UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 2

FORM 10-K

(Mark One)

one) 

ANNUAL REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended Year Ended June 30, 20202023

or 

 

TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________________________ to _________________________

 

333-227029

(Commission file number)File Number: 333-180954

 

Hawkeye Systems, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

83-0799093

(State or other jurisdiction of

incorporation or organization) incorporation) 

 

(IRSI.R.S. Employer

Identification No.)

 

6605 Abercorn, Suite 204

Savannah, GA 31405

(912) 253-0375

(Address and telephone number of principal executive offices)offices (Zip Code) 

 

N/A(912) 253-0375

(Former name, former address and former fiscal year, if changed since last report)Registrant’s telephone number, including area code 

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Sectionsection 12(g) of the Act: Common Stock, $0.0001 par value

 

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 Exchange Act. Yes ☐ No ☒

 

Indicate by check mark whether the issuerregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes ☒     No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or amendment to Form 10-K.files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smallsmaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the ExchangeEx- change Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

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-votingregistrant’s common equitystock held by non-affiliates as of December 31, 2020, was $11,482,036.

(At December 31, 2020, the registrant had 14,828,036 shares of common stock issued and outstanding, of which 3,356,000 shares of common stock issued and outstanding were held by officers and directors. Market value has been computed based uponwas $1,304,772 on the salesclosing sale price of privately placed shares at or about such date.)

As of January 21, 2021, there were 16,549,649 shares of the registrant’s common stock outstanding.on June 30, 2023 of $0.24 per share.

 

EXPLANATORY NOTE:

This Amendment No.  2 to  the periodic report on Form 10-K for the period ended June 30, 2020 is filed to respond to a request for further conclusionsThe number of shares of registrant’s common stock outstanding as to disclosure controls and procedures in Item 9A.of October 13, 2023 was 5,552,222.

 

 

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

TABLE OF CONTENTS

 

PART I

 

Item 1.

Description of BusinessBusiness.

4

Item 1A.

Risk Factors.

8

Item 1B.

Unresolved Staff Comments.

8

Item 2.

Description of PropertyProperties.

98

Item 3.

Legal ProceedingsProceedings.

98

 

Item 4.

Mine Safety DisclosuresDisclosures.

8

10

Part II

Item 5.

Market forFor Registrant’s Common Equity, and Related Stockholder Matters and Small Business Issuer Purchases of Equity SecuritiesSecurities.

109

Item 6.

Selected Financial Data

1210

Item 7.

Management'sManagement’s Discussion and Analysis of Financial Condition and Results of OperationOperations.

1210

Item 7A.

Quantitative andAnd Qualitative Disclosures About Market RiskRisk.

1412

Item 8.

Financial Statements and Supplemental Data.

15F-1

Item 9.

Changes Inin and Disagreements Withwith Accountants on Accounting and Financial DisclosuresDisclosure.

3413

Item 9A.

Controls and ProceduresProcedures.

3413

Item 9B.

Other InformationInformation.

13

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

35

Part III

Item 10.

Directors, Executive Officers Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange ActGovernance.

3514

Item 11.

Executive CompensationCompensation.

3715

Item 12.

Security Ownership ofOf Certain Beneficial Owners and Management and Related Stockholder MattersMatters.

4119

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

4219

Item 14.

Principal Accountant Fees and ServicesServices.

4221

Part IV

Item 15.

ExhibitsExhibit and Financial Statement Schedules.

4322

Item 16.

Form 10-K Summary.

 

2

Table of Contents

  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

 

This Annual Reportannual report on Form 10-K, the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Indoor Harvest, Corp.Hawkeye Systems, Inc. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Indoor Harvest”“Hawkeye”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions, and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.

 

Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.

 

The industry and market data contained in this report are based either on our management'smanagement’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.

 

3

Table of Contents

 

Item 1. Description of Business

 

General

 

We were incorporated on May 15, 2018 in the State of Nevada. We are a technology holding companycurrently pursuing opportunities to invest in, acquire, merge or consolidate with a target business participating in diversified industries, such as affordable housing development, and technology applications to mitigate the effects of climate change. Our previous focus was on pandemic management products and services. Led by a veteran, the Company is committed to leveraging its extensive resources in support of its ongoing mission to help our government and medical infrastructure to keep civilians safe. Hawkeye Systems sources and distributes PPE (Personal Protective Equipment) and other Pandemic Management supplies to enterprise level customers and government agencies. The Company also looks to license & acquire technology that improves life and works with partners to develop cutting edge, “smart” products for a variety of markets. From inception until the date of this filing our activities have primarily consisted of (i) the incorporation of our company, (ii) the development of our business plan, (iii) development of our products, (iv) recruiting and adding additional consultants and employees, (v) signing contracts for the business, (vi) advancing the sale of PPE products through numerous sources and (vi) development of our relationship with DemeTECH Corporation and other potential business partners.

Our business office is located at 6605 Abercorn, Suite 204, Savannah, GA 31405. Our telephone number is 800-531-8799912-388-6720 and our website is www.hawkeyesystemsinc.com.

 

Business Description

 

The global coronavirus outbreak has tested people, industries, governmentsFrom inception and supply chains unlike any crisis since World War II. Manufacturers and suppliersuntil July of 2021, the Company focused on selling personal protective equipment (PPE) have been working overtime(“PPE”). In July 2021, the Company’s management determined to increase productioncease the Company’s operations as a seller of PPE, deeming that continuing operations in response to unprecedented international demand. Like many companies Hawkeye Systems Inc. has been impacted by Covid-19 pandemic in 2020 and has had to adapt and overcome several obstacles which previously didthat sector was not exist. The Company’s initial focus was photography, videography, and AR focused, however in an environment that has evolved outa productive use of the pandemic, we determined that future technology or developing technology does not seem like a place to place the fortune of our shareholders. Consequently, we evolved to provide products that the market needs now while identifying opportunities which make sense operating in this environment. Once we shifted from developing technologies only to trying to service more urgent issues in the current environment, we began to locate, market and sell personal protection equipment (“PPE”) including sanitizer, masks and gloves. As we worked in this market, we have refined and further narrowed our strategy. Clearly several aspects of our “normal” business environment have become greatly disrupted. Government policy has become opaque and not supportive of small business, supply chains have become greatly disrupted and the US dependency on foreign countries has, to various degrees, become unreliable, expensive and unpredictable from the perspective of quality, availability and quantity. The management of Hawkeye made a difficult but defining moment in the last quarter of the fiscal year ended June 30, 2020. We decided that as a company we can only defend and support a strategy that can be executed in this environment with our available resources that supports the requirements and needs of our customers and of customers in the current environment. In prioritizing the list of important issues here is the short list of what will differentiate and ensure our successCompany’s resources.

 

1. Availability of product without significant price competition (dependable supply).

2. Quality and certification under all required standards.

3. Sales Strategy not dependent on government action or assistance.

4. Growth strategy that depends on sales volume and growth funding technological innovation and not innovation at the expense of volume that can sustain the company.

5. Technological innovation should be narrow in focus and support the mission of the company.

4

Table of Contents

The company has made great strides and progress to this end. Here is a list of the big achievements over the last two quarters:

1. Developed and executed on a relationship with a dependable South Korean manufacturer to provide excellent sanitizer at a reasonable price in a sustainable way, which has subsequently been listed on Amazon.com; we continue to work with Amazon and other partners to increase traction in this channel.

2. Developed and executed a strategy with DemeTECH to provide US made, NIOSH approved, N95’s which are competitive with foreign imports but have the advantage of 100% US made, US sourced in a scalable, repeatable way, regardless of government decisions regarding PPE (excise tax, foreign raw materials, PPE import blocks , etc.)

3. Developed a project to build and control 5.4 M boxes of nitrile gloves per year at a price which is and will be competitive even post pandemic. We are currently trying to fund this project and make sure we have reliable nitrile rubber supply as this is the rate limiting step in providing gloves globally right now.

Company Goals and Objectives

Hawkeye’s mission for the next fiscal year and beyondOur current business plan is to through acquisition and organic growth, become one of the largest US providers of PPE in the categories we compete in.acquire, merge or consolidate with another company (a “target business”). We intend to douse capital stock, debt or a combination of these to effect a business combination with a target business with significant growth potential.

We will not restrict our search for target businesses to any particular industry. Rather, we may investigate businesses of essentially any kind or nature and participate in any type of industry that may, in our management’s opinion, meet our business objectives as described in this through organic sales, acquisitionannual report. We emphasize that the description in this report of our business objectives is extremely general and partnership.is not meant to restrict the discretion of our management to search for and enter into potential business opportunities. We have identified the modular construction industry and targeted North America’s housing shortage in the single-family and multi-family homes. We have not abandoned our technology origins andconducted any market studies with respect to this industry. To the extent we enter into a business combination with a financially unstable company or an entity in fact with financial strengthits early stage of development or growth, including entities without established records of sales or earnings, we will revealbecome subject to numerous risks inherent in the business and roll out innovations closely alignedoperations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that we effect a business combination with an entity in an industry characterized by a high level of risk, we will become subject to the categoriescurrently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries that experience rapid growth. In addition, although we are competing in.will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

 

US and World Markets for PPE

In March 2020, the World Health Organization declared the Novel Coronavirus Disease 2019 (“COVID-19”) a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruptionSources of global financial markets. In response, many countries implemented business closures and restrictions, stay-at-home and social distancing ordinances and similar measures to combat the pandemic, which significantly impacted global business and dramatically reduced demand for certain medical products in the second quarter of 2020. Demand increased in the third quarter resulting in growth over the prior year driven by sales of personal protective equipment (PPE) and COVID-19 related products.target businesses

Manufacturers are engaged in a historic effort to ramp up production of the vital equipment needed to respond to the coronavirus outbreak. While respirators like N95 masks have received the greatest attention from the public and media, PPE needs also include protective garments, eye and face protection, gloves, and other components of the specialized ensembles health care professionals use to protect themselves.

Initially, there was a significant shortage of PPE products. Broadly speaking, no one knew a pandemic on this scale was coming. It has literally been a century since the last truly global health crisis. In addition, over the past few decades, both for budgetary and efficiency reasons, healthcare organizations — just like most other sectors of the economy — adopted a “just in time” approach to ordering supplies. That philosophy worked until this crisis hit. There are policy solutions that can help to supply equipment during a crisis, some of which have been partially successful at this time, and others that were not in place. These range from stockpiling equipment to subsidizing inventory.

Sanitizer is expected to have compound annual growth rate exceeding 23.1% through 2027.1 Mask growth is expected to have a 11.5% compound annual growth rate over the period of from 2020 to 2025.2 Finally, the global nitrile gloves market size is anticipated to reach USD 8.98 billion by 2027.3 That market is projected to register a compound annual growth rate of 14.1% over the forecast period.

___________ 

1 Hand Sanitizer Market Size, Share & Trends Analysis Report By Product (Gel, Foam, Liquid), By Distribution Channel (Hypermarket & Supermarket, Drug Store, Specialty Store, Online), By Region, And Segment Forecasts, 2020 – 2027-Grand View Research),

2 From USD $810.0 million in 2019, the global N95 mask market is predicted to grow to USD $1,627.5 million by 2025, registering a CAGR of 11.5% during the forecast period (2020–2025): VynZ Research.

3 Grand View Research, Inc.

5

Table of Contents

 

We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community, who may present solicited or unsolicited proposals. Our officers and directors and their affiliates may also bring to our attention target business candidates. While we do not presently anticipate engaging the services of professional firms that specialize in business acquisitions on any formal basis, we may engage such firms in the future, in which event, we may pay a finder’s fee or other compensation for such introductions if they result in consummated transactions. These fees are focusedcustomarily between 5% and 25% of the size of the overall transaction, based upon a sliding scale of the amount involved and a variety of other factors.

4

Table of Contents

Selection of a target business and structuring of a business combination

Our management will have significant flexibility in identifying and selecting a prospective target business. In evaluating a prospective target business, our management will consider, among other factors, the following:

·

the financial condition and results of operation of the target;

·

the growth potential of the target and that of the industry in which the target operates;

·

the experience and skill of the target’s management and availability of additional personnel;

·

the capital requirements of the target;

·

the competitive position of the target;

·

the stage of development that the target’s products, processes, or services are at;

·

the degree of current or potential market acceptance of the target’s products, processes, or services;

·

proprietary features and the degree of intellectual property or other protection of the target’s products, processes, or services;

·

the regulatory environment of the industry in which the target operates;

·

the prospective equity interest in, and opportunity for control of, the target; and

·

the costs associated with effecting the business combination.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on sourcing sustainable supplythe above factors as well as other considerations deemed relevant by our management in connection with effecting a business combination consistent with our business objective. In connection with our evaluation of a prospective target business, we anticipate that we will conduct an extensive due diligence review that will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as a review of financial or other information that will be cost effectivemade available to us.

We will endeavor to structure a business combination to achieve the most favorable tax treatment to us, the target business and competitive assumingboth companies’ stockholders. We cannot assure you, however, that the pandemic becomes less importantInternal Revenue Service or appropriate state tax authority will agree with our tax treatment of the business combination.

Until we are presented with a specific opportunity for a business combination, we are unable to ascertain with any degree of certainty the time and reducescosts required to select and evaluate a target business and to structure and complete the business combination. We have two full-time employees devoting their time to our affairs. Any costs incurred in severity. Thereconnection with the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a tremendous backlogloss to us and reduce the amount of supplies which needcapital otherwise available to be re-stockpiled andcomplete a business combination.

Limited ability to evaluate the target business’ management

Although we intend to competescrutinize the management of a prospective target business before effecting a business combination, we cannot assure you that our assessment of the target’s management will prove to be correct, especially considering the possible inexperience of our officers and directors in evaluating certain types of businesses. In addition, we cannot assure you that the target’s future management will have the necessary skills, qualifications, or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the long-term market not just worktarget business cannot presently be stated with any certainty. While it is possible that one or more of our officers and directors will remain associated in some capacity with us following a business combination, it is unlikely that any of them will devote their full efforts to our affairs after a business combination. Moreover, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the near term duringoperations of the pandemic.target business.

We may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you, however, that we will be able to recruit additional managers who have the requisite skills, knowledge, or experience necessary to enhance the incumbent management.

