QMI SEISMIC INC.

Interim Financial Statements

For the three and six months ended June 30, 2010

(Unaudited - Prepared by management)

UNAUDITED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 released by Canadian Securities Administrators, the

Company discloses that its auditors have not reviewed the unaudited interim financial statements for

the three and six months ended June 30, 2010

QMI SEISMIC INC.

Balance Sheets

(Expressed in Canadian Dollars)

June 30

December 31

2010

2009

(Unaudited)

Assets

Current assets

Cash

62,974

GST receivable

1,991

Prepaid expense

897

65,862

License (Note 4&5a)

Total Assets

65,863

Liabilities and Shareholders' Equity

Current liabilities

Accounts payable and accrued liabilities

8,144

4,000

Shareholders' equity

Share capital (Note 3(b))

100,001

Deficit

(42,282)

(4,000)

57,719

(3,999)

Total Liabilities and Shareholders' deficit

65,863

Nature and continuance operation (Note 1)

See accompanying notes to the financial statements

Approved on behalf of the Board of Directors

"Navchand Jagpal"

" Rana Vig "

Director

QMI SEISMIC INC.

Statement of Operations and Comprehensive Loss

(Expressed in Canadian Dollars)

(Unaudited)

Three months ended

Six months ended

June 30, 2010

June 30, 2009

June 30, 2010

June 30, 2009

Expenses

Consulting

3,000

4,450

Interest and bank charges

–

223

–

Office and administration

528

–

550

–

Professional fees

2,000

–

2,361

–

Rent

4,000

–

4,000

–

Trust and filing fees

5,698

–

26,698

–

Net loss and comprehensive loss for the period

(15,291)

(38,282) $

Basic and diluted loss per share

(0.00)

(0.00) $

Weighted average number of

common shares outstanding

16,606,518

–

18,058,969

–

QMI SEISMIC INC.

Statement of Shareholders' Equity

Expressed in Canadian Dollars except for number of shares

Number of

Accumulated

Total

Outstanding

Contributed Comprehensive

Shareholders'

Capital

Surplus

Income

Deficit

Equity

Incorporation on October 16,

2009

–

Net loss for the period from

October 16, 2009 to December

31, 2009

–

(4,000)

Other comprehensive income

(loss)

–

(4,000)

Balance, December 31, 2009

–

(4,000)

(3,999)

Share cancellation

(1)

–

(1)

Share issuance - plan of

arrangement (Note 5b)

17,583,372

–

Share issuance - private

placement (Note 3d)

2,000,000 100,000

–

100,000

Net loss for the six months

ended June 30, 2010

–

(38,282)

Other comprehensive income

(loss)

–

Balance, June 30, 2010

19,583,372 100,001

–

(42,282)

57,719

QMI SEISMIC INC.

Statement of Cash Flows

(Expressed in Canadian Dollars)

(Unaudited)

Three months ended

Six months ended

June 30, 2010

June 30, 2009

June 30, 2010

June 30, 2009

Cash provided by (used for)

Operating activities

Loss for the period

(15,291)

–

(38,282)

Changes in non-cash working capital

–

GST receivable

(804)

–

(1,991)

–

Prepaid expenses

(897)

–

(897)

–

Accounts payable and accrued liabilities

(19,876)

–

4,144

–

Cash used for operating activities

(36,868)

(37,026)

Investing activities

Capital stock issued (cancellation)

–

99,999

–

Cash generated from investing activities

–

99,999

Increase in cash

(36,868)

–

62,973

–

Cash, beginning of the period

99,842

–

Cash, end of the period

62,974

–

62,974

–

Supplementary information:

Cash paid for interest expense

–

223

–

Non-cash transactions:

Issuance of 17,583,372 shares for the

acquisition of the license (Note 4&5a)

–

See accompanying notes to the consolidated financial statements

QMI SEISMIC INC.

Notes to the Financial Statements

For the Three and Six Months Ended June 30, 2010

(Unaudited)

1. NATURE AND CONTINUANCE OF OPERATIONS

QMI Seismic Inc. (the “Company”) was incorporated under the Business Corporations Act (British

Columbia) on October 16, 2009 in British Columbia, Canada. Pursuant to the Plan of Arrangement

between the Company and its former parent company, Arris Resources Inc. (“Arris”), (which

changed its name to RTN Stealth Software Inc. (“RTN”) on December 21, 2009) dated November 2,

2009, the Company acquired an exclusive distribution agreement from RTN to distribute three types

of products: Seismic Sensor 2700, RF Quake, and Watch Dog (the “License”) from RTN as part of the

Plan of Arrangement, and has became a seismic sensor distribution company for all India (Note 4).

As consideration for the acquisition of this License, the Company issued 17,583,372 common shares

to RTN (Note 3), which were distributed to the shareholders of RTN pro-rata based on their relative

shareholdings of RTN. The Company’s principal business following the Plan of Arrangement is the

development of the License and the Company may also acquire additional distribution agreements.

