Quantitative Alpha Trading 6K Current report | AGBTF 6 Jul 10

RTN STEALTH SOFTWARE INC.

(Formely Arris Resources Inc.)

InterimConsolidated Financial Statements

Expressed in Canadian Dollars

Three months ended March 31, 2010

(Unaudited)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian

Securities Administrators, if an auditor has not performed a review of the interim financial

statements, they must be accompanied by a notice indicating that the financial statements have not

been reviewed by an auditor.

The accompanying unaudited interim consolidated financial statements of RTN Stealth Software Inc.

for the three months ended March 31, 2010, have been prepared in accordance with Canadian

generally accepted accounting principles and are the responsibility of the Company's management.

The Company's independent auditors has not performed a review of these financial statements in

accordance with the standards established by the Canadian Institute of Chartered Accountants for a

review of interim financial statements by an entity’s auditor

RTN STEALTHSOFTWARE INC.

(Formely Arris Resources Inc.)

ConsolidatedBalance Sheets

(Baisc ofPresentation- note 2)

(Unaudited - expressed in Canadian Dollars)

March 31

December 31

2010

2009

(Unaudited)

Assets

Current assets

Cash and cash equivalents

478,936

379,284

Marketable securities (note 6 & 9b)

–

1,448,800

Amounts receivable

12,375

242,744

Prepaid expenses

–

10,000

Short terminvestment (Note 5)

10,012

–

501,323

2,080,828

Equipment (note 4)

7,351

3,940

License (note 7)

150,000

–

Mineralproperties (note 6 & 9b)

–

67,185

Oiland gas property

658,675

2,151,954

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable and accrued liabilities

65,000

75,072

Subsequent events (note 10)

Shareholders' equity

Share capital(note 9a)

2,355,580

3,919,865

Contributed surplus (note 9c)

2,604,737

670,374

Accumulated comprehensive income

504,770

Deficit

(4,871,412)

(3,018,127)

658,675

2,151,954

Basic of presentation - note 2

See accompanying notes to the interimfinancial statements

Approved on behalf of the Board of Directors

"Nikolas Perrault"

"Lucky Janda"

Director

RTN STEALTHSOFTWARE INC.

(Formely Arris Resources Inc.)

InterimConsolidatedStatements of Operations

(Unaudited - expressed in Canadian Dollars except for number of shares)

Three months ended March 31

2010

2009

Expenses

Advertising and promotion

22,632 $

–

Amortization

3,748

782

Bank charges and interest

239

Foreign exchange (gain)

(13,232)

Management,consulting and administrative

33,600

20,000

Office

3,001

Professionalfees

42,208

–

Rent

12,500

20,000

Property research fees

9,544

Stock-based compensation (note 8b)

1,736,064

–

Travel

1,500

–

Trust and filing fees

9,805

3,081

Loss before the following:

(1,865,297)

(40,319)

Interest income

–

Gain on spin-off of former subsidiaries (note 6)

12,000

–

Net loss forthe period

(1,853,285) $

(40,319)

Loss pershare, basic and fully diluted

(0.02) $

(0.00)

Weighted average numberofcommon shares outstanding

99,416,860

62,716,860

ConsolidatedStatement of Comprehensive loss

(Unaudited -expressed in Canadian Dollars)

Three months ended March 31

2010

2009

Net loss forthe period

(1,853,285) $

(40,319)

Other comprehensive loss for the period

–

Total comprehensive loss forthe period

(1,853,285) $

(40,319)

ConsolidatedStatements of Deficit

(Unaudited - expressed in Canadian Dollars)

Three months ended March 31

2010

2009

Deficit, beginning ofthe period

(3,018,127) $

(2,418,656)

Net loss for the period

(1,853,285)

(40,319)

Deficit, end ofthe period

(4,871,412) $

(2,458,975)

See accompanying notes to the interimconsolidated financial statements

RTN STEALTHSOFTWARE INC.

(Formely Arris Resources Inc.)