5

Table of Contents

Investment Company Act

 

The United States has issued significant pandemic relief billsInvestment Company Act of 1940 (the “Investment Company Act”) defines an “investment company” as any issuer which covers PPEis or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities. We may participate in a business or opportunity by purchasing, trading, or selling the securities of a business. However, as we do not intend to engage primarily in these activities, we believe that we do not fall under the Investment Company Act’s definition of investment company, and we do not intend to register the Company as an “investment company” under the Investment Company Act. We do not believe that registration under the Investment Company Act is required based upon our proposed activities. We intend to conduct our activities so as to avoid being classified as an “investment company” and avoid application of the costly and restrictive registration and other essential materials during the pandemic.  This funding is greatly needed and will help increase sales and move forward sale cycles which were stopped due to lack of funding.  Manyprovisions of the potential buyers of our products exhausted their budget for PPE mid-year or even earlier in 2020 so this relief greatly improves the ability for customers to stop rationing critical suppliesInvestment Company Act and provide their medical and front line workers the appropriate amount and level of protection to these important essential workers.

Research and Developmentits regulations.

 

The products whichInvestment Company Act may, however, also be deemed to be applicable to a company that does not intend to be characterized as an “investment company” but that, nevertheless, engages in activities that may be deemed to be within the definition and scope of certain provisions of the Investment Company Act. While we do not believe that our anticipated principal activities will subject us to regulation under the Investment Company Act, we cannot assure you that we will not be deemed to be an “investment company,” especially during the period prior to a business combination. In the event we are looking at for potential R&Ddeemed to be an “investment company,” we may become subject to certain restrictions relating to our activities and future fundingregulatory burdens, including:

·

restrictions on the nature of our investments; and

·

the issuance of securities,

and have imposed upon us certain requirements, including:

·

registration as an investment company;

·

adoption of a specific form of corporate structure; and

·

compliance with certain burdensome reporting, recordkeeping, voting, proxy and disclosure requirements and other rules and regulations.

In the event we are further out than the next few quarters so our limited resources willcharacterized as an “investment company,” we would be focused on succeeding in the strategyrequired to address the market needs as we have defined them.comply with these additional regulatory burdens, which would require additional expense.

 

Intellectual Property

 

The companyCompany currently does not have IPown any intellectual property, and thisdirectly acquiring the intellectual property of a third party is not part of our current strategy.

 

Regulation

 

OurIn our current business involves the distribution, importation and sale of PPE and other medical devices, and in this regard we are subject to extensive local, state, federal and foreign governmental laws and regulations applicable toregulations. Upon completion of an acquisition, we may have significant additional regulation based on the distributionnature of the business.

Investment in HIE LLC

On July 17, 2020, the Company entered into a membership agreement with Eagle Equities LLC (“Eagle”) and Ikon Supplies (“Ikon”) for the purpose of procuring, funding the purchase of and sale of medical devices. Additionally, governmentPPE (the “Membership Agreement”). To pursue this objective, the parties agreed to form a Nevada limited liability company, HIE, LLC (“HIE”). According to the terms and private insurance programs fund a large portionconditions of the total costMembership Agreement, HIE would be terminated and dissolved upon the earliest to occur of: (i) the sale of medical care, and there has been an emphasis on efforts to control medical costs, including laws and regulations lowering reimbursement rates for medical devices. Also, many of these laws and regulations are subject to change and may impact our financial performance. For example, certain laws and regulations restricting medical PPE productsHIE’s interest in the United States have been temporarily modifiedprocurement, financing, transportation, sale and disposition of PPE; (ii) the refusal or waived in response to the COVID-19 pandemic. In addition, our business is generally subject to numerous other laws and regulations that could impact our financial performance, including securities, antitrust, anti-bribery and anti-kickback, customer interaction transparency, data privacy, data security, price gouging and other laws and regulations, and someinability of the related rules have been temporarily modified in response to the COVID-19 pandemic. Failureany party to comply with lawthe requirements, obligations or regulations couldstipulations of the Membership Agreement; (iii) the unanimous agreement of the parties; or (iv) the order of a court of competent jurisdiction. Eagle, Ikon and the Company would participate each in 33% of any net profits generated by HIE. Eagle contributed to HIE by providing and arranging to procure a loan (the “Origination Loan”), sufficient to cover all capital needed for each PPE purchase (a “Deal”); and additional funds, as needed, to cover additional expenses towards the costs of goods (“Additional Contribution”). The Company contributed by assigning its agreement to purchase gloves and agreed to issue convertible promissory notes to Eagle to secure the Origination Loan and any Additional Contribution. The parties agreed to pay an equal portion of all administrative expenses incurred by HIE. In the event of a loss of capital, all parties would contribute to repay the Origination Loan and Additional Contribution with each paying 33.3% of the loss.

6

Table of Contents

The proceeds of each Deal shall be first distributed to Eagle, as repayment for any Additional Contribution. The next proceeds will be allocated to the repayment of the Origination Loan. After the Origination Loan is repaid, net proceeds will be distributed as follows: (i) Eagle shall receive the greater of $0.25 per box of gloves or 33.3% of the net proceeds. If net proceeds are more than $0.25, but less than $0.75 per box, once the first $0.25 is paid to Eagle, the Company and Ikon will share in the remaining profits equally. If the net profits are more than $0.75 per box, all the parties will receive 33.3% of the net profits. Net losses shall be allocated between the parties which each being allocated 33.3%.

HIE is managed by a manager appointed by the parties in accordance with a policy established by the policy committee. Each of the Company and Ikon will have 25 votes in the policy committee and Eagle will have 50 votes.

HIE has no activities and has been wound up in fiscal year 2023.  The Company has recorded a material adverse effectnet gain/loss of $0 and a net gain of $59,208 during fiscal years 2023 and 2022, respectively, of which the Company has recorded a gain/loss on our business.investment of $0 and a gain on investment of $19,736, in fiscal year ended of June 30, 2023, and 2022, respectively.

  

Hawkeye’s Position in the Industry and Competitiveness

We compete with numerous companies in the PPE market. Many organizations are well established with more financial and human resources than we provide. This market is highly fragmented, and participants frequently focus on a specific technology area.

The top nine companies providing PPE products include the following:

Ansell

Ansell manufactures and sells high-performance and high-quality protection solutions, designed for hand, foot, and body protection for different industries such as automotive, chemical, food, services, machinery and equipment, military, mining, and construction.

Honeywell

Honeywell provides eye and face protection equipment, hearing protection equipment, fall protection equipment, hand protection equipment, first-aid, head protection equipment, lockout-tagout, and professional footwear. Salisbury, a Honeywell brand, is the leading manufacturer of PPE for electrical safety. Its solutions comply with ATSM International requirements and OSHA regulations. It offers a complete solution with insulating rubber gloves, line hose, blankets, voltage detectors, clamp sticks, distribution dead-end insulators, temporary grounding equipment, plastic cover-up, and dielectric boots.

6

Table of Contents

3M

3M offers a wide range of products that are used to enhance personal protection of people, facilities, and systems. Products offered by the segment include PPE, traffic safety, civil security solutions, and commercial solutions. 3M offers a strong line of PPE like reusable and disposable respirators, head and face protection equipment, protective eyewear, hearing protection equipment, and reflective materials used in footwear, clothing, and other accessories for enhancing visibility in low-light conditions.

MSA Safety

MSA Safety has divided its products into two categories: non-core products and core products. Non-core products include respirators, thermal imaging cameras, eye and face protection equipment, and gas masks. These products complement the core offerings. The company’s core products include fall protection equipment, fire and rescue helmet, head protection equipment, portable gas detection instruments, breathing apparatus products, and fixed gas and flame detection instruments.

DuPont

DuPont is a provider of PPE including body armor, cut protection, vehicle armor, flame-resistant clothing, and chemical protective garments and accessories. DuPont has several brands including, Kevlar brand, Nomex brand, ProShield garments, Tychem garments, Tyvek protective apparel, Thermo-man demonstration unit, Protera fabric, ProShield garments, and Nomex fabric for military, firefighters, and police.

Lindström Group

Lindström Group offers a wide range of PPE to reduce accidents in hazardous environments. Its high-quality PPE portfolio includes protective footwear, respiration protection, head protection equipment, eye and face protection equipment, hearing protection equipment, protective clothing, head and arm protection equipment, and fall arrest systems.

Alpha ProTech

Alpha ProTech has expertise in manufacturing high-quality protective clothing, infection control products, and a line of construction weatherization building products for the housing market. It sells its products under its brand name as well as private labels. Its protective apparel product category provides a complete range of head-to-toe protective clothing products such as shoe covers, bouffant caps, frocks and lab coats, coveralls, and gowns. The infection control product line offers face masks and eye shields.

Avon Rubber

Avon operates in two core markets: protection and defense and dairy. The company's protection systems have expertise in chemical, biological, radiological, and nuclear defense for the US homeland security, military, and fire and industrial market. The respiratory products are directly sold to the military, and the primary customers are the US department of defense including army, marines, air force, navy, and coast guard. The company's offerings in the PPE market include respirators, gas masks, and spares and accessories.

Johnson Safety Products

JSP is an independent manufacturer of industrial head protection and above-the-neck PPE. The company has R&D team and testing bases in Oxford, UK. The product portfolio includes eye and face protection equipment, head protection equipment, hearing protection equipment, respiratory protection equipment, body PPE, fall protection equipment, and traffic equipment.

It is our hypothesis that due to entanglements with the US government and federal procurement processes the typical providers including 3m and Honeywell will be somewhat hamstrung in their ability to grow to meet the demands of these growing marketplaces until they meet the demands of the federal government which we don’t expect to be in the near future. Other US providers such as Prestige Ameritech are impacted by their access to capital and their current inability to scale to the market demands.

7

Table of Contents

Prior Investment in Radiant Images,CNTNR USA, Inc.

 

On September 19, 2019,February 27, 2023, the Company entered into a Stock Purchase Agreement with Radiant Images,as “Lender” and CNTNR USA, Inc., a CaliforniaDelaware corporation (“Radiant”CNTNR”), as well as Radiant’s shareholder Gianna Wolfe (“Wolfe”“Borrower” executed a promissory note (the “Original CNTNR Note”) and key employee, Michael Mansouri (“Mansouri”), pursuant to which. CNTNR borrowed $200,000 from the Company would acquire 100%under the Original CNTNR Note.

On April 6, 2023, the Company as “Lender” and CNTNR as “Borrower” executed a restated promissory note (the “Restated Note”). The principal amount of the Restated Note is $1,000,000, accruing annual interest at a rate of 12%, the Restated Note takes into account the $200,000 borrowed under the Original CNTNR Note. The maturity date of the Restated Note is: (i) the closing of a material debt or equity financing by CNTNR; or (ii) September 30, 2023, whichever occurs first. The Restated Note includes warrant coverage of one warrant issued for every one share of CNTNR issued in repayment of the principal amount of the Restated Note. The warrants shall be exercised with a 30% discount over the fair market value of the shares of common stock (the “Shares”) of Radiant from Wolfe, resulting in acquisition of Radiant.

InCNTNR and expire 36 months after April 2020, the Company received notice from Radiant Images of their intent to terminate the acquisition agreement. Although the Company believes that the termination is not legally valid, the Company has ceased further discussions with respect to the acquisition and is pursuing litigation for repayment of amounts due by Radiant. The Company’s investment in Radiant was structured as a revolving note has been classified as a Note Receivable from Radiant due with accrued but unpaid interest.6, 2023. Pursuant to the terms of the revolving note, Radiant is requiredRestated Note, CNTNR paid a commitment fee to repay the money already investedCompany equivalent to Hawkeye with interest. The note receivable was issued on April 26, 2019, is due upon demand5% of the principal amount of the Restated Note; and a consulting fee of $5,000 per month, beginning on March 1, 2023. Upon maturity of the Restated Note, CNTNR shall pay all principal and interest due under the Restated Note and issued the equivalent of 10% of its issued and outstanding shares to the Company. If CNTNR defaults on repayment at maturity, then it shall issue 15% of its issued and outstanding shares to the Company. Warrant coverage applies over the shares issued at repayment, either over 10% of CNTNR’s outstanding shares if the Restated Note is repaid on or before its maturity date, or 15% of CNTNR's outstanding shares if the Borrower is in default.

To fund the Company’s investment in CNTNR, the Company and Steve Hall, a Company shareholder holding 37% of the issued and outstanding shares of the Company’s Common Stock, executed a promissory note on March 29, 2023 (the “Hall Note”). The principal amount under the Hall Note was $1,000,000, accruing interest at any time commencing April 26, 2020.a rate of 12% per year. The maturity date of the Hall Note was: (i) the closing of a debt financing, or (ii) May 31, 2023, whichever occurs first. At the maturity date, the Company shall pay Steve Hall all accrued principal and interest rateunder the Hall Note, and transfer to Steve Hall 90% of the shares of CNTNR issued to the Company and 90% of the warrants issued under the Restated Note. As on the note is 12%date of this report, the Company and accrues daily on the outstanding balance. During the fiscal year ended June 30, 2020, total contributions of $385,000 were made to Radiant, bringing the balanceSteve Hall are currently working towards a restructuring of the note receivable to $1,305,800 at June 30, 2020 (not including interest). At June 30, 2020 interest income of $154,042 had been accrued on the note. Under accounting treatment, this note and interest are impaired on our balance sheet while we undertake litigation to resolve this dispute. Nevertheless the Company intends to vigorously pursue this matter and litigation and believes that this amount is fully collectible from Radiant and/or its principals.

Proposed Acquisition of DemeTECH Corporation

As part of our PPE operations, the Company has developed an exclusive worldwide distribution relationship with DemeTECH Corporation for supply of masks which are produced in the United States. In addition to PPE production, DemeTech Corporation is a world-renowned leader in surgical sutures, mesh and bone wax. DemeTech strives to enhance doctor-patient relationships through hard work, dedication, and a commitment to the pursuance of cutting-edge technology and innovation.  DemeTECH’s corporate headquarters are located in Miami, Florida, with office facilities stemming throughout North America, South America, Asia, the Middle East, and Europe.  DemeTech prides itself on using next-generation technology to meet the growing demands of today's society.  DemeTECH has proven their ability to meet federal standards (NIOSH approval), scale their operations, and to provide high quality product.   We will continue to work with them to provide further improve their cost advantage and take advantage of the benefits of US based production.Hall Note.

