FORM 51-102F3
MATERIAL CHANGE REPORT
Item 1
Name and Address of Company:
RTN STEALTH SOFTWARE INC.
5250 Satellite Drive, Unit 22
Mississauga, Ontario L4W 5G5
Item 2
Date of Material Change:
January 10, 2011 and January 19, 2011
Item 3
News Release:
The news release attached hereto as Schedule “A” was disseminated over
Marketwire on January 10, 2011. The news release attached hereto as Schedule
“B” was disseminated over Marketwire on January 19, 2011.
Item 4
Summary of Material Change:
On January 19, 2011 RTN Stealth Software Inc. (the "Company" or "RTN
Stealth") completed a non-brokered private placement of 9,523,809 units at a
purchase price of $0.0525 per unit, for aggregate gross proceeds of approximately
$500,000. Each unit is comprised of one (1) common share of the Company (a
“Common Share”) and four (4) common share purchase warrants (each, a
“Warrant”). Each whole Warrant entitles its holder to purchase one (1)
additional Common Share at an exercise price of $0.0525 per share at any time
prior to 5:00 p.m. (Toronto time) on March 31, 2011.
On January 10, 2011, the Company agreed to amend the terms of its outstanding
promissory notes in aggregate principal amount of US$2,407,212 to, among other
things, permit the Company to elect at any time prior to March 31, 2011, to pay
all, but not less than all, of the aggregate principal amount then outstanding on
one or more of the notes, together with all interest then accrued on the notes being
repaid, by issuing to the holder a number of Common Shares equal to the amount
then owing on the relevant note divided by an issue price of $0.0525 per share.
Item 5
Full Description of Material Change:
5.1
Full Description of Material Change
On January 19, 2011 RTN Stealth completed a non-brokered private placement of
9,523,809 units at a purchase price of $0.0525 per unit, for aggregate gross
proceeds of approximately $500,000. Each unit is comprised of one (1) Common
Share and four (4) Warrants. Each whole Warrant entitles its holder to purchase
one (1) additional Common Share at an exercise price of $0.0525 per share at any
time prior to 5:00 p.m. (Toronto time) on March 31, 2011.
As announced on January 10, 2011, a group of insiders, led by Mr. Halpern,
Chairman of the Board of the Company, agreed on that date to purchase from
existing third party holders, promissory notes of the Company in an aggregate
principal amount of US$1,453,606, together with interest accruing thereon at the
rate of Prime + 1%. In connection with the insiders’ purchase of promissory
notes, the Company agreed to amend the terms of its outstanding promissory
notes (the “Debt Amendments”) in an aggregate principal amount of $2,407,212
(which amount includes the promissory notes purchased by insiders as described
above) to permit the Company to elect at any time prior to March 31, 2011, to pay
all, but not less than all, of the aggregate principal amount then outstanding on
one or more of the notes, together with all interest then accrued on the notes being
repaid, by issuing to a holder of promissory notes a number of Common Shares
equal to the amount then owing on the relevant note divided by an issue price of
$0.0525 per share. Although holders of the promissory notes have also agreed to
extend the term of the notes for three (3) years on the same terms and conditions,
it is currently anticipated that the Company will elect to satisfy its indebtedness
by the issuance of Common Shares.
The Debt Amendments constitute a “related party transaction” for the purposes of
Multilateral Instrument 61-101- Protection of Minority Security Holders in
Special Transactions (“MI 61-101”). The Company relied on the exemptions
from the formal valuation and minority shareholder approval requirements of MI
61-101 pursuant to the exemption found in sections 5.7(e) and 5.5(g) of MI 61-
101 on the basis that the Company is in serious financial difficulty and the
transaction is designed to improve its financial position, as determined by the
non-interested directors of the Board. The agreement to amend the Company’s
indebtedness, and the terms thereof, were approved by all of the Company’s non-
interested directors.
In addition, on January 10, 2011, the Company announced that subject to
shareholder approval at the next annual meeting of the Company, the Board of the
Company has approved and agreed to recommend the amendment of its articles of
incorporation to permit the early conversion of 5,250,000 special convertible
Class B preferred shares (Series 1) (the “Special Preferred Shares”) into
52,500,000 common shares of the Company in accordance with the 10:1
conversion ratio specified in its current articles of incorporation. The Special
Preferred Shares were issued to shareholders of Market Guidance Systems Inc.