InterimConsolidatedStatements of CashFlows

(Unaudited - expressed in Canadian Dollars)

Three months ended March 31

Cash provided by (used in)

2010

2009

Operating activities

Income(loss) for the period

$ (1,853,285) $

(40,319)

Items not involving cash

Accrued interest income

(12)

–

Amortization

3,748

783

Stock-based compensation (note 8b)

1,736,064

–

Gain on spin-off of former subsidiaries (note 6)

(12,000)

–

(125,485)

(39,536)

Net changes in non-cash working capital

Amounts receivable

(7,632)

(1,304)

Prepaid expenses

10,000

18,655

Due to (from) related parties

–

(52,500)

Accounts payable

1,928

14,348

(121,189)

(60,337)

Investing activities

Purchase of equipment

(7,159)

–

Acquistion of short-terminvestment

(10,000)

–

(17,159)

–

Financing activities

Share subscription receivable

238,000

–

238,000

–

Increase (Decrease) in cash and cash equivalents

99,652

(60,337)

Cash and cash equivalents, beginning ofyear

379,284

99,366

Cash and cash equivalents, end ofperiod

$ 478,936 $

39,029

Supplementary information:

Cash received frominterest

– $

–

See accompanying notes to the interimconsolidated financial statements

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

NATURE AND CONTINUANCE OF OPERATIONS

RTN Stealth Software Inc. (formerly known as Arris Resources Inc. hereinafter referred to as the

“Company” or “RTN Stealth”) is a public company incorporated in the Province of British Columbia,

Canada.

On December 21, 2009, the Company changed its name from Arris Resources Inc. to RTN Stealth Software

Inc. At the same time, the Company changed its trading symbol to RTN. The Company is listed on

Canadian National Stock Exchange. The Company holds an interest in an oil and gas project in Alberta,

Canada. In January 2010, the Company entered into the business of software sales and executed a definitive

agreement to acquire an exclusive and perpetual license to a security trading software: the Market

Navigation, Trade Execution, and Market Timing Software (note 7).

Under the Plan of Arrangement effective January 5, 2010, the Company transferred its interest in five

mineral claims in British Columbia, Canada, its agreement with a British Columbia manufacturing

company to distribute its earth quake sensor products in India and its marketable securities to its three

subsidiaries to complete the spin-off. The Company had a working capital of $436,323 and accumulated a

deficit of $4,871,412 as at March 31, 2010. As the Company had changed its business from resource

exploration into the software business, it is unsure whether the Company may successfully change its

business model and strategic direction. The ability of the Company to continue to operate as a going

concern is dependent on its ability to ultimately operate its business at a profit. To date, the Company has

not generated any revenues from operations and will most likely require additional funds to meet its

obligations and the costs of its operations. As a result, further losses are anticipated prior to the generation

of any profits.

The Company’s future capital requirements will depend on many factors, including the costs of operating

the software business. The Company’s anticipated operating losses and increasing working capital

requirements may require that it obtain additional capital to continue operations.

The Company will depend almost exclusively on outside capital. Such outside capital will include the sale

of additional shares. There can be no assurance that capital will be available as necessary to meet these

continuing operating costs or, if the capital is available, that it will be on terms acceptable to the Company.

The issuances of additional equity securities by the Company may result in significant dilution to the equity

interests of its current shareholders. Obtaining commercial loans, assuming those loans would be available,

will increase the Company’s liabilities and future cash commitments. If the Company is unable to obtain

financing in the amounts and on terms deemed acceptable, the business and future success may be

adversely affected, thus giving rise to doubt about the Company’s ability to continue as a going concern.

The financial statements do not reflect adjustments to the carrying values of assets, liabilities or reported

results should the Company be unable to continue as a going concern.

BASIS OF PRESENTATION

These unaudited interim consolidated financial statements have been prepared in accordance with Canadian

generally accepted accounting principles (“Canadian GAAP”). They do not include all the disclosures as

required for annual financial statements under generally accepted accounting principles. These unaudited

interim consolidated financial statements should be read in conjunction with the Company's annual

consolidated financial statements for the year ended December 31, 2009, which are available through the

internet on SEDAR at www.sedar.com.