Accordingly, the Company’s financial success is dependent upon the extent to which it can develop

the License and the economic viability of developing any such additional agreements.

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

generally accepted accounting principles (GAAP) with the assumption that the Company will be able

to realize its assets and discharge its liabilities in the normal course of business rather than through

a process of forced liquidation. The Company intends to commence an in-house feasibility study

regarding the development of the License. The feasibility study will consider the distributor’s duties

and obligations and how to best achieve them. The Company is a start-up distribution company

and therefore has no regular source of income, other than interest income it may earn. As a result,

its ability to conduct operations, including the development of the License or the evaluation and

acquisition of additional distribution agreements, is based on its current cash and its ability to raise

funds, primarily from equity sources, and there can be no assurance that the Company will be able

to do so. Thus, the Company’s ability to continue as a going concern is dependent upon its ability to

generate future profitable operations and/or to obtain the necessary financing to meet its

obligations and repay its liabilities arising from normal business operations when they come due.

These unaudited interim financial statements do not include any adjustments relating to the

recoverability and classification of recorded asset amounts and classification of liabilities that might

be necessary should the Company be unable to continue in business.

These unaudited interim 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 financial statements should be read in conjunction with the Company's audited

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

internet on SEDAR at www.sedar.com.

Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of

the results that may be expected for the full year ending December 31, 2010 or for any other period.

QMI SEISMIC INC.

Notes to the Financial Statements

For the Three and Six Months Ended June 30, 2010

Unaudited

2. SIGNIFICANT ACCOUNTING POLICIES

These unaudited interim 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. New accounting pronouncements issued but not yet adopted by the

Company are as follows:

Future accounting changes

i. Business combinations, Section 1582:

This Section, which replaces the former Business Combinations, Section 1581, establishes

standards for the accounting for a business combination. It provides the Canadian equivalent

to International Financial Reporting Standard IFRS 3, “Business Combinations”.

This Section applies prospectively to business combinations for which the acquisition date is

on or after the beginning of the first annual reporting period beginning on or after January 1,

2011. Earlier application is permitted, in which case an entity would also early adopt Section

1601, Consolidated Financial Statements and Section 1602, Non-Controlling Interests. This

Section will not impact the Company as it presently operates, however the Section will be

effective if the Company undertakes a business combination in the future.

ii. Consolidated financial statements, Section 1601:

This Section, which, together with new Section 1602, replaces the former Consolidated

Financial Statements, Section 1600, establishes standards for the preparation of consolidated

financial statements.

The Section applies to interim and annual consolidated financial statements relating to fiscal

years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning

of a fiscal year, in which case an entity would also early adopt Section 1582, Business

Combinations and Section 1602, Non-Controlling Interests. This Section will not impact the

Company as it presently operates, however the Section will be effective if the Company

undertakes a business combination in the future.

iii. Non-controlling interests:

This new Section establishes standards for accounting for non-controlling interest in a

subsidiary in consolidated financial statements subsequent to a business combination. It is

equivalent to the corresponding provisions of International Financial Reporting Standard IAS

27, “Consolidated and Separate Financial Statements”. This Section applies to interim and

annual consolidated financial statements relating to fiscal years beginning on or after January

1, 2011. Earlier adoption is permitted, in which case an entity would also early adopt Section

1582, Business Combinations and Section 1601, Consolidated Financial Statements. This

Section will not impact the Company as it presently operates. However the Section will be

effective if the Company undertakes a business combination in the future.

QMI SEISMIC INC.

Notes to the Financial Statements

For the Three and Six Months Ended June 30, 2010

Unaudited

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

iv. International financial reporting standards:

The Canadian Accounting Standards Board (“AcSB”) in 2006 published a new strategic plan

that will significantly affect financial reporting requirements for Canadian companies. The

AcSB strategic plan outlines the convergence of Canadian GAAP with International Financial

Reporting Standards (“IFRS”) over a five-year transitional period.

In February 2008, the CICA Accounting Standards Board confirmed that the changeover to

IFRS from Canadian GAAP will be required for publicly accountable enterprises, effective for

the interim and annual financial statements relating to fiscal years beginning on or after

January 1, 2011. The transition from current Canadian GAAP to IFRS is a significant

undertaking that may materially affect the Company’s reported financial position and results

of operations. The Company continues to monitor and assess the impact of the convergence

of Canadian GAAP and IFRS on its financial statements. The Company is currently in the

process of executing an IFRS conversion plan. It is expected that there is no material impact to

the financial reporting arising from the transition to IFRS.

3. CAPITAL STOCK

a. Authorized:

Unlimited Class A common shares without par value

Unlimited Class B preferred shares without par value

b. Issued and Outstanding:

Number of Shares

Amount

Common share issued on incorporation

December 31, 2009

Common share cancellation

(1)

Common shares issued for the acquisition of

the License (Note 4 & 5a)

17,583,372

March 31, 2010

17,583,372

Common shares issued for the private

placement (Note 3d)

2,000,000

100,000

June 30, 2010

19,583,372

100,001

c. Stock Options:

Pursuant to resolutions for a special meeting together with RTN (the former parent company) on

December 8, 2009, the Company received shareholders’ approval to adopt an incentive stock option

plan (the "Option Plan") which provides that the Board of Directors of the

QMI SEISMIC INC.