 

Company Policies

 

The Company has adopted the following policies: (i) code of conduct policy; (ii) information security policy; and (iii) public company communication policy.

 

Employees

 

The Company currently has two directors consisting of Corby Marshal, Chief Executive Officer, and M. Richard Cutler. The Company also has one additional officer Christopher Mulgrew, Chief Financial Officer. We currently have one other independent contractor providing bookkeeping and accounting services and a handful of contractors.no employees.

7

Table of Contents

 

Legal Proceedings

 

On November 13, 2019 5W Public Relations LLC filed a complaint against Hawkeye Systems, Inc. relating to payments allegedly due under a contract for public relations services. That complaint has not been served on Hawkeye. Hawkeye vigorously disputes the allegations in the complaint as 5W Public Relations provided virtually no services to Hawkeye during the term of this arrangement but was paid a substantial amount of funds. Hawkeye will not only defend the litigation when and if it is served, but will also provide counterclaims for failure of consideration, fraud in the inducement, general fraud and other causes of action. Hawkeye anticipates that this litigation if pursued will be resolved favorably for the Company.

In April 2020, the Company received notice from Radiant Images of their intent to terminate the Company’s acquisition agreement. Although the Company believes that the termination is not legally valid, the Company ceased further discussions with respect to the acquisition and has engaged counsel to pursue litigation for repayment of amounts due by Radiant. The Company’s investment in Radiant was structured as a revolving note has been classified as a Note Receivable from Radiant due with accrued but unpaid interest. Pursuant to the terms of the revolving note, Radiant is required to repay the money already invested to Hawkeye with interest. The note receivable was issued on April 26, 2019, is due upon demand of the Company at any time commencing April 26, 2020. The interest rate on the note is 12% and accrues daily on the outstanding balance. During the fiscal year ended June 30, 2020, total contributions of $385,000 were made to Radiant, bringing the balance of the note receivable to $1,305,800 at June 30, 2020 (not including interest). At June 30, 2020 interest income of $154,042 had been accrued on the note. Under accounting treatment, this note and interest are impaired on our balance sheet while we undertake litigation to resolve this dispute. Nevertheless, the Company intends to vigorously pursue this matter and litigation and believes that this amount is fully collectible from Radiant and/or its principals.

8

Table of Contents

Other than the foregoing, the Company is not currently a party to any material legal proceedings and is not aware of any material threatened litigation.

 

Offices

 

Our current executive offices are provided by the management of the Company. We do not pay any rent, and there is no agreement to pay any rent in the future.

 

Item 1A. Risk Factors.

 

Not Applicable.We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 1B. Unresolved Staff Comments

 

Not Applicable.We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 2. Properties.

 

We own no properties related to our operations. We operate from business offices provided by our executive officers.

 

Item 3. Legal Proceedings.

 

On November 13, 2019 5W Public Relations LLC filed a complaint against Hawkeye Systems, Inc. relating to payments allegedly due under a contract for public relations services. That complaint has not been served on Hawkeye. Hawkeye vigorously disputes the allegations in the complaint as 5W Public Relations provided virtually no services to Hawkeye during the term of this arrangement but was paid a substantial amount of funds. Hawkeye will not only defend the litigation when and if it is served, but will also provide counterclaims for failure of consideration, fraud in the inducement, general fraud and other causes of action. Hawkeye anticipates that this litigation if pursued will be resolved favorably for the Company.

In April 2020, the Company received notice from Radiant Images of their intent to terminate the Company’s acquisition agreement. Although the Company believes that the termination is not legally valid, the Company ceased further discussions with respect to the acquisition and has engaged counsel to pursue litigation for repayment of amounts due by Radiant.  The Company’s investment in Radiant was structured as a revolving note has been classified as a Note Receivable from Radiant due with accrued but unpaid interest.  Pursuant to the terms of the revolving note, Radiant is required to repay the money already invested to Hawkeye with interest. The note receivable was issued on April 26, 2019, is due upon demand of the Company at any time commencing April 26, 2020. The interest rate on the note is 12% and accrues daily on the outstanding balance. During the fiscal year ended June 30, 2020, total contributions of $385,000 were made to Radiant, bringing the balance of the note receivable to $1,305,800 at June 30, 2020 (not including interest). At June 30, 2020 interest income of $154,042 had been accrued on the note.  Under accounting treatment, this note and interest are impaired on our balance sheet while we undertake litigation to resolve this dispute.  Nevertheless, the Company intends to vigorously pursue this matter and litigation and believes that this amount is fully collectible from Radiant and/or its principals.

Other than the foregoing, weWe are not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this report, no director, officer, or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. We are not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

 

9

Table of Contents

PART II

Item 4. Mine Safety Disclosures.

 

Not applicable

 

8

Table of Contents

PART II

Item 5. Market for Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “HWKE”. On June 12, 2019, the Company obtained clearance to trade on OTC Markets and on September 12, 2019, the Company’s stock began trading on the OTCQB market maintained by OTC Markets. Quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not represent actual transactions. The closing sale price of our common stock on January 21, 2021October 13, 2023 was $0.5099$0.17 per share.

 

Below is a table indicating the range of high and low closing price information for the common stock as reported by the OTC Markets Group for the periods listed. These prices do not necessarily reflect actual transactions.

 

 

 

High

 

 

Low

 

Quarter ended December 31, 2020

 

$0.62

 

 

$0.35

 

Quarter ended September 30, 2020

 

$0.43

 

 

$1.24

 

Quarter ended June 30, 2020

 

$0.50

 

 

$0.16

 

Quarter ended March 31, 2020

 

$1.10

 

 

$0.13

 

Quarter ended December 31, 2019

 

$2.50

 

 

$1.50

 

 

 

High

 

 

Low

 

Quarter ended June 30, 2023

 

$0.35

 

 

$0.35

 

Quarter ended March 31, 2023

 

$0.12

 

 

$0.12

 

Quarter ended December 31, 2022

 

$0.21

 

 

$0.18

 

Quarter ended September 30, 2022

 

$0.22

 

 

$0.22

 

Quarter ended June 30, 2022

 

$0.28

 

 

$0.25

 

 

Holders

 

As of January 21, 2021,October 13, 2023, there were approximately 3441 record holders of our common stock. This does not include the holders of our common stock who held their shares in street name as of that date.

 

Dividends

 

We have never paid or declared any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future but rather intend to retain future earnings, if any, for reinvestment in our future business. Any future determination to pay cash dividends will be in compliance with our contractual obligations and otherwise at the discretion of the board of directors and based upon our financial condition, results of operations, capital requirements and such other factors as the board of directors deems relevant.

 

Transfer Agent

 

Our registrar and transfer agent is VStock Transfer, LLC.

 

Recent Sales of Unregistered Securities

 

On February 14, 2020 the Company issued 248,000 shares to a related party for $62,000. As part of the investment, the investor was also issued 100,000 warrants to purchase shares of common stock for one year at $0.30 per share.

On February 20, 2020, the Company issued 416,668 shares to a related party upon the exercise of warrants for $166,167.

10

Table of Contents

Effective March 3, 2020, the Company issued 40,000 shares of common stock to an accredited investor upon the exercise of warrants for $40,000.

Effective March 5, 2020, the Company issued 50,000 shares of common stock to an accredited investor upon the exercise of warrants for $15,000.Restricted Common Stock – Steve Hall

 

On April 6, 2020, the company issued 59,186 shares to a consultant for services valued at $18,000.

On April 23, 2020 the Company issued 1,000,000 shares to an accredited investor for $250,000. As part of the investment, the investor was also issued 2,000,000 warrants to purchase shares of common stock for one year at $1.00 per share and 2,000,000 warrants to purchase shares of common stock for one years at $2.00 per share.

Effective June 29, 2020, the Company issued 65,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

Effective June 30, 2020, the Company issued 200,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

Effective June 30, 2020, the Company issued 100,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

Effective July 7, 2020, the Company issued 100,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

Effective July 21, 2020, the Company issued 100,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

Effective July 31, 2020, the Company issued 75,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.

On September 23, 2020 Eagle Equities LLC converted in full its outstanding convertible note with an original principal amount of $150,000, together with accrued and unpaid interest, into 469,623 shares of common stock.

Effective July 1, 2020, the Company issued 800,000 shares of common stock to an accredited investor upon conversion of a $200,000 convertible note at $0.25 per share.

Effective November 25, 2020, the Company’s chief executive officer converted $180,000 of unpaid salary into 515,000 shares of common stock.

Effective December 3, 2020, the Company issued 100,000 shares of common stock to an accredited investor for $20,000. Included with the purchase were 100,000 options to purchase common stock at $.20 per share exercisable for two years.

Effective December 15, 2020, the Company issued 612,000two convertible notes payable of $250,000 each to Steve Hall. Both notes have one year term with simple interest at 10% per annum if repaid within 90 days, and simple interest at 20% per annum thereafter. At the option of holder, this note is convertible at any time which is six months from the date of issuance through that date which is one year from the date of issuance at a conversion price of $0.25 per share. In consideration for the loans, the Company also granted to the Lender 200,000 stock options exercisable at $0.25 for a two-year term. The options vested upon issuance. On November 2, 2021, the Company issued 160,000 shares of common stock for cashless exercise of 200,000 shares of stock option. Both notes and the accrued interests totaling $594,344 have been converted on September 1, 2021, and issued on July 28, 2022 for the aggregate total of 16,666,667 shares of common stock. On February 9, 2023, the 16,666,667 shares of common stock were reduced to 1,666,667 shares to reflect the 1-for-10 reverse stock split.

Restricted Common Stock - Richard Cutler

On May 23, 2022, the Company granted 500,000 shares of restricted common stock as compensation to Richard Cutler, a director until August 11, 2022. The shares were valued at $20,000 and were granted in lieu of cash compensation, contingent upon completion of an accredited investoracquisition or reverse takeover. The 500,000 shares were issued on February 10, 2023, and later 450,000 shares were cancelled on June 15, 2023 due to the recognition of the Company’s reversed stock split. See further discussion on Note 13 – Reversed Stock Split to the Financial Statements.

Restricted Common Stock - Christopher Mulgrew

On May 23, 2022, the Company granted 250,000 shares of restricted common stock as compensation to Christopher Mulgrew, the Company’s Chief Financial Officer. The shares were valued  at $10,000 and were granted in lieu of cash compensation, contingent upon conversioncompletion of $153,000an acquisition or reverse takeover. The stocks were issued on February 10, 2023, and later 225,000 shares were cancelled on June 15, 2023 due to the recognition of the reverse stock split. See further discussion on Note 13 – Reversed Stock Split to the Financial Statements.

9

Table of Contents

On April 9, 2023, the Company granted 500,000 shares of restricted common stock with a fair market value of $0.142 per share to Christopher Mulgrew, the Company’s Chief Financial Officer, as performance bonus for calendar years 2021 and 2022, and recognizing that Mr. Mulgrew agreed to defer a significant portion of contractually obligated compensation payments. The shares were issued on April 24, 2023 in debt.the amount of $71,000. 

Restricted Common Stock - Corby Marshall

On February 9, 2023, the Company granted 750,000 shares of restricted common stock at the fair market value of $0.142 per share to Corby Marshall, the Company’s Chief Executive Officer, as performance bonus for calendar years 2021 and 2022, and recognizing that Mr. Marshall agreed to defer a significant portion of contractually obligated compensation payments. The shares were issued on April 24, 2023 in the amount of $106,500.

Common Stock issued for Rounding

On February 22, 2023, the Company issued 139 shares of common stock for rounding to reflect the 1 for 10 reverse stock splits. See further discussion on Note 13 – Reversed Stock Split to the Financial Statements.

 

Item 6. Selected Financial Data.

 

Not applicable.

 

11

Table of Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion relates to the historical operations and financial statements of Hawkeye Systems, Inc. for the fiscal year ended June 30, 2020.2023.

 

Forward-Looking Statements

 

The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report.annual report. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report.annual report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks Factors"“Risks Factors” in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.annual report.

The Company is currently looking for investment opportunities into target businesses in diversified industries, such as affordable housing development, and technology applications to mitigate the effects of climate change. From the date of our previous filing, we entered into a convertible promissory note with CNTNR providing them with $1,000,000 in financing, as described in Notes 8 and 10 to the Financial Statements.

 

Financial Condition and Results of Operations

 

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.our operations.

10

Table of Contents

 

We expect we will require additional capital to meetdevelop our long-term operating requirements.business plan. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

Results of Operations

 

Fiscal YearYears Ended June 30, 20192023 and 2022

 

We haveThe Company had no$0 operating revenues in ourfor both fiscal year ended June 30, 2019. Our activities have been financed by the proceedsyears of share subscriptions2023 and loans. During our fiscal year ended June 30, 2019, we raised approximately $775,000 from private offerings of our common stock and raised an additional $400,000 during the period in connection with two promissory notes issued to accredited investors.

Total operating expenses in the year ended June 30, 2019 were $1,356,340 which is also the Company’s operating loss. The operating loss for this period is a result of legal and professional fees required to form2022 after the Company forceased operations of its PPE business development and regulatory filing expenses and fees. Our loss also reflect an other expensein July 2021. The Company generated from CNTNR a total of $510,568 in interest with is based on the value of securities issued in lieu of interest payments.

Net loss$70,000 for the year ended June 30, 20192023 in other income, of which $20,000 was $1,866,998.

12

Table of Contents

Fiscal Year Ended June 30, 2020generated for consulting fees, and $50,000 for financing arrangement fee. See further discussion on Note 10– Note receivable to the Financial Statements.

 

We had operating revenues of $3,020,672 in our fiscal year ended June 30, 2020. Cost of sales was $1,992,809 resulting in gross profit of $1,027,863, or 34%. These revenues are from the sale of PPE products. During our fiscal year ended June 30, 2020, we raised approximately $512,500 from private offerings of our common stock and an additional $221,000 from exercise of warrants. We raised additional funds of $277,000 from a related party, paid directly for the purchase of PPE, which is included in common stock payable, as of June 30, 2020. We raised an additional $383,500 from convertible notes.