These consolidated financial statements include the accounts of RTN Stealth Software Inc. and its wholly

owned inactive subsidiaries: Arris Minerals Inc. (“AMI”) and Arris Oil & Gas Inc. (“AOG”).

All significant inter-company transactions and transactions have been eliminated upon consolidation.

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

SIGNIFICANT ACCOUNTING POLICIES

These unaudited interim consolidated financial statements follow the same accounting policies and

methods of application as the Company's most recent audited annual financial statements for the financial

year ended December 31, 2009, except as described below.

New Accounting Standards Not Yet Adopted:

International Financial Reporting Standards ("IFRS")

The AcSB has announced its decision to replace Canadian generally accepted accounting principles

(“Canadian GAAP”) with IFRS for all Canadian publicly-listed companies. The AcSB announced that the

changeover date will commence for interim and annual financial statements relating to fiscal years

beginning on or after January 1, 2011. The transition date for the Company to changeover to IFRS will be

January 1, 2010. Therefore, the IFRS adoption will require the restatement for comparative purposes of

amounts reported by the Company for the year ending December 31, 2010. The Company has begun

assessing the adoption of IFRS for 2011 and is considering the accounting policy choices under IFRS.

EQUIPMENT

March 31, 2010

December 31, 2009

Cost

Accumulated

Net

Amortization

Office furniture

3,414

2,220

1,194

1,492

Computer equipment

17,108

11,151

5,957

2,347

Computer software

10,473

10,273

200

100

Leasehold improvements

2,522

33,517

26,166

7,351

3,939

SHORT TERM INVESTMENT

As at March 31, 2010, the Company’s short term investment consisted of an investment in a Guaranteed

Investment Certificate which was issued by a Canadian chartered bank that will mature on February 2011.

CORPORATE RESTRUCTURING

On November 2, 2009, the Company and its three former wholly owned subsidiaries Arris Holdings Inc.

(“AHI”), CLI Resources Inc. (“CLI”) and QMI Seismic Inc. (“QMI”), collectively known as the “Parties”,

entered into a plan of arrangement (“Arrangement Agreement”) whereby the three former subsidiaries

would spin-out from the parent company, each becoming a reporting issuer and each acquiring an asset

from the Company in exchange for common shares (the “Common Shares”) of the respective subsidiary.

The change in corporate structure was effective on January 5, 2010 with the sequence of events as

summarized below:

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

6.CORPORATE RESTRUCTURING (continued)

Altered the identifying name of the Company’s Common Shares to Class A Common Shares

without par value, being the RTN Class A Common Shares.

II.

Created a class consisting of an unlimited number of common shares without par value (the

“ Common Shares’’).

III.

Each issued RTN Class A Common Share was exchanged for one Common Share and one RTN

Class A Preferred Share (with no par value). The RTN Class A Common Share was eliminated

upon the completion of the Arrangement Agreement.

IV.

The Company transferred its interest in five mineral claims in Atlin, British Columbia (the

Mineral Properties’) to CLI; an agreement with a British Columbia manufacturing company to

distribute its earthquake sensor products in India (the “Distribution Agreement”) to QMI; and all

of the Company’s marketable securities (the “Equity Portfolio”) to AHI in the consideration for

17,583,372 common shares of each of CLI, QMI, and AHI (collectively known as “Distributed

Shares”) issued by the three former subsidiaries respectively (note 9b).

The Company redeemed the issued RTN Class A Preferred Shares for consideration consisting

solely of the Distributed Shares. Each shareholder of record as of the close business on November

5, 2009, being the share distribution record date, of the Company, has received its pro-rata share

of the Distributed Shares. RTN Class A Preferred Share was eliminated upon the completion of

the Arrangement Agreement.

ACQUISITION OF SOFTWARE LICENSE

On January 19, 2010, the Company executed a definitive agreement with privately owned Market Guidance

Systems Inc. (“MGS”) whereby the Company acquired a fully supported exclusive and perpetual license to

the Market Navigation, Trade Execution and Market Timing Software (the “RTN-Stealth Software”).

