an exhibit to Exeo Entertainment, Inc.’s
Form S-1 filed with the Commission on August 16, 2013, as
amended.(2)
Not
filed herewith, but this exhibit is incorporated by reference.
Previously filed as an exhibit to Exeo
Entertainment, Inc.’s Form 10-K filed with the
Commission on March 13, 2014.(3)
Not
filed herewith, but this exhibit is incorporated by reference.
Previously filed as an exhibit 99.1 to Exeo Entertainment,
Inc.’s Form 10-Q filed with the Commission on October 6,
2014.





Item 15(c) Reports on Form 8-K





None.





Press Releases





None.























19







SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.





EXEO
ENTERTAINMENT, INC.(Registrant)Signature
Title
Date/s/ Jeffrey A. Weiland
President and
Director
March
14, 2017Jeffrey
A. Weiland/s/ Robert S. Amaral
Chief
Executive Officer,
March
14, 2017Robert
S. Amaral
Treasurer and
Director(Principal
Executive and Financial Officer

































































20