Total2023, total operating expenses in the year ended June 30, 2020 were $2,217,981$1,118,537 compared to $1,356,340$1,230,468 for the same period in 2019.2022. The increasedecrease in operating expenses is primarily a result of increased compensation, professional feesa decrease in Selling, General, and a result of write down of inventory.Administrative expenses due to company downsizing. The Company’s net loss was $2,600,468$1,226,311 for the fiscal year ended June 30, 20202023 compared to $1,866,998net loss of $1,288,802 for the fiscal year ended June 30, 2019.2022. The net loss for this period islosses are primarily a result of generaloperating expenses, and administrative costs, professional fees, management compensation and significant cost of sales.interest expenses.

 

Liquidity and Capital Resources

 

Our cash balance at June 30, 20202023 was $911,747$143,861 compared to $18,372$325 at June 30, 2019.2022. We do not believe these cash reserves are sufficient to cover our expenses for our operations for fiscal year ending June 30, 2021.the next 12 months. We will require additional funding for our PPE purchases and ongoing operations. While

As of our fiscal year ended June 30, 2023, we havereceived $260,000, from a loanline of credit from a related party, and an additional $1,000,000 from a promissory note issued by a related party.

During our fiscal year ended June 30, 2023, the Company issued common stock valued at $624,344 in connection with settlement of stock payable, from Radiant Systemswhich included $594,344 associated with the settlement of $1,305,800a convertible promissory note with Steve Hall, and interest$30,000 related to settlement of compensation due from Radiant of $154,042, those amounts are reflected impaired on our balance sheet as a result of the litigation with Radiant. Nevertheless, we intend to vigorously pursue that litigationRichard Cutler for $20,000, and expect to fully recover those amounts.Christopher Mulgrew for $10,000.

 

In addition, we intend to raise funds through the sale of equity and the exercise of warrants issued in private placements. Although to date we have had some warrant exercises for cash, there can be no assurance that we will be able to raise money through this offering or through the exercise of warrants.debt securities. If we cannot raise any additional financing prior to the expiration of the first quarter of 2021,2024, we believe we will be able to obtain loans from management in the future, if necessary, but have no agreement in writing.

 

We are an emerging growtha smaller reporting company and although we have begun to generate revenue from our PPE transactions, we have limited revenueaccumulated losses to date. Under a limited operations scenario to maintain our corporate existence, we believe we will require additional funds over the next 12 months to complete our regulatory reporting and filings. However, we will require maximum participation through private placements, warrant exercises or alternative financingsfinancing to implement our complete business plan.

 

There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.

 

Plan of Operation and Funding

 

We expect that working capital requirements will continue to be funded through equity offerings, warrant exercises, and related party advances in the near term.future. We have no guarantees or firm commitments that the related party advances will continue in the near term. Our working capital requirements are expected to increase with the growth of our business and sales of PPE.future.

 

Existing working capital, further advances, together with anticipated capital raises and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months.months, but there is no guarantee that we will be successful in raising enough capital, or that we will receive the cash flow required to fund our operations. We have no lines of credit with banking institutions or other bank financing arrangements.arrangements, we do have a line of credit form a related party (see Note 7 to the Financial Statements). Generally, we have financed operations to date through proceeds from the sale of our common stock, warrant exercises and convertible loans.

 

Management anticipates additional increases in operating expenses relating to: (i) funding PPE purchases and sales; (ii) developmental expenses; and (iii) marketing expenses. We intend to finance these expenses with issuances of securities and through the exercise of outstanding warrants.

1311

Table of Contents

 

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences, or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrictcontinue our business operations.

 

Material Commitments

 

As of the date of this Current Report,annual report, we do not have any material commitments.entered into various commitments on loan obligations. For a discussion of the related items, please see Notes 5 to 10 to the Financial Statements. 

 

Purchase of Significant Equipment

 

We do not intend to purchase any significant equipment during the next twelve months.

 

Off-Balance Sheet Arrangements

 

As of the date of this Current Report,annual report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Going Concern

 

As reflected in the accompanying financial statements, the Company had an accumulated deficit of approximately $4,509,841$12,108,487 at June 30, 20202023 and net loss from operations of $1,190,118.$1,118,537.

 

The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been the issuance of equity securities, proceeds from convertible loans, and related party advances. In addition, the Company is in the development stage and has generated limited revenuesaccumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue operations is dependent on the success of Management’s plans which include the sale of significant PPE products,and raising of capital through the issuance of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements.

 

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives.identify, negotiate and materialize a business combination with a target business. The Company believes its current available cash may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Critical Accounting Policies and Estimates

 

For a discussion of our accounting policies and related items, please see the Notes to the Financial Statements, included in Item 8.

 

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

 

Not applicable.

 

1412

Table of Contents

 

Item 8. Financial Statements and Supplementary Data.

 

Contents

 

Part 1

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Report of Independent AuditorRegistered Public AccountingFirm  (PCAOB ID: 5041)

 

16F-2

Report of Independent Registered Public AccountingFirm (PCAOB ID: 6906)

F-3

 

 

 

 

 

 

 

Balance Sheets as of June 30, 20202023 and June 30, 20192022

 

17F-4

 

 

 

 

 

 

 

Statements of Operations for the years ended June 30, 20202023 and 20192022

 

18F-5

 

 

 

 

 

 

 

Statements of Changes in Stockholders’ Equity (Deficit) for the years ended June 30, 20202023 and 20192022

 

19F-6

 

 

 

 

 

 

 

C Statements of Cash Flows for the years ended June 30, 20202023 and 20192022

 

20F-7

 

 

 

 

 

 

 

Notes to Financial Statements

 

21F-8

 

 

15F-1

Table of Contents

  

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Hawkeye Systems, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheetssheet of Hawkeye Systems, Inc. (the "Company") as of June 30, 2020 and 2019,2022, the related statementstatements of operations, stockholders' equity (deficit), and cash flows for the yearsyear then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019,2022 and the results of its operations and its cash flows for the yearsyear then ended, in conformity with accounting principles generally accepted in the United States.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/S/ BF Borgers CPA PC

BF Borgers CPA PC (PCAOB ID 5041)

We have served as the Company's auditor from 2018 to 2023

Lakewood, CO

December 14, 2022

F-2

Table of Contents

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Hawkeye Systems, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Hawkeye Systems, Inc. (the “Company”) as of June 30, 2023, the related statement of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

Explanatory Paragraph - Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, during the year ended June 30, 2023, the Company had a net loss of $1,226,311 and an accumulated deficit of $12,108,487. The Company has not established sufficient revenue to cover its operating costs and will require additional capital to continue its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.

The Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BF BorgersReliant CPA PC

BF BorgersReliant CPA PC

 

Served as Auditor since 20182023

Lakewood, CONewport Beach, CA

February 1, 2021October 5, 2023

 

16F-3

Table of Contents

 

HAWKEYE SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

As at June 30, 2020 and 2019

 

 

 

June 30,

 

 

June 30,

 

ASSETS

 

2020

 

 

2019

 

Current assets:

 

 

 

 

 

 

Cash

 

$911,747

 

 

$18,372

 

Accounts receivable

 

 

47,656

 

 

 

-

 

Inventory, net

 

 

509,517

 

 

 

-

 

Prepaid expenses

 

 

6,667

 

 

 

4,855

 

Total current assets

 

 

1,475,587

 

 

 

23,227

 

 

 

 

 

 

 

 

 

 

Equipment, net

 

 

737

 

 

 

3,145

 

Advances to Radiant Images, Inc.

 

 

-

 

 

 

920,800

 

Note receivable - Radiant Images, Inc., net of allowance of $1,459,842 and $0, respectively

 

 

-

 

 

 

-

 

Total assets

 

$1,476,324

 

 

$947,172

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$332,327

 

 

$86,664

 

Convertible note payable, net of discount

 

 

137,625

 

 

 

-

 

Convertible note payable, net of discount – related party

 

 

211,305

 

 

 

-

 

Notes payable - related parties

 

 

200,000

 

 

 

400,000

 

Common stock payable

 

 

436,000

 

 

 

-

 

Total current liabilities

 

 

1,317,257

 

 

 

486,664

 

Total liabilities

 

 

1,317,257

 

 

 

486,664

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 50,000,000 shares authorized; no shares issued or outstanding

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value, 400,000,000 shares authorized; 14,828,036 and 9,897,116 shares issued and outstanding, respectively

 

 

1,483

 

 

 

990

 

Additional paid-in capital

 

 

4,527,925

 

 

 

2,198,891

 

Common stock to be issued - 425,000 and 150,000 shares, respectively

 

 

139,500

 

 

 

170,000

 

Accumulated deficit

 

 

(4,509,841)

 

 

(1,909,373)

Total stockholders’ equity

 

 

159,067

 

 

 

460,508

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$1,476,324

 

 

$947,172

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$143,861

 

 

$325

 

Prepaid expenses

 

 

2,370

 

 

 

1,333

 

Interest receivable

 

 

40,438

 

 

 

-

 

Loan receivable

 

800,000

 

 

 

-

 

Total current assets

 

 

986,669

 

 

 

1,658

 

 

 

 

 

 

 

 

 

 

Total assets

 

$986,669

 

 

$1,658

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities – related party

 

$730,454

 

 

$186,009

 

Accounts payable and accrued liabilities

 

 

13,644

 

 

 

7,637

 

Convertible note payable, net of discount - related party

 

 

500,000

 

 

 

500,000

 

Accrued interest – related party

 

 

298,158

 

 

 

79,946

 

Line of credit – related party

 

 

525,000

 

 

 

265,000

 

Promissory note payable – related party

 

 

1,000,000

 

 

 

-

 

Common stock payable - related party

 

 

-

 

 

 

624,344

 

Total current liabilities

 

 

3,067,256

 

 

 

1,662,936

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Loan payable due to Eagle - JV partner

 

 

442,251

 

 

 

442,251

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

3,509,507

 

 

 

2,105,187

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 50,000,000 shares authorized; no shares issued or outstanding

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value, 400,000,000 shares authorized; 5,552,222 and 2,560,414 shares issued and outstanding, respectively

 

 

555

 

 

 

256

 

Additional paid-in capital

 

 

9,585,094

 

 

 

8,778,391

 

Accumulated deficit

 

 

(12,108,487)

 

 

(10,882,176)

Total stockholders’ deficit

 

 

(2,522,838)

 

 

(2,103,529)

Total liabilities and stockholders’ deficit

 

$986,669

 

 

$1,658

 

 

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

 

17F-4

Table of Contents

 

HAWKEYE SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended June 30, 2020 and 2019

 

 

June 30,

 

June 30,

 

 

Years Ended

 

 

2020

 

 

2019

 

 

June 30,

 

 

 

 

 

 

 

2023

 

 

2022

 

Sales

 

$3,020,672

 

$-

 

Cost of sales

 

 

1,992,809

 

 

 

-

 

Gross profit

 

 

1,027,863

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

General and administrative

 

264,250

 

185,233

 

 

89,260

 

284,751

 

Management compensation

 

778,085

 

592,874

 

 

622,551

 

799,593

 

Professional fees

 

581,132

 

523,795

 

 

156,726

 

78,811

 

Professional fees - related party

 

377,707

 

-

 

 

250,000

 

61,500

 

Marketing

 

90,807

 

54,438

 

 

 

-

 

 

 

5,813

 

Write-down of inventory

 

 

126,000

 

 

 

-

 

Total operating expenses

 

 

2,217,981

 

 

 

1,356,340

 

 

 

1,118,537

 

 

 

1,230,468

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,190,118)

 

 

(1,356,340)

 

 

(1,118,537)

 

 

(1,230,468)

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

Other income and (expense):

 

 

 

 

 

Other income

 

70,000

 

-

 

PPP loan forgiveness

 

-

 

17,293

 

Interest income

 

154,042

 

-

 

 

40,438

 

-

 

Interest expense

 

(47,024)

 

(510,658)

Financing expense - related party

 

(57,526)

 

-

 

Allowance for Radiant Images, Inc. - note receivable

 

 

(1,459,842)

 

 

-

 

Total other expense

 

 

(1,410,350)

 

 

(510,658)

Interest expense - related party

 

(218,212)

 

(95,363)

Gain on investment in HIE

 

 

-

 

 

 

19,736

 

Total other income and (expense)

 

 

(107,774)

 

 

(58,334)

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(2,600,468)

 

$(1,866,998)

 

$(1,226,311)

 

$(1,288,802)

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

 

$(0.21)

 

$(0.20)

 

$(0.23)

 

$(0.56)

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted

 

 

12,584,616

 

 

 

9,253,980

 

 

 

5,236,347

 

 

 

2,312,334

 

 

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

 

18F-5

Table of Contents

 

HAWKEYE SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Years Ended June 30, 2020 and 2019

 

 

 

 

 

 

 

 

 

Additional

 

 

Common

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Stock

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

To Be Issued

 

 

Deficit

 

 

Equity

 

Balance, June 30, 2018

 

 

8,886,416

 

 

$889

 

 

$655,836

 

 

$(142,500)

 

$(42,375)

 

$471,850

 

Common stock and warrants issued for cash

 

 

951,600

 

 

 

95

 

 

 

260,347

 

 

 

142,500

 

 

 

-

 

 

 

402,942

 

Common stock and warrants issued for services

 

 

59,100

 

 

 

6

 

 

 

29,544

 

 

 

-

 

 

 

-

 

 

 

29,550

 

Stock based compensation – warrants

 

 

-

 

 

 

-

 

 

 

252,858

 

 

 

-

 

 

 

-

 

 

 

252,858

 

Stock based compensation – options

 

 

-

 

 

 

-

 

 

 

422,326

 

 

 

-

 

 

 

-

 

 

 

422,326

 

Extension of warrants for cash

 

 

-

 

 

 

-

 

 

 

193,054

 

 

 

-

 

 

 

-

 

 

 

193,054

 

Stock subscriptions received

 

 

-

 

 

 

-

 

 

 

-

 

 

 

170,000

 

 

 

-

 

 

 

170,000

 

Fair value of conversion feature of note payable

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

-

 

 

 

-

 

 

 

200,000

 

Relative fair value of warrants issued with convertible debt

 

 

-

 

 

 

-

 

 

 

184,926

 

 

 

-

 

 

 

-

 

 

 

184,926

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,866,998)

 

 

(1,866,998)

Balance, June 30, 2019

 

 

9,897,116

 

 

 

990

 

 

 

2,198,891

 

 

 

170,000

 

 

 

(1,909,373)

 

 

460,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issues for stock to be issued

 

 

430,000

 

 

 

43

 

 

 

169,957

 

 

 

(170,000)

 

 

-

 

 

 

-

 

Common stock and warrants issued for cash

 

 

1,782,666

 

 

 

178

 

 

 

392,822

 

 

 

 

 

 

 

-

 

 

 

393,000

 

Common stock and warrants issued for services

 

 

984,253

 

 

 

98

 

 

 

471,378

 

 

 

-

 

 

 

-

 

 

 

471,476

 

Stock based compensation – options

 

 

-

 

 

 

-

 

 

 

541,931

 

 

 

-

 

 

 

-

 

 

 

541,931

 

Stock based compensation – warrants

 

 

-

 

 

 

-

 

 

 

57,526

 

 

 

-

 

 

 

-

 

 

 

57,526

 

Common stock issued on conversion of note payable

 

 

400,000

 

 

 

40

 

 

 

199,960

 

 

 

-

 

 

 

-

 

 

 

200,000

 

Warrants exercised for cash

 

 

516,000

 

 

 

52

 

 

 

220,948

 

 

 

-

 

 

 

-

 

 

 

221,000

 

Warrants exercised for services

 

 

53,333

 

 

 

5

 

 

 

15,995

 

 

 

-

 

 

 

-

 

 

 

16,000

 

Common stock issued for investment in Radiant Images, Inc.