As consideration for the above, the Company issued 5,000,000 Class B preferred shares to the shareholders

of MGS. In connection with the acquisition, the Company paid a company controlled by a director of the

Company a transaction advisory fee of 250,000 Class B Preferred Shares (Note 8). Each Class B Preferred

share is convertible into ten common shares of the Company when the cumulative net revenues derived from

the license of the RTN-Stealth Software reach a total of $20,000,000.

SHARE CAPITAL

a) Authorized and outstanding shares:

As at March 31, 2010 the authorized share capital of the Company consisted of the following:

-Unlimited number of Common Shares with no par value

-Unlimited number of Class B Preferred Shares with no par value. Each Class B Preferred Share is

convertible into ten Common Shares when the cumulative net revenues derived from the license of the

RTN-Stealth Software reach a total of $ 20,000,000 (Note 7).

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

8.SHARE CAPITAL (continued)

The continuity of the issued and outstanding shares of the Company as at March 31, 2010 is as follows:

a)Authorized and outstanding shares (continued) :

CommonShare (renamedas Class AcommononJanuary5,2010)

Numberofshares

Outstanding balance,12/31/2008

Issuance -Arrangement with Incana Investment Inc.

75,416,860

2,806,956

Exercise ofoptions

6,050,000

190,575

Fairvalue ofshare options allocated to shares issued on exercise

45,845

Private placement,net ofshare issuance costs

17,500,000

876,489

Stocksplit and consolidation round off

Share issued forprivate placement finders fee

450,000

Outstanding balance,12/31/2009

99,416,860

3,919,865

Cancellation at January 5,2010-Arrangement Agreement with AHI,

CLI,QMI(note 6)

(99,416,860)

(3,919,865)

Outstanding balance,3/31/2010

This Class A common share was eliminated from the Company’s share capital as at March 31, 2010.

CommonShare

Numberofshares

Outstanding balance,12/31/2008

Issuance

Redemption

Outstanding balance,12/31/2009

Issuance on January 5,2010-Arrangement Agreement with AHI,CLI,

QMI(note 6)

99,416,860

2,205,580

Outstanding balance,3/31/2010

99,416,860

2,205,580

Class Apreferredshare

Numberofshares

Outstanding balance,12/31/2008

Issuance -Arrangement Agreement Inanca Investment Inc.

75,416,860

100,000

Redemption -Arrangement Agreement Inanca Investment Inc.

(75,416,860)

(100,000)

Outstanding balance,12/31/2009

Issuance -Arrangement Agreement with AHI,CLI,QMI(Note 5)

99,416,860

1,714,285

Redemption &cancellation-Arrangement Argreement with AHI,CLI,

QMI(note 6)

(99,416,860)

(1,714,285)

Outstanding balance,3/31/2010

This class of preferred share (Class A) was eliminated from the Company’s share capital as at March 31, 2010

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

Class B preferredshare

Numberofshares

Outstanding balance,12/31/2008

Issuance ofnewclass ofpreferred shares

Redemption ofnewclass ofpreferred shares

Outstanding balance,12/31/2009

Issuance -acquisition ofsoftware license (Note 7)

5,250,000

150,000

Outstanding balance,3/31/2010

5,250,000

150,000

b) Stock Options

The Corporation has an incentive stock option plan authorizing the Company to issue incentive stock options

to directors, officers, employees and consultants of the Company. No specific vesting terms are required.

The option price shall not be less than the fair market value of the Company’s common shares on the grant

date. In February 2010, the Company awarded its directors, officers, employees and consultants a total of

5,650,000 stock options at an exercise price of $0.32 with the expiry date of February 24, 2015. The fair

value of each option at the date of grant was estimated at $0.31/option by using the Black-Scholes option

pricing model with the following assumptions:

Risk free interest rate

3.25%

Expected life

5 years

Volatility

232%

Expected dividends

nil

The 5,650,000 granted options had a fair value of $1,736,064 at the grant date and all the granted options

were vested immediately on issuance. As a result, the Company recognized $1,736,064 stock-based

compensation expense and credited to contributed surplus to account for the vesting of the options (Note 8 C)

during the quarter.