(“MGS”) and certain transaction advisors in 2010 in connection with the purchase
of MGS’s assets by the Company announced on May 17, 2010. The Special
Preferred Shares were specified to be convertible into common shares only upon a
$20 million revenue milestone target being reached on the retail version of RTN
Stealth software, a condition which has not yet been satisfied.
SCHEDULE “A”
RTN STEALTH SOFTWARE INC.
5250 Satellite Drive, Unit 22
Mississauga, Ontario L4W 5G5
Tel: 905-629-1333 Fax: 905-629-3222
CNSX: RTN; OTCBB: RTNSF; FRANKFURT: 8RT
For Immediate Release: January 10, 2011
RTN Stealth resolves liquidity issues, strengthens balance sheet, elects new Chair and announces
annual meeting.
MISSISSAUGA, Ontario, Canada /January 10, 2011/
Michael Boulter, President, COO and interim CEO of RTN Stealth Software Inc. (the "Company" or
"RTN Stealth") advised today that the Company has successfully addressed its short-term liquidity issues
by means of a non-brokered private placement which is scheduled to close on or about January 11, 2011.
The private placement will immediately generate liquidity of approximately $500,000 for the Company.
Pursuant to the placement the Company will issue 9,523,809 units at a purchase price of $0.0525 per unit.
Each unit will include one (1) common share of the Company (a “Common Share”) and four (4)
common share purchase warrants (each, a “Warrant”). Each whole Warrant entitles its holder to
purchase one (1) additional Common Share at an exercise price of $0.0525 per share at any time prior to
5:00 p.m. (Toronto time) on March 31, 2011.
In conjunction with the closing of the private placement, the Company is delighted to make a number of
related announcements:
1. Mr. Todd Halpern, appointed to the Company’s Board of Directors in October, 2010, has been elected
as Chair of its Board of Directors. Primarily engaged as President of Halpern Enterprises. Mr. Halpern
and his family have been in the business of importing fine wines and spirits into Canada for over 57
years. Mr. Halpern joined Halpern Enterprises in 1979 and has since built the company into Canada’s
largest importer of wine and spirits, representing over 100 of the world's leading producers. Mr. Halpern
was also a member of the Board of Sentinelle Medical Inc. and was involved in the successful acquisition
of the company by Hologic Inc. He is also a member of the Board of Mobilotto, a software development
company focused on creating secure mobile games for regulated environments.
Heavily involved in philanthropy in the healthcare sector, Mr. Halpern has served as a member of the
Board of Toronto General Hospital since 2005. In addition to being Board Champion of the Krembil
Neuroscience Centre's Krembil Discovery Tower and Krembil Neuro Program, he chairs the annual
Grand Cru Culinary Wine Festival, which benefits research at University Health Network.
As chair of the Company, Mr. Halpern will lead its efforts to strengthen overall governance and
management.
2. On the recommendation of an independent committee of its Board of Directors, the Company has also
concluded an agreement to restructure its indebtedness which, having become due and payable, was in
default. Certain insiders led by Mr. Halpern have agreed to purchase and hold promissory notes of the
Company in an aggregate principal amount of US$2,407,212, together with interest accruing thereon at
the rate of Prime + 1%. Under the terms of the agreement, the Company may elect at any time prior to
March 31, 2011, to pay all, but not less than all, of the aggregate principal amount then outstanding on
one or more of the notes, together with all interest then accrued on the notes being repaid, by issuing to
the holder a number of Common Shares equal to the amount then owning on the relevant note divided by
an issue price of $0.0525 per share. Although holders of the promissory notes have also agreed to extend
the term of the notes for three (3) years on the same terms and conditions, it is currently anticipated that
the Company will elect to satisfy its indebtedness by the issuance of common shares.
The agreement to amend the promissory notes is a related party transaction for purposes of applicable
securities laws. The Company is relying upon one or more exemptions from certain of the requirements
applicable to related party transactions, including an exemption that is available to the Company because
it is in serious financial difficulty and the transaction is designed to improve its financial position.