 

 

704,668

 

 

 

71

 

 

 

206,929

 

 

 

-

 

 

 

-

 

 

 

207,000

 

Common stock reissued to replace lost shares

 

 

60,000

 

 

 

6

 

 

 

(6)

 

 

-

 

 

 

-

 

 

 

-

 

Common stock subscriptions received

 

 

-

 

 

 

-

 

 

 

-

 

 

 

139,500

 

 

 

-

 

 

 

139,500

 

Beneficial conversion feature

 

 

-

 

 

 

-

 

 

 

51,594

 

 

 

-

 

 

 

-

 

 

 

51,594

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,600,468)

 

 

(2,600,468)

Balance, June 30, 2020

 

 

14,828,036

 

 

$1,483

 

 

$4,527,925

 

 

$139,500

 

 

$(4,509,841)

 

$159,067

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance, June 30, 2021 (Restated)

 

 

17,921,148

 

 

$179

 

 

$7,958,622

 

 

$(9,713,661)

 

$(1,754,860)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative-effect adjustment from adoption of ASU 2020-06

 

 

-

 

 

 

-

 

 

 

(169,354)

 

 

120,287

 

 

 

(49,067)

Common stock issued for settlement of account payable

 

 

30,000

 

 

 

3

 

 

 

29,970

 

 

 

-

 

 

 

30,000

 

Stock based compensation – options

 

 

-

 

 

 

-

 

 

 

482,200

 

 

 

-

 

 

 

482,200

 

Stock option cashless exercised

 

 

627,500

 

 

 

63

 

 

 

(63)

 

 

-

 

 

 

-

 

Common stock issued for common stock payable

 

 

110,800

 

 

 

11

 

 

 

476,989

 

 

 

-

 

 

 

477,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,288,802)

 

 

(1,288,802)

Balance, June 30, 2022

 

 

2,560,416

 

 

$256

 

 

$8,778,391

 

 

$(10,882,176)

 

$(2,103,529)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for common stock payable

 

 

1,741,667

 

 

 

174

 

 

 

624,170

 

 

 

-

 

 

 

624,344

 

Common stock issued for compensation

 

 

1,250,000

 

 

 

125

 

 

 

177,375

 

 

 

 

 

 

 

177,500

 

Stock based compensation – options

 

 

-

 

 

 

-

 

 

 

5,158

 

 

 

-

 

 

 

5,158

 

Shares issued for rounding to reflect the 1 for 10 reverse stock split

 

 

139

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,226,311)

 

 

(1,226,311)

Balance, June 30, 2023

 

 

5,552,222

 

 

$555

 

 

$9,585,094

 

 

$(12,108,487)

 

$(2,522,838)

 

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

 

19F-6

Table of Contents

 

HAWKEYE SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended June 30, 2020 and 2019

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(2,600,468)

 

$(1,866,998)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

2,408

 

 

 

1,673

 

Allowance for note receivable - Radiant Images, Inc.

 

 

1,459,842

 

 

 

-

 

Inventory Obsolescence

 

 

126,000

 

 

 

-

 

Amortization of debt discount

 

 

17,024

 

 

 

200,000

 

Stock based compensation – options and warrant

 

 

599,457

 

 

 

347,526

 

Common stock issued and warrants exercised for services

 

 

471,476

 

 

 

29,550

 

Stock based compensation - interest expense

 

 

-

 

 

 

310,658

 

Stock based compensation - warrant extension

 

 

-

 

 

 

193,054

 

Warrants exercised for services

 

 

16,000

 

 

 

-

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(47,656)

 

 

-

 

Inventory

 

 

(635,517)

 

 

-

 

Prepaid expense

 

 

(1,812)

 

 

(4,856)

Interest receivable

 

 

(154,042)

 

 

-

 

Accounts payable and accrued liabilities

 

 

245,663

 

 

 

72,933

 

Common stock payable

 

 

436,000

 

 

 

-

 

Net cash used in operating activities

 

 

(65,625)

 

 

(716,460)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of equipment

 

 

-

 

 

 

(4,818)

Investment in Radiant Images, Inc.

 

 

(158,000)

 

 

(770,800)

Net cash provided used in investing activities

 

 

(158,000)

 

 

(775,618)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Sales of common stock and warrants, net of issuance costs

 

 

393,000

 

 

 

605,000

 

Issuances of notes payable, net of financing costs

 

 

-

 

 

 

400,000

 

Net proceeds from convertible note

 

 

133,500

 

 

 

-

 

Net proceeds from convertible note – related party

 

 

250,000

 

 

 

-

 

Proceeds from exercise of warrants

 

 

221,000

 

 

 

-

 

Stock subscriptions received

 

 

119,500

 

 

 

170,000

 

Net cash provided by financing activities

 

 

1,117,000

 

 

 

1,175,000

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

893,375

 

 

 

(316,278)

Cash beginning of year

 

 

18,372

 

 

 

334,650

 

Cash end of year

 

$911,747

 

 

$18,372

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Investment in Radiant converted to note receivable

 

$1,305,800

 

 

$-

 

Common stock issued on conversion of note payable

 

$200,000

 

 

$-

 

Reclassification from common stock to be issued to common stock

 

$170,000

 

 

$-

 

Beneficial conversion feature

 

$51,594

 

 

$-

 

Common stock reissued to replace lost shares

 

$6

 

 

$-

 

Common stock issued for investment in Radiant Images, Inc.

 

$207,000

 

 

$-

 

 

 

Years Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(1,226,311)

 

$(1,288,802)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

PPP loan forgiveness

 

 

-

 

 

 

(17,293)

Stock based compensation – options and warrant

 

 

5,158

 

 

 

482,200

 

Common stock issued for services

 

 

177,500

 

 

 

-

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expense

 

 

(1,038)

 

 

541

 

Interest receivable

 

 

(40,438)

 

 

-

 

Accounts payable and accrued liabilities

 

 

6,008

 

 

 

(46,214)

Accounts payable and accrued liabilities – related party

 

 

544,445

 

 

 

194,135

 

Accrued interest - related party

 

 

218,212

 

 

 

1,019

 

Common stock payable -- related party

 

 

-

 

 

 

147,344

 

Net cash used in operating activities

 

 

(316,464)

 

 

(527,070)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Gain on investment in HIE

 

 

-

 

 

 

(19,736)

Loans advanced to CNTNR

 

 

(800,000)

 

 

-

 

Net cash used in investing activities

 

 

(800,000)

 

 

(19,736)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from promissory note – related party

 

1,000,000 

 

 

 

-

 

Net proceeds from line of credit –related party

 

260,000 

 

 

 

265,000

 

Net cash provided by financing activities

 

 

1,260,000

 

 

 

265,000

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

143,536

 

 

 

(281,806)

Cash beginning of period

 

 

325

 

 

 

282,131

 

Cash end of period

 

$143,861

 

 

$325

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Common stock issued for settlement of accounts payable

 

$-

 

 

$30,000

 

Common stock issued in exchanged for common stock payable -related party

 

$624,344

 

 

$477,000

 

Replacement of Inventory financing payable to convertible note

 

$-

 

 

$500,000

 

Debt forgiveness

 

$-

 

 

$17,293

 

Stock option cashless exercise

 

$-

 

 

$627

 

 

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

 

20F-7

Table of Contents

 

HAWKEYE SYSTEMS, INC.

HAWKEYE SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended June 30, 2023 and 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended June 30, 2020 and 2019

 

Note 1 - Organization

 

Hawkeye Systems, Inc. (“the Company”(the “Company”), a Nevada corporation incorporated on May 15, 2018, is a technology holding company with a2018. Our previous focus was on pandemic management products and services. The Company is committedWe are currently looking for investment opportunities in diversified industries, such as affordable housing development, and technology applications to leveraging its extensive resources in supportmitigate the effects of its ongoing missionclimate change. From inception until the date of this filing our activities have primarily consisted of (i) liquidating our stock of personal protective equipment (“PPE”) products, (ii) the development of our business plan and the evaluation of strategic investment and business development strategies, including the execution of letters of intent and the provision of funding to help our government and medical infrastructure to keep civilians safe. Starting 2020, the Company began sourcing and distributing PPE (Personal Protective Equipment) and other pandemic management supplies to enterprise level customers and government agencies. The Company also looks to license & acquire technology that improves life and works with partners to develop cutting edge, “smart” products for a variety of markets.few selected target companies.

 

Note 2 - Summary of Significant Accounting Policies

 

Basis of presentation

The accompanying financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. Significant estimates in the accompanying financial statements include useful lives of property and equipment, fair value assumptions used for stock-based compensation, and the valuation allowance on deferred tax assets.

 

Cash

The Company considers cash in banks and other deposits with an original maturity of three months or less when purchased to be cash and cash equivalents. There were no$143,861 and $325 as cash equivalents as of June 30, 20202023 and 2019.2022, respectively.

 

Financial instruments

For certain of the Company’s financial instruments, including cash, note and interest receivable, convertible note payable, and notes payable, related party, the carrying amounts approximate their fair values due to their short maturities.

 

Accounts receivable and allowance for doubtful accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services or goods. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered.

The Company had no balance on accounts receivable and allowance for doubtful accounts at June 30, 20202023 or 2019.2022.

 

21F-8

Table of Contents

 

Inventory

Inventories, consisting of finished goods and goods in transit, are primarily accounted for using the first-in-first-out (“FIFO”) method of accounting. Inventories are measured at the lower of cost and net realizable value. The Company estimates the net realizable value of inventories based on an assessment of expected sales prices.

 

PropertyThe Company has no inventory as of June 30, 2023, and equipment

Property and equipment are recorded at cost. Repair and maintenance costs that do not improve service potential or extend economic life are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The useful life of computer equipment is five years2022, respectively.

 

Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of property, plant and equipment should be assessed, including, among others, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes in circumstances are present and an impairment test is performed, we estimate the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. If the sum of the expected future cash flows is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.

Fair value measurements

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. The Company has no assets or liabilities that are adjusted to fair value on a recurring basis.

 

Convertible financial instruments

The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S. GAAP.

 

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

 

Common stock purchase warrants and derivative financial instruments

Common stock purchase warrants and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement, or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain reset provisions that do not qualify for the scope exceptionexception; are classified as liabilities. The Company assesses the classification of its common stock purchase warrants and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

 

22

Table of Contents

Beneficial conversion feature

The issuance of the convertible debt generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital). The discount is amortized to interest expense over the term of the convertible debt.

 

F-9

Table of Contents

Income taxes

The Company uses the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

 

Revenue recognition

Revenue is recorded in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Revenue is recognized from product sales when goods are shipped, title and risk of loss have transferred to the purchaser, there are no significant vendor obligations, the fees are fixed or determinable, and collection is reasonably assured. Amounts billed to customers for shipping and handling are included in net sales. Costs associated with shipping and handling are included in cost of goods sold. The Company recognizes sales on a gross basis when it is considered the primary obligor in the transaction and on a net basis when it is considered to be acting as an agent. We record estimates for cash discounts, product returns, and other discounts in the period of the sale. This provision is recorded as a reduction from gross sales and the reserves are shown as a reduction of accounts receivable.

 

As of fiscal years ended June 30, 2023, and 2022, the Company had generated zero revenue for both years.

Cost of sales

Cost of sales includes inventory costs and shipping and freight expenses. Since the Company had not generated any revenue during fiscal years ended June 30, 2023, and 2022, the Company incurred no cost of sales in both years.

 

Related parties

The Company follows ASC 850, ”Related“Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

 

Commitments and contingencies

The Company follows ASC 450-20, “Loss Contingencies,” to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

23

Table of Contents

Basic and diluted earnings per share

Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including stock options, warrants to purchase the Company'sCompany’s common stock, and convertible note payable. For the years ended June 30, 20202023 and 2019,2022, potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share because they were anti-dilutive are as follows:

 

 

June 30,

2020

 

 

June 30,

2019

 

 

June 30,

2023

 

 

June 30,

2022

 

Warrants

 

7,047,135

 

14,655,664

 

 

239,401

 

249,400

 

Options

 

5,255,000

 

672,000

 

 

425,600

 

425,600

 

Convertible notes

 

 

-

 

 

 

400,000

 

 

 

6,455,847

 

 

 

4,224,732

 

Total possible dilutive shares

 

 

12,302,135

 

 

 

15,727,664

 

 

 

7,120,848

 

 

 

4,899,732

 

F-10

Table of Contents

 

The shares above have been adjusted to reflect a 1-for-10 reverse stock split that became effective on February 9, 2023. See further discussion on Note 13 – stock reverse split.