The continuity of the outstanding stock options of the Company as at March 31, 2010 is as follows:

Number of outstanding

Weighted Average

option

Exercise Price

Balance, December 31, 2009

Grants

5,650,000

0.32

Expired/Cancelled/Consolidated

Exercised

Balance, March 31, 2010

5,650,000

0.32

As at March 31, 2010, there were 5,650,000 stock option outstanding with a weighted average exercise

price of $0.32 per share.

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

8.SHARE CAPITAL (continued)

c) contributed surplus

The continuity of the outstanding stock options of the Company as at March 31, 2010 is as follows:

ContributedSurplus

Balance,12/31/2008&2009

670,374

Stockoption granted (note 8b)

1,736,064

Cancellation ofClass A preferred share-Arrangement Argreement

with AHI,CLI,QMI(note 6)

198,299

Balance,3/31/2010

2,604,737

RELATED PARTY TRANSACTIONS

a) During the three months ended March 31, 2010, two companies controlled by the President charged the

Company $14,000 in management and administrative fees (2009 - $13,000), and $12,500 in rental expense

(2009 - $7,000). As at March 31, 2010 the Company owed $3,000 for these expenses (2009 - $52,500).

These transactions have occurred in the normal course of operations and management represents that they

have occurred on a basis consistent with those involving unrelated parties, and accordingly they are

measured at their fair values.

b) The Arrangement Agreement envisions the transfer of the Mineral Properties, the Distribution Agreement,

and the Equity Portfolio (collectively the “Transferred Assets’) from RTN Stealth to CLI, QMI, and AHI

respectively. As consideration for the transfer, the controlling interest in the common shares of CLI, QMI,

and AHI was immediately distributed to the shareholders of RTN Stealth. (Note 6(IV)). The shareholders

of RTN Stealth at the time of the transfer will continue to collectively own the Transferred Assets.

Consequently, there was no substantive change in the beneficial ownership of the Transferred Assets at the

time that the Transferred Assets were vended to RTN Stealth. As such the transfer of the Mineral

Properties, Distribution Agreement, and the Equity Portfolio was recorded, in accordance with the

Canadian generally accepted accounting principles, at the carrying values as follows

Value of the transfer being the carrying

value at RTN Stealth’s account on

Mineral Properties

January 5, 2010

five mineral claims in the areas located near Gladys

Lake Molybdenum occurrences in the Atlin Mining

District, British Columbia

67,185

Distribution Agreement

Distribution Agreement with a British Columbia

private company to distribute its seismic sensors in

India.

RTN STEALTH SOFRWARE INC.

(Formerly Arris Resources Inc.)

Notes to Interim Consolidated Financial Statements

For the three months ended March 31, 2010

(Unaudited - expressed in Canadian dollars, unless stated otherwise)

Value of the transfer being the

Number of

carrying value at RTN Stealth’s

Equity Portfolio

share

account on January 5, 2010

Publicly traded common shares

-Desert Gold Ventures Inc.

300,000

240,000

-Ona Power Corp.

2,800,000

509,600

-Maxtech Ventures Inc.

440,000

228,800

Share purchase warrants of publicly traded

shares

-Ona Power Corp.

2,800,000

470,400

1,448,800

10. SUBSEQUENT EVENTS

On May 17, 2010, the Company executed two definitive agreements subject to CNSX approval. In the first

case the Company has acquired of all of the assets of MGS, the Company that sold the RTN-stealth Software

to the Company in January 2010 (note 7), and in the second case the Company has purchased the EMC-

ALGO Software Suite from ENAJ Mercantile Corporation (“ENAJ”), a privately owned company. The

Company has issued to MGS shareholders twenty (20) million common shares escrowed in four equal

tranches at 6, 9, 12, and 15 months and assume $2.45 million of liabilities owed by MGS.

As to ENAJ, the Company has issued five (5) million common shares as consideration for the acquisition of

the EMC-ALGO Software Suite. The first 2.5 million common shares have been issued to ENAJ and are

escrowed in four equal tranches at 6, 9, 12, and 15 months. The remaining 2.5 million common shares were

issued to the owner of ENAJ, and are escrowed, in three equal tranches at 12, 24, and 36 months.

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