3. Subject only to shareholder approval at the next annual meeting of the Company, the Board of the
Company has approved and agreed to recommend the amendment of its articles of incorporation to permit
the early conversion of 5,250,000 special convertible Class B preferred shares (Series 1) (the “Special
Preferred Shares”) into 52,500,000 common shares of the Company in accordance with the 10;1
conversion ratio specified in its current articles of incorporation. The Special Preferred Shares were
issued to shareholders of Market Guidance Systems Inc. (“MGS”) and certain transaction advisors in
2010 in connection with the purchase of MGS’s assets by the Company announced on May 17, 2010. The
Special Preferred Shares were specified to be convertible into common shares only upon a $20 million
revenue milestone target being reached on the retail version of RTN Stealth software, a condition which
has not yet been satisfied.
4. The Board of the Company will shortly be issuing formal notice for an Annual Meeting of the
Company to be held in Toronto, Ontario on February 16, 2011 with the Record Date set in respect thereof
being January 14, 2011. In addition to resolutions dealing with the conversion of the Special Preferred
Shares, the Company will be seeking shareholder approval to amend its articles of incorporation, adopt a
new general bylaw, expand the size of its Board to 10 members, elect a new Board of Directors, authorize
the Company’s continuance under Ontario law and conduct such other and further business as may be
usual or appropriate.
“The immediate and near term cash injection provided by the private placement, together with the
restructuring of the Company’s debt, will strengthen the Company’s balance sheet considerably, relieve
the previously disclosed liquidity pressures and position the Company to move forward again and enable
the rationalization of its equity capital structure ,” Mr. Boulter said. “The exercise of the warrants and
repayment of the notes with shares, coupled with shareholder approval for the elimination of the
overhange related to the preferred shares, will give the company a viable capital structure to build on over
the long term, enabling it to complete the development and testing of its unique securities trading system
and platform. Our strengthened Board under Mr. Halpern’s leadership will bring new direction and focus
to the Company as it moves forward to commercial deployment of its software solutions.”
For additional information about RTN Stealth Software Inc., please contact us at (905) 629-1333 or visit
us at www.rtnstealth.com.
Except for historic information, the matters discussed in this document contain certain forward-looking statements. These statements involve
known and unknown risks, delays, uncertainties and other factors not under the Corporation’s control that may cause actual results, levels of
activity, performance or achievements to be materially different from the results, levels of activity, performance, achievements or expectations
expressed or implied by these forward-looking statements.
CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.
SCHEDULE “B”
RTN STEALTH SOFTWARE INC.
5250 Satellite Drive, Unit 22
Mississauga, Ontario L4W 5G5
Tel: 905-629-1333 Fax: 905-629-3222
CNSX: RTN; OTCBB: RTNSF; FRANKFURT: 8RT
For Immediate Release: January 19, 2011
RTN Stealth Closes Private Placement
MISSISSAUGA, Ontario, Canada /January 19, 2011/
Michael Boulter, President, COO and interim CEO of RTN Stealth Software Inc. (the "Company" or
"RTN Stealth") advised today that the Company has completed the previously announced non-brokered
private placement for gross proceeds to the Company of approximately $500,000. Pursuant to the
placement the Company issued 9,523,809 units at a purchase price of $0.0525 per unit. Each unit consists
of one (1) common share of the Company (a “Common Share”) and four (4) common share purchase
warrants (each, a “Warrant”). Each whole Warrant entitles its holder to purchase one (1) additional
Common Share at an exercise price of $0.0525 per share at any time prior to 5:00 p.m. (Toronto time) on
March 31, 2011.
For additional information about RTN Stealth Software Inc., please contact us at (905) 629-1333 or visit
us at www.rtnstealth.com.
Except for historic information, the matters discussed in this document contain certain forward-looking statements. These statements involve
known and unknown risks, delays, uncertainties and other factors not under the Corporation’s control that may cause actual results, levels of
activity, performance or achievements to be materially different from the results, levels of activity, performance, achievements or expectations
expressed or implied by these forward-looking statements.
CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.