Stock-based compensation

Stock-based compensation to employees and non-employees consistconsists of stock options grants, warrants to purchase common stock, and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant. The fair value of the share of common stock is based on the trading price of the Company’s share.

 

Option

The Company calculates the fair value of optionoptions and warrant grants utilizing the Black-Scholes pricing model. Assumptions used by the Company in using the Black-Scholes pricing model include: 1) volatility based on the Company’s average volatility rate, 2) risk free interest rate based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of the grant, 3) the expected life of the option or warrants, and 4) expected cash dividend rate on shares of common stock.

1)

volatility based on the Company’s average volatility rate,

2)

risk free interest rate based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of the grant,

3)

the expected life of the option or warrants, and

4)

expected cash dividend rate on shares of common stock.

During the year ending June 30, 20202023, and 2019,2022, volatility was based on average rates for similar publicly traded companies.trading price of the Company’s share.

 

The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for employee awards is generally recognized on a straight- line basis over the vesting period of the award.

 

There were no stock options granted during the fiscal year of 2023, and the remaining $5,158 of stock-based compensation awards were vested in September 2022.

Restricted Shares Granted for Compensation

On April 09, 2023, the Company issued 500,000 shares of common stock in the amount of $71,000 to Christopher Mulgrew, the CFO, and 750,000 shares of common stock in the amount of $106,500 to Corby Marshall, the CEO, as a performance bonus, respectively.

On June 15, 2023, the Company issued 25,000 shares of common stock in the amount of $10,000 to Christopher Mulgrew, the CFO, and 50,000 shares of common stock in the amount of $20,000 to Richard Cutler, a member of the Company’s board of directors who resigned on August 19, 2022, as a performance bonus, respectively. These two instances were recorded as common stock payable as of June 30, 2022.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current yearyear’s presentation.

 

F-11

Table of Contents

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The update modified the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update was effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Adoption of this update as of July 1, 2019 did not have a material impact on the Company’s consolidated financial statements because the Company has no long-term operating leases.

 

In June 2018, the FASBManagement has considered all recent accounting pronouncements issued ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The update aligns the accounting for share-based payment awards issued to nonemployees with those issued to employees. Under the new guidance, the nonemployee awards will be measuredand their potential effect on the grant date and compensation costs will be recognized when achievement of the performance condition is probable. This new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The adoption of the new guidance on July 1, 2019 did not have a material impact on the Company’s consolidatedour financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement. The update modifies the disclosure requirements for recurring and nonrecurring fair value measurements, primarily those surrounding Level 3 fair value measurements and transfers between Level 1 and Level 2. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the new guidance and does not expect it to have a material impact on its consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction Between Topic 808 and Topic 606 Revenue from Contracts with Customers, which clarifies when transactions between participants in a collaborative arrangement are within the scope of Topic 606. This ASU becomes effective for the Company in the year ending December 31, 2020 and early adoption is permitted. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements.

24

Table of Contents

 

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 Debt—Debt“Debt-Debt with Conversion and Other OptionsOptions” and ASC subtopic 815-40 Hedging—Contracts“Hedging-Contracts in Entity’s Own EquityEquity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company is currently assessing the impact of the adoption ofearly adopted this standard on its consolidatedeffective July 1, 2021 using the modified retrospective approach transition method. Therefore, the condensed financial statements.statements for the year ended June 30, 2022 are presented under the new standard, while the comparative period presented is not adjusted and continues to be reported in accordance with the Company’s historical accounting policy.

 

Note 3 - Going Concern

 

The Company’s financial statements are prepared using U.S. GAAP, applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

During the year ended June 30, 2020,2023, the Company had a net loss of $2,600,468.$1,226,311. As of June 30, 2020,2023, the Company had an accumulated deficit of $4,509,841.$12,108,487. The Company has not established sufficient revenue to cover its operating costs and will require additional capital to continue its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company includes:include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant stockholders sufficient to meet its minimum operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing this plan.

 

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Note 4 – InventoryLoan payable due to Eagle - JV partner

 

Inventory at June 30, 2020 and 2019 consist of the following:

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Finished goods

 

$545,112

 

 

$-

 

Goods in transit

 

 

90,405

 

 

 

-

 

Less: Obsolescence

 

 

(126,000)

 

 

-

 

 

 

$509,517

 

 

$-

 

25

Table of Contents

Note 5 – Advances to Radiant Images, Inc.

Advances to Radiant Images, Inc.

Optical Flow LLC

On June 7, 2018, the Company entered into a joint-venture partnership with Insight Engineering, LLC (“Insight”) to develop high resolution imaging systems. The partnership established Optical Flow, LLC (“Optical Flow) with each party owning 50%. In June 2018, the Company contributed $150,000 to the venture. An additional $750,000 was invested by the Company in the year ended June 30, 2019. Throughout most of the year ended June 30, 2019, the Company accounted for its investment in Optical Flow LLC using the equity method of accounting. As a result of the Radiant Images, Inc. acquisition agreement (see below), the Company and Insight agreed to contribute no further amounts to and cease operations of what was the intended business of Optical Flow. Because Optical Flow had no continuing operations, it became only a conduit to submit advances to Radiant, and the Company bore all risk of loss. Consequently the Company determined that Optical Flow should be consolidated as of June 30, 2019. Operating results and cash flows of Optical Flow are included in the consolidated statement of operations for the year ended June 30, 2019. There was little activity in Optical Flow during the year ended June 30, 2020.

Radiant Images, Inc.

On September 19, 2019, the Company entered into a Stock Purchase Agreement (“Radiant Agreement”) with Radiant Images, Inc., a California corporation (“Radiant”), as well as Radiant’s shareholder Gianna Wolfe and key employee, Michael Mansouri, pursuant to which the Company would acquire 100% of the shares of common stock of Radiant from Wolfe, effectuating the acquisition of Radiant.

Prior to the entering the agreement, Optical Flow had advanced $920,800 to Radiant. Per terms of the Radiant Agreement, this advance was to be applied as deposit on the purchase price. At June 30, 2019, the advance amount was presented as “Advances to Radiant Images, Inc.” on the consolidated balance sheet.

The Radiant purchase price was equal to $1,810,905 plus the cash and cash equivalents of Radiant as of the close of business on the closing date. The closing was anticipated to occur before December 31, 2019. Prior to closing, Hawkeye was required to have received at least $1,500,000 from the sale of equity securities.

During the year ended June 30, 2020, the Company issued a total 520,000 shares of common stock with a fair value of $260,000 to Wolfe and Mansouri. In addition, a total of 250,000 options to purchase common shares at an exercise price of $0.50 were granted to the two individuals. The fair value of the options was $125,000 (see Note 9) and were recorded as stock based compensation. These shares and options will be cancelled.

As of June 30, 2020 and 2019, advances to Radiant was $0 and $920,800, respectively.

Note Receivable – Radiant Images, Inc.

In contemplation of the closing of the Radiant Agreement, the advance balance of $920,800 was formalized in a secured revolving promissory note (“Radiant Note)” dated April 26, 2019. Further advances to Radiant prior to the closing of the acquisition would increase the balance of the promissory note. The interest rate on the note was 12% and accrues daily on the outstanding balance and is collateralized by all of the assets of Radiant pursuant to a Security Agreement. The purchase price would be offset by the balance of the promissory note and interest upon closing. Through June 30, 2020, additional cash advances under the note receivable was $385,000 in equity-related transactions.

In April 2020, the Company received notice from Radiant of its intent to terminate the Radiant Agreement. As per terms of the agreement, the Radiant Note and related interest became due. The Company has ceased further discussions with respect to the acquisition and is pursuing litigation for repayment of amounts due by Radiant. The Company’s investment in Radiant was structured as a revolving note and has been classified as a Note Receivable from Radiant due with accrued but unpaid interest. Pursuant to the terms of the revolving note, Radiant is required to repay the money already invested to Hawkeye with interest. The note receivable was issued on April 26, 2019, is due upon demand of the Company at any time commencing April 26, 2020. The interest rate on the note is 12% and accrues daily on the outstanding balance. During the fiscal year ended June 30, 2020, total contributions of $337,000 were made to Radiant, bringing the balance of the note receivable to $1,305,800 at June 30, 2020 (not including interest). Because of the ongoing litigation with Radiant, the Company recorded an allowance for note receivable of $1,305,800 and interest receivable of $154,042, during the year ended June 30, 2020. Nevertheless, the Company intends to vigorously pursue the litigation and expects to fully collect these amounts from Radiant and/or its principals.

26

Table of Contents

As of June 30, 2020 and 2019, note receivable and interest receivable are as follows;

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Note receivable

 

$1,305,800

 

 

$-

 

Interest receivable

 

 

154,042

 

 

 

-

 

 

 

 

1,459,842

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Allowance for note receivable

 

 

(1,305,800)

 

 

-

 

Allowance for interest receivable

 

 

(154,042)

 

 

-

 

 

 

$-

 

 

$-

 

Note 6 - Notes Payable – Related Parties

Related party notes payable to shareholders are comprised of the following:

 

 

June 30,

2020

 

 

June 30,

2019

 

Note payable – January 22, 2019

 

$-

 

 

$200,000

 

Note payable – June 13, 2019

 

 

200,000

 

 

 

200,000

 

Total

 

$200,000

 

 

$400,000

 

Note payable – January 22, 2019

On January 22, 2019, the Company obtained a $200,000 note from a shareholder of the Company. The note terms provide the note was due on demand after 60 days at which point the lender could request repayment at any time. The Company had the ability to repay the note (in full or in instalments) at any time without notice or penalty. In lieu of interest payments, the Company granted stock options to purchase 150,000 shares of common stock.

At the option of the lender, the note was convertible at any time from the date of issuance for one year subsequent at a conversion price of $0.50 per share. Upon conversion the lender would also be issued (i) two times the number of shares converted in Series A warrants each exercisable for one year for one share of the Company’s common stock at an exercise price of $1.00 per share, and (ii) two times the number of shares converted in Series B warrants each exercisable for one year for one share of the Company’s common stock at an exercise price of $2.00 per share.

The conversion feature with additional warrants to be issued was recorded as a debt discount up to the face amount of the note and was amortized to interest expense over the 60-day term of the note. The fair value of the warrants was approximately $200,000 and was determined using the Black-Scholes option pricing model. The fair value of stock options issued in lieu of interest payments was $74,800 which was recognized as interest expense during the year ended June 30, 2019. See Note 9 for assumptions used in the calculation of fair value for both the warrants and the options.

On August 2, 2019, the note was converted into 400,000 shares of common stock.

Convertible Note payable – June 13, 2019

On June 13, 2019, the Company entered into a Securities Purchase Agreement with a shareholder pursuant to which it issued a Promissory Note for $200,000 due on the second anniversary of issuance. The note bears interest at 10%. In connection with the Securities Purchase Agreement, the Company issued 100,000 shares of its common stock and a warrant to purchase 400,000 shares at $1.50 per share exercisable for two years from issuance.

27

Table of Contents

On June 13, 2020, the note matured and became due on demand and became convertible with a 40% discount to market price, but not lower than $1.00 per share.

On the date of the note, the 100,000 shares of common stock and the 400,000 warrants had fair values of $50,000 and $184,926, respectively. The total of $234,926 was recognized as interest expense during the year ended June 30, 2019. See Note 9 for assumptions used in the calculation of fair value of the warrants.

During the year ended June 30, 2020 and 2019, interest expense of $20,000 and $932 was recognized on this note payable – related party, respectively. Accrued interest payable, included in accounts payable and accrued liabilities, was $20,932 and $932 at June 30, 2020 and 2019, respectively.

Note 7 – Convertible Notes Payable

Convertible note

On MarchJuly 17, 2020, the Company entered into a Securities Purchase Agreementmembership agreement with Eagle Equities LLC pursuant(“Eagle”) and Ikon Supplies (“Ikon”) to which theform a Nevada Limited Liability Company, issued a 10% Convertible Redeemable NoteHIE, LLC (“Convertible Note”HIE”) for the original principal amountpurpose of $150,000. The Convertible Note is due on March 17, 2021procuring, funding the purchase of and onsale of PPE (the “Membership Agreement”). Subject to the sixth month anniversaryprovision of the Note mayAgreement, the interest of any net profits would be converted into shares of Common Stockshared 33.3% among each member. If there is a loss in some or all of the capital, the Company at a 40% discountis contingently liable to contribute to repay 33.3% of the Origination Loan and Additional Contribution and of any losses of HIE.

In addition, the Company is obliged to repay 1/3 of the loan contributed by Eagle or 1/3 of the capital paid by Eagle according to the lowest Volume Weighted Average Price for the Company’s common stock for the 15 days preceding the conversion. The Company will recognize the derivative liability when the Note becomes convertible. The Convertible Note may be prepaid prior to the six-month anniversary at 115% of the face if paid within 30 days, and an additional 5% every 30 days thereafter with a cap of 140%. Interest accrual and debt amortization would have begun in April 2020.Membership Agreement.

 

F-12

Financing fees associated with the note totaled $16,500 resulting in net proceeds to the Company of $133,500. The financing fees were recognized as a discount on debt is being amortized over the term of the note.

Table of Contents

 

During the year ended June 30, 2020, amortization of $4,125 was recognized as interest expense. As of June 30, 2020, the balance of the note payable is $150,000 less unamortized debt discount of $12,375 or $137,625. Interest expense of $3,750 was recognized on the convertible noteHIE did not have any operating activities during the year ended June 30, 2020.2023. As of June 30, 2023 and 2022, the Company’s investment balance in HIE was $0, and the loan balance payable to joint venture partner Eagle totaled $442,251, unchanged for two years.

 

Convertible noteNote 5 - Related Party Transactions

Related party transactions are described in detail in Note 6, Note 7, Note 8, Note 9, Note 11, and Note 14.