Notes to the Financial Statements

For the Three and Six Months Ended June 30, 2010

Unaudited

3. CAPITAL STOCK (Continued)

Company may, from time to time, in accordance with CNSX requirements, grant to directors,

officers, employees, management companies and consultants to the Company, non-transferable

options to purchase common shares. Included in the Option Plan are provisions that provide that

the number of common shares reserved for issuance will not exceed 10% of the issued and

outstanding common shares of the Company. At the discretion of the Board of Directors of the

Company, options granted under the Option Plan can have a maximum exercise term of 5 years

from the date of grant. Vesting terms will be determined at the time of grant by the Board of

Directors. There were no options granted or outstanding as at June 30, 2010.

d. Share Purchase Warrants:

On April 5, 2010 the Company completed a private placement for issuing a total of 2,000,000

security units (“Unit”) at a price of $0.05 per Unit. Each unit consists of a common share and a

common share purchase warrant. Each common share purchase warrant entitles the holder to

purchase, for a period of two years, an additional common share at an exercise price of $0.07 per

share.

As at June 30, 2010, the Company had 2,000,000 common share purchase warrants outstanding,

with an average exercise price of $0.07/share, and an average remaining life of 1.75 years.

4. CORPORATE RESTURCTURING

Distribution Agreement

In October 2009, RTN, the former parent of the Company, entered into a distribution agreement

(the “License”) with a British Columbia private company to distribute its seismic sensors in India. The

License allows RTN to distribute three types of products: Seismic Sensor 2700, RF Quake and Watch

Dog in India. Initial sales projections are 1,000 each of three products in year one, 2,000 each of

three products in year two and 3,000 each of three products in year three, with 100% mark-up on

the FOB wholesale price.

Plan of Arrangement

On November 2, 2009 the Company entered into the Plan of Arrangement (the “Arrangement

Agreement”) with RTN to proceed with a corporate restructuring by the way of statutory plan

whereby the Company would spin-out from the former parent and become a reporting issuer and

acquiring an asset from RTN. Under the Arrangement Agreement, RTN would transfer its interest in

the License in exchange for 17,583,372 common shares of the Company (Note 5b). On the effective

date of the Arrangement Agreement (January 5, 2010), each shareholder of RTN of record, as of the

close of business on November 5, 2009, received their pro-rata share of the 17,583,372 common

shares of the Company issued for the acquisition of the License.

QMI SEISMIC INC.

Notes to the Financial Statements

For the Three and Six Months Ended June 30, 2010

Unaudited

5. RELATED PARTY TRANSACTIONS

a. During the six months ended June 30, 2010, a company controlled by the spouse of the chief

executive officer charged the Company $3,000 for the consulting services provided. This

transaction has occurred in the normal course of operations and is measured at a value agreed

by both the Company and the related party. As at June 30, 2010 there was no outstanding due

from (to) balance between the Company and its related parties.

b. The Arrangement agreement envisioned the transfer of the License from RTN to the Company,

and the immediate distribution of a controlling interest in the common shares of the Company to

the shareholders of RTN (Note 4). The shareholders of RTN at the time of the transfer continued

to collectively own the License. Consequently, there was no substantive change in the beneficial

ownership of the License at the time that the License was vended to the Company. As such the

transfer of the License was recorded, in accordance with the Canadian generally accepted

accounting principles, at the carrying values of the License in the accounts of RTN ($1).

6. SUBSEQUENT EVENTS

a. On July 1, 2010, the Company entered into a secured loan agreement (the “Loan Agreement”)

with an unrelated entity (the “Borrower”) in the aggregate amount of $40,000 for twelve (12)

months. The loan has an interest at $2.5% per annum which is equal to the prime borrowing

rate offered by Canadian banks. The loan is secured by a general security interest in all of the

Borrower’s present and after acquired tangible and intangible assets including the inventory.

b. On July 9, 2010 the Company completed a non-brokered private placement for issuing a total of

1,000,000 security units (“Unit”) at a price of $0.05 per Unit. Each unit consists of a common

share and a common share purchase warrant. Each common share purchase warrant entitles

the holder to purchase, for a period of two years, an additional common share at an exercise

price of $0.07 per share.

c. On July 29, 2010 the Company announced an acquisition of all the issued and outstanding

common shares of QMI Technologies Inc., a wholly owned subsidiary of QMI Manufacturing Inc.

by issuing 20,400,001 common shares in the equity of the Company.

7. DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES (GAAP)

The Company’s financial statements have been prepared in accordance with Canadian GAAP. There are

no impacts to financial statement line items of these financial statements if these financial statements

are prepared in accordance with the generally accepted accounting principles (“U.S. GAAP”).

QMI Seismic Inc. 6-K/A