Note 6 – Inventory Financing Payable – related party

 

On April 6, 2020,February 19, 2021, Steve Hall, a shareholder of the Company, issuedadvanced $1 million to the Company. The purpose of the advance was to purchase inventory to satisfy customer orders. The advance would be repaid upon cash being received from the end customer. In addition to the principal amount of the advance, the related party will be entitled to 1/3 of the gross profit earned on the transaction. The terms of the agreement are non-interest bearing. The creditor is 100% at risk as this is a non-recourse funding vehicle. 

In June 2021 the Company cancelled the contemplated purchase of inventory and returned $500,000 to Mr. Hall. Mr. Hall agreed to allow the Company to retain the balance to fund future purchases and general operating expenses.

On October 1, 2021, the Company and Steve Hall entered into a restated and amended promissory note, to consolidate and restate the terms pursuant to which Steve Hall had provided funds to the Company (the “Consolidated Note”). The Consolidated Notes consolidated and restated the terms of advances made on February 17, 2021, for $500,000 for inventory financing, February 18, 2021, for $500,000 for inventory financing, November 12, 2021, for $30,000 and December 13, 2021, for $75,000. In addition to consolidating the advances singled out above, the Consolidated Note included the extension of a line of credit of up to $1,000,000, from Steve Hall to the Company. The principal amount of the Consolidated Note, excluding the $1,000,000 line of credit, is $1,105,000, payable on demand at any time after October 1, 2022 (the “Due Date”), and accruing interest at a rate of 12% per year, if repaid within 90 days of the due date and 20% if repaid thereafter. Principal and interest due under the line of credit extended pursuant to the Consolidated Note shall be added to the principal amount due under the Consolidated Note and shall be payable pursuant to the same terms. The line of credit is due and payable on the Due Date unless extended. At the option of holder, the Consolidated Note is convertible, note payableat any time, into shares of $250,000common stock at a conversion price of $0.02 per share.

The Consolidated Note’s Due Date was extended to September 30, 2023.

As of June 30, 2023, and 2022, the accrued interest under the Consolidated Note was $164,932, and $64,932, and the principal balance was $500,000 at the end of both years, respectively.

Note 7 – Line of Credit – related party

On October 1, 2021, Steve Hall agreed to provide a line of credit of up to $1,000,000 to the Company with simple interest at 10% per annum if repaid withina rate of 12% for the first 90 days, and simple interest at a rate of 20% per annum thereafter. All principal disbursed under the line of credit will accrue interest, and be payable on the same terms as principal due under the Consolidated Note (see Note 6). The convertibleline of credit expired on October 1, 2022.  Subsequently, the line of credit has been renewed and extended with same terms and a new maturity date of October 1, 2023.

As of June 30, 2023, and 2022, the outstanding principal of the line of credit totaled $525,000, and $265,000 with accrued interest of $101,238, and $15,015, respectively. 

Note 8 – Promissory notes payable – related party

On March 29, 2023, Steve Hall provided the Company with a loan in the principal amount of $1,000,000, as evidenced by a promissory note with an annual interest rate of 12% per year (the “Steve Hall Note”). The purpose of the Steve Hall Note was to provide the Company with a funding source to make a follow-on investment in CNTNR USA, Inc., a Delaware corporation (“CNTNR”). On May 31, 2023 (or upon the closing of a debt financing), the Company will repay the outstanding principal balance of the Hall Note to Steve Hall and transfer to him 90% of the shares of CNTNR, issued by CNTNR to the Company pursuant to the Company’s investment in CNTNR, plus 90% of the CNTNR Warrants as described below in Note 10 - Note Receivable.

F-13

Table of Contents

As of June 30, 2023, the outstanding loan balance was $1,000,000 with accrued interest of $31,989. This note is duepast its maturity date. The Company is currently working with Mr. Hall to restructure the note and extend its maturity date.

Note 9 – Accrued expenses – related party

Between September 2021 to September 2022, the Company had accepted deposits in the total amount of $30,218 from Central National Gottesman, Inc., on a sale of face masks on behalf of Steve Hall, a shareholder of Hawkeye Systems, Inc. As of June 30, 2023, the deposits remain with the Company and have not been sent to Mr. Hall. In addition, there are no fixed repayment terms or any repayment arrangement on this accrued liability.

Note 10 – Note receivable

On February 27, 2023, the Company and CNTNR USA, Inc. (“CNTNR”) entered into a promissory note under which the Company disbursed $200,000 to CNTNR (the “CNTNR Note”). Subsequently, on April 6, 2021. At2023, the optionCompany and CNTNR amended and restated the CNTNR Note (the “Amended CNTNR Note”). In the Amended CNTNR Note, the Company agreed to lend CNTNR the total principal amount of holder, this note$1,000,000 (“Principal Amount”) with a commitment fee equivalent to 5% of the Principal Amount. CNTNR further agreed to pay the Company a monthly consulting fee of $5,000 beginning on March 1, 2023 that will continue until the Principal Amount is convertiblerepaid. The balance of the consulting fee is recorded as an accounts receivable. As of June 30, 2023, the accounts receivable has a zero balance.

The Amended CNTNR Note has an annual interest rate of 12% and matures at the earlier of September 30, 2023, or the closing of a material debt or equity financing. Upon maturity of the Amended CNTNR Note, CNTNR will pay to the Company all outstanding Principal Amount and interest, plus any timeoutstanding consulting fee and issue the Company 10% of the issued and outstanding shares of CNTNR (equivalent to 6,170,879 shares).

Moreover, the Amended CNTNR Note includes warrant coverage of one warrant for every share issued in repayment of the Principal Amount at the closing of an intended merger with CNTNR which is sixequal to 6,170,879 warrants. The warrants will have a 30% discount rate to the current fair market price of the shares of CNTNR when exercised and will expire 36 months fromafter April 6, 2023. Both the shares and warrant shares have not been issued as of June 30, 2023 and will be recorded at fair value as financing income upon issuance at settlement.

As the interest is calculated on the total balance of the available loan of $1,000,000 starting on the date of issuance through that date which is one year from the datefirst transfer on February 28, 2023, the CNTNR Note and the Amended CNTNR Note have accrued interest of issuance at a conversion price$40,438 with an outstanding principal of $0.25 per share. In consideration for the loan$800,000 as of $250,000, the Borrower also granted to the Lender 100,000 stock options exercisable at $0.25 for a two-year term. The options vested upon issuance. The fair value of the options was $13,297 and was recognized as debt discount as a part of beneficial conversion feature in the year ended June 30, 2020 (Note 8).2023.

Note 11 – Common stock payable – related party

On May 23, 2022, the board of directors granted Richard Cutler, former director who had resigned in August 2022, 50,000 shares (it was 500,000 shares prior to the reverse stock split described in Note 13) of restricted common stock valued at $20,000, with an exercise price of $0.4 per share. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $51,594, which is being amortized over the termshares were granted as consideration for services granted. All shares are restricted until an acquisition or reverse takeover of the note.Company.

 

DuringOn May 23, 2022, the year ended June 30, 2020, amortizationboard of $12,899directors granted Chris Mulgrew, the Company’s Chief Financial Officer, 25,000 shares (it was recognized250,000 shares prior to the reverse stock split described in Note 13) of restricted common stock, valued at $10,000 with an exercise price of $0.04 per share. The shares were granted as interest expense. consideration for services granted. All shares are restricted until an acquisition or reverse takeover of the Company.

As of June 30, 2020,2023, and 2022, the balanceCompany reported common stock payable-related party of $0 and $624,344, which represents zero, and 1,741,667 (it was 17,416,667 shares prior to the note payable is $250,000 less unamortized debt discountstock reverse split) shares of $38,695 or $211,305. Interest expense of $6,250 was recognized on the convertible notes during the year ended June 30, 2020.common stock to be issued, respectively.

 

28F-14

Table of Contents

 

Note 812 - Stockholders’ Equity

 

Common Stock

 

20202023 Stock Issuances

 

During the year ended June 30, 2020, the Company had the following common stock transactions:

 

·

Sold 1,782,666 shares of its common stock for total cash proceeds of $393,000. Included with these issuances were warrants to purchase up to 4,939,635 shares at exercise prices of $0.50 and $2.50.

·

Issued 984,253 shares of its common stock with total value of $471,476 as compensation for salary, accounting, legal and advisory services.

·

Issued 400,000 shares of its common stock in exchange for convertible note payable with a value of $200,000 (see Note 7).

·

Issued 516,000 shares of its common stock upon exercise of warrants for $221,000 in cash.

·

Issued 53,333 shares of its common stock associated with the exercise of warrants for $16,000 for services.

·

Issued 430,0001,666,667 shares of common stock for stock subscriptionsvalued at $594,344 associated with the settlement of $170,000 received priortwo convertible notes to June 30, 2019.

·

Issued a totalSteve Hall in aggregate amount of 704,668 shares$500,000 and accrued interest of its common stock with a value of $207,000 for transactions with Radiant.

·

Issued 60,000 shares of common stock to replace lost shares.

2019 Stock Issuances

During the year ended June 30, 2019, the Company had the following common stock transactions:

·

Sold 951,600 shares of its common stock for total cash proceeds of $402,942. Included with these issuances were warrants to purchase up to 3,096,600 shares via warrants at exercise prices of $1.00 and $2.00.

$94,344.

 

·

Issued 59,100139 shares of its common stock valued at $0.50 per share$0 due to four consultants asround up shares on stock reverse split. See Note 13 for further discussion.

Issued 500,000 shares of common stock for compensation for $29,550 in website, advertising, legal and advisory services.of $71,000 to Christopher Mulgrew, the CFO.

·

Issued 25,000 shares of common stock for compensation of $10,000 to Christopher Mulgrew, the CFO.

·

Issued 750,000 shares of common stock for compensation to Corby Marshall, the CEO.

·

Issued 50,000 shares of common stock for compensation of $20,000 to Richard Cutler, a member of the Company’s board of directors who resigned on August 19, 2022.

 

Common2022 Stock Issuances

·

Issued 300,000 shares of common stock to Tysdco valued at $30,000 associated with the settlement of Accounts Payable of $30,000 on consultant fee. Shares were reduced to 30,000 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

Issued 464,570 shares of common stock valued $200,000 for stock payable to Financial Ventures Group. Shares were reduced to 46,457 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

·

Issued 643,430 shares of common stock valued $277,000 for stock payable to Steve Hall. Shares were reduced to 64,343 due to stock reverse split on 02/09/2023. See Note 13 for further discussion.

·

Issued 6,275,000 shares of common stock for cashless exercise of 7,900,000 stock options. Shares were reduced to 627,500 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

2022 Stock to be Issued

As of June 30, 2020 and 2019, the Company received payment for unissued capital stock resulting in 425,000 and 150,000 share of common stock to be issued for payments of $139,500 and $170,000, respectively.

Balance at July 1, 2018

 

$(142,500)

Received on subscription

 

 

170,000

 

Common stock certificates issued

 

 

142,500

 

Balance at June 30, 2019

 

 

170,000

 

Received on subscription

 

 

139,500

 

Common stock certificates issued

 

 

(170,000)

Balance at June 30, 2020

 

$139,500

 

 

·

On September 1, 2021, Steve Hall converted a note with a principal amount of $500,000 and the associated accrued interest of $94,344 into 16,666,667 shares of common stock at $0.03566 per share. The transaction was being classified as a common stock payable-related party as of June 30, 2022. The shares were registered on July 28, 2022. Furthermore, shares were reduced to 1,666,667 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

29

On May 23, 2022, the board of directors granted Chris Mulgrew, a related party 250,000 shares of restricted common stock, respectively with conversion value of $0.04 per share. The shares were granted as consideration for services. All shares are restricted until an acquisition or reverse takeover of the Company. 25,000 shares of stock were issued on February 10, 2023 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

·

On May 23, 2022, the board of directors granted Richard Cutler, a related party 500,000 shares of restricted common stock, respectively with conversion value of $0.04 per share. The shares were granted as consideration for services. All shares are restricted until an acquisition or reverse takeover of the Company. 50,000 shares of stock were issued on February 10, 2023 to reflect the 1-for-10 reverse stock split on 02/09/2023. See Note 13 for further discussion.

F-15

Table of Contents

 

Stock Purchase Warrants

 

Transactions in stock purchase warrants for the years ended June 30, 20202023 and 20192022 are as follows:

  

 

 

Number of Warrants

 

 

Weighted Average Exercise Price

 

Balance at June 30, 2018

 

 

11,645,654

 

 

$1.04

 

Granted

 

 

3,010,000

 

 

 

1.51

 

Balance at June 30, 2019

 

 

14,655,654

 

 

 

1.14

 

Granted

 

 

5,567,137

 

 

 

1.40

 

Exercised – shares issued

 

 

(1,051,001)

 

 

0.44

 

Exercised – subscription received

 

 

(300,000)

 

 

0.30

 

Expired

 

 

(11,624,663)

 

 

1.12

 

Balance at June 30, 2020

 

 

7,047,135

 

 

$1.52

 

 

 

Number of

 

 

Weighted Average

 

 

 

 Warrants

 

 

 Exercise Price

 

Balance at June 30, 2022

 

 

249,401

 

 

$

1.00

 

Expired

 

 

-

 

 

 

-

 

Balance at September 30, 2022

 

 

249,401

 

 

1.00

 

Expired

 

 

(10,000

)

 

 

0.20

 

Balance at December 31, 2022

 

 

239,401

 

 

 

1.04

 

Expired

 

 

-

 

 

 

-

 

Balance at March 31, 2023

 

 

239,401

 

 

 

1.04

 

Expired

 

 

-

 

 

 

Balance at June 30, 2023

 

 

239,401

 

 

$

1.04

 

The Company had not issued any warrants to purchase common stock in the years ended June 30, 2023 and 2022, respectively.

 

The composition of the Company’s warrants outstanding at June 30, 20202023 are as follows:

 

Exercise Price

Exercise Price

 

 

Number of Warrants

 

 

Weighted Average Remaining Life (in years)

 

Exercise Price

 

Number of Warrants

 

Weighted Average Remaining Life (in years)

 

$0.30

 

350,000

 

1.00

 

0.30

 

35,000

 

0.84

 

$

0.50

 

66,667

 

0.84

 

$

1.00

 

70,867

 

0.84

 

$

2.00

 

66,867

 

0.84

 

$

 

 

 

 

 

 

 

 

0.50

 

393,333

 

1.01

 

 

 

239,401

 

 

 

0.84

 

1.00

 

2,540,651

 

0.79

 

1.50

 

20,000

 

1.25

 

2.00

 

3,592,000

 

1.30

 

2.50

 

 

151,151

 

 

 

0.52

 

 

 

 

7,047,135

 

 

 

1.07

 

 

During the year ended June 30, 2020 and 2019, the Company issued warrants to purchase common shares in connection with a note payable to a related party (see Note 7). The fairintrinsic value of the warrantwarrants as of June 30, 2023 and 2022 was determined using the Black-Scholes option pricing model with the following assumptions:$0.

 

 

2020

 

 

2019

 

Exercise price

 

$1.00

 

 

$

1.00 to $2.00

 

Expected term (in years)

 

1.00 years

 

 

0.75 years

 

Risk-free rate

 

0.13 to 0.18

%

 

 

2.00%

Volatility

 

111 to 190

%

 

 

233%

Dividend yield

 

 

-

 

 

 

-

 

 

Stock Options

 

During 2019, the Company’s board of directors approved the 2019 Directors, Officers, Employees and Consultants Stock Option Plan (“Option Plan”) which authorized the issuance of options to purchase up to 2,500,000 shares of common stock to its employees, directors, and consultants.

 

Fiscal Year 2023

During the fiscal year ended June 30, 2020,2023, the Company had not granted any stock options. And all stock options were vested at the end of 1st quarter of fiscal year 2023.

Fiscal Year 2022

On October 1, 2021, pursuant to the Company’s Option Plan, the Company granted 3,200,0001,876,000 stock options with exercise prices of a range from $0.10 to $0.50 and a term of five years. TheseAll of these options vested 20% immediately upon issuance of thisthe option and an additional 20% every three months thereafter. The fair value of these shares was $474,491$132,210 of which $189,797$127,051 was recognized in the fiscal year ended June 30, 2020. At2022.

On May 23, 2022, the Company granted 3,250,000 stock options, of which 2,000,000 were to related parties. These options vested immediately upon issuance with exercise prices of a range from $0.05 to $0.075 and a term of five years with a fair value of $113,163.

F-16

Table of Contents

Since the launch of the 2,500,000 shares of stock option plan in January 2019, the company has issued a total of 12,406,000 shares of stock options, of which 2,500,000 shares were under the 2019 option plan and were all vested and exercised by the end of fiscal year 2022. As of June 30, 2020,2022, there are 4,182,800 shares of stock options exercisable, of which all are granted as non-statutory stock options, outside of the Option Plan.

On June 30, 2022, compensation cost for non-vested options of $284,695$5,158 will be recognized over the next year.

Also, during the year ended June 30, 2020, the Company issued 100,000 stock options with an exercise price of $0.25 with a 5-year term in connection with a sale of shares of common stock for cash. The options vested upon issuance. The fair value of the options was $433 and was recognized in the year ended June 30, 2020.

Also, during the year ended June 30, 2020, the Company issued 400,000 stock options to a related party with an exercise price of $0.50 with a 5-year term. These options vested 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of the options was $121,278 of which $48,511 was recognized in the year ended June 30, 2020.  At June 30, 2020, compensation cost for non-vested options of $72,767 will be recognized over the next year. 

30

Table of Contents

During the year ended June 30, 2019, pursuant the Company’s Option Plan, the Company granted 522,000 stock options with exercise prices ranging from $0.50 to $0.55 and a term of five years. These options vested 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $650,717 of which $342,726 was recognized in the year ended June 30, 2019 and $307,991 was recognized in the year ended June 30, 2020.

Also during the year ended June 30, 2019, the Company issued 150,000 stock options with an exercise price of $0.50 for a 5-year term in lieu of interest payments for the note due on demand which vested upon issuance. The fair value of the options was $74,800 and was recognized as interest expense in the year ended June 30, 2019.

 

The fair value of the newly granted options was determined using the Black-Scholes option pricing model with the following assumptions:

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2023

 

 

2022

 

Trading price

 

$

0.06 - $0.47

 

$0.50

 

 

$0.00

 

$

0.02 - 0.13

 

Exercise price

 

$

0.10 - $0.50

 

$

0.50 - $0.55

 

 

$0.00

 

$0.00

 

Expected term (in years)

 

1.0 to 5.0

 

5.0

 

 

0.00

 

5.00

 

Risk-free rate

 

0.19% - 2.46

%

 

2.43% to 2.57

%

 

0.00%

 

0.71%-2.84

%

Volatility

 

97% - 174

%

 

267%

 

0.00%

 

229%-255

%

Dividend yield

 

-

 

-

 

 

-

 

-

 

 

For options issued in the year ended June 30, 2020,2022, the volatility rate is based on the Company’s volatility. For options issued in the year ended June 30, 2019, the volatility rate of the Company three similar publicly traded companies. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant. The Company has no history or expectation of paying cash dividends on its common stock.

 

Transactions in stock options for the years ended June 30, 20202023, and 2019 is2022, are as follows:

 

 

Number of options

 

 

Weighted average exercise price

 

 

Weighted average remaining life

(in years)

 

 

 

 

Weighted

 

Outstanding, June 30, 2018

 

-

 

-

 

-

 

 

Number of

 

Weighted average

 

average  

remaining life

 

 

options

 

 

exercise price

 

 

(in years)

 

Outstanding, June 30, 2021

 

728,000

 

2.30

 

3.76

 

Granted

 

1,455,000

 

$4.59

 

4.59

 

 

512,600

 

1.08

 

4.66

 

Expired or Forfeited

 

-

 

-

 

-

 

 

(25,000)

 

5.00

 

1.59

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(790,000)

 

 

1.86

 

 

 

3.14

 

Outstanding, June 30, 2019

 

1,455,000

 

4.59

 

4.59

 

Outstanding, June 30, 2022

 

425,600

 

1.41

 

4.41

 

Granted

 

3,800,000

 

0.15

 

4.79

 

 

-

 

-

 

-

 

Expired or Forfeited

 

-

 

-

 

-

 

 

-

 

-

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

-

 

-

 

-

 

Outstanding, June 30, 2020

 

 

5,255,000

 

 

 

0.25

 

 

 

4.28

 

Outstanding, June 30, 2023

 

425,600

 

1.41

 

3.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested, June 30, 2020

 

 

3,075,000

 

 

$0.33

 

 

 

3.98

 

Exercisable, June 30, 2023

 

 

425,600

 

 

$1.41

 

 

 

3.41

 

(1)

These quantities have been adjusted to reflect a 1-for-10 reverse stock split that became effective on February 9, 2023.

During fiscal year 2023, the Company amortized expenses of $5,158 to the unrelated party, and $0 remains unamortized.

F-17

Table of Contents

 

At the fiscal years ended of June 30, 2020,2023, and 2022, the intrinsic value of the outstanding options was $1,986,900.$0 in both years. 

 

Note 13 – Stock Reverse Split

Hawkeye filed a form of 8K/A on March 23, 2023 announcing the Company amended its Articles of Incorporation to effect a one-for-ten reverse stock split (the “Reverse Split”) of the Company’s common stock while par value of $0.0001 per share remain the same. The Reverse Split was approved by FINRA on February 8, 2023, and became effective on February 9, 2023. All fractional shares resulting from the Reverse Split were rounded up to the nearest whole share, which results in an additional 139 shares issued for rounding. As a result of the Reverse Split, the Company had 4,227,222 shares of common stock issued and outstanding on February 8, 2023. In addition, at the effective time of the Reverse Split, all common shares, warrants, options and the related financial information as filed in the Quarterly Report on Form 10-Q of 3rd quarter, and in this Annual Report on Form 10-K were retroactively restated to reflect the 1-for-10 reverse stock split for all past and current periods presented.

Note 14 – Consulting Agreement Related Party

On January 30, 2023, Hawkeye entered into a consulting agreement with Steve Hall, a shareholder of the Company, to provide real estate and development consulting services, including the supervision of the Company’s senior management, staff and all personnel, whether employees or consultants, strategic planning, property acquisitions and annual budget review. 

The contract period is 12 months with no option for renewal thereafter. The Company has paid Steve Hall a one-time flat service fee of $250,000 on January 31, 2023. Compensation is without recourse and there is no requirement for performance of services during the term of the contract.

Note 15 – Income Taxes

 

The Company did not recognize a provision (benefit) for income taxes for the years ended June 30, 20202023 and 2019.2022.

 

At December 31, 20202022 and 2019,2021, the Company had net deferred tax assets principally arising from the net operating loss carryforward for income tax purposes multiplied by an expected federal rate of 21%.

As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax assets, a valuation allowance equal to 100% of the net deferred tax asset existsexisted at June 30, 20202023 and 2019.2022.

31

Table of Contents

 

A reconciliation of the federal statutory income tax to our effective income tax is as follows:depicted below:

 

 

June 30,

 

June 30,

 

 

June 30,

2020

 

 

June 30,

2019

 

 

2023

 

 

2022

 

Federal statutory rates

 

$(546,098)

 

$(392,070)

 

$(257,525)

 

$(270,648)

Income tax adjustment

 

 

 

 

 

 

 

 

 

 

Expense not deductible in current period

 

306,567

 

-

 

Stock based compensation

 

5,158

 

101,262

 

Permanent difference

 

173

 

72,981

 

 

370

 

288

 

Valuation allowance against net deferred tax assets

 

 

239,358

 

 

 

319,089

 

 

 

251,997

 

 

 

169,098

 

Effective rate

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

AtOn June 30, 2020,2023, the Company had federal net operating loss carry forwards of approximately $567,000$1,967,115. This loss will never expire but its utilization is limited to 80% of taxable income in any future year.

 

F-18

Table of Contents

Net deferred tax assets consist of the following components as of:

 

 

June 30,

 

June 30,

 

 

June 30,

2020

 

 

June 30,

2019

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Operating loss carry forward

 

$567,346

 

$327,988

 

 

$1,967,115

 

$1,715,118

 

Valuation allowance

 

 

(567,346)

 

 

(327,988)

 

 

(1,967,115)

 

 

(1,715,118)

Net deferred income tax asset

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

The Company is open to examination of our income tax filings in the United States and state jurisdictions for the 2018 through 20202022 tax years. Tax attributes from years prior to that can be adjusted as a result of examinations. In the event that the Company is assessed penalties and or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.

 

Note 10 - Related Party Transactions

In addition to the notes payable described in Note 7, the Company had the following transactions with related parties:

·

During the year ended June 30, 2019, the Company issued shares and warrants to an investor with direct control over Insight in exchange for $250,000. Insight was a 50% partner of Optical Flow (see Note 5 and Note 7).

·

On September 11, 2019, the Company elected M. Richard Cutler, the Company’s corporate and securities counselor, as a member of its board of directors. During the year ended June 30, 2020, legal expense associated with Mr. Cutler’s services totaled $377,707 of which $165,000 was paid in the form of 330,000 shares of the Company’s common stock. At June 30, 2020, the Company has an account payable to Mr. Cutler of $76,817.

·

On June 1, 2020 the Company entered into an agreement with a related party and a third party for the primary purpose of procurement, financing, transportation, sale and disposition and related matters in personal protection equipment (PPE), and all such other business incidental thereto. Pursuant to the agreement, the related party and third party paid $2,000,000 for a deposit on PPE. The balance of the $2,000,000 is payable from net profits from the venture as follows: 43.5% to the Company, 43.5% to the related party and 13.0% to the third party. Subsequent to repayment of the $2,000,000, net profits are distributed 40% to the Company, 20% to the related party and 40% to the third party.

On June 1, 2020, a related party provided $277,000 for the purchase of PPE.  The related party agreed to convert $277,000 of such amount into common stock at $.25 per share.  As at June 30, 2020, the Company has recorded this as amount as a common stock payable.

32

Table of Contents

Note 1116 – Commitments and Contingencies

 

On August 1, 2019,July 17, 2020, the Company entered into an agreement with Stratcon Advisorya Membership Agreement (See “Investment in HIE LLC” in Item 1. Description of Business). Under the terms and Tysadco Partners. Pursuant toconditions of the agreement,Membership Agreement, in the event of a loss of capital of HIE, the Company will pay $6,000 per month for twelve months for corporate development, investment advisory,shall contribute to repay 33.3% of the Origination Loan and investor relations services, payable $3,000 in restricted common stockAdditional Contribution and $3,000 in cash. Total expense recognized under this agreementof any losses of HIE. HIE did not have operating activities during the fiscal year ended June 30, 2020 was $70,855. At June 30, 2020, the Company has a balance of $27,000 payable and $6,000 worth of common stock.2023.

 

On June 11, 2020,January 30, 2023, Hawkeye entered into a consulting agreement with Steve Hall, a shareholder of the Company, formalized an employment agreement with its chief executive officer which provides for annual salary of $250,000 beginning with the calendar year 2020. The agreement also specified that the CEO would receive $180,000 of salary that was earned during the calendar year 2019. During the year ended June 30, 2020, compensation expense of $284,130 was recognized under this agreement. At June 30, 2020,to provide real estate and development consulting services. Transactions are described in detail in Note 14 - Consulting Agreement - Related Party.

On February 27, 2023, the Company hasand CNTNR USA, Inc. (“CNTNR”) entered into a payable duepromissory note under which the Company disbursed $200,000 to its CEOCONTNR (the “CNTNR Note”). Subsequently, on April 6, 2023, the Company and CNTNR amended and restated the CNTNR Note (the “Amended CNTNR Note”) of $150,000. The agreement contained provisions for severance, health benefits, and a car allowance.

Note 12 - Subsequent Events

Effective July 1, 2020,which the Company agreed to changelend CNTNR the conversion price and issue 800,000 sharestotal principal amount of common stock$1,000,000 (“Principal Amount”) with a commitment fee equivalent to an accredited investor upon conversion5% of a $200,000 convertiblethe Principal Amount. Detailed discussions are included in note at $0.25 per share.10 - note receivable.

Note 17 - Subsequent Events

Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation, the following subsequent events would require disclosure in the financial statements:

 

EffectiveThe Company borrowed additional funds of $70,000 and $380,000 from Steve Hall on July 7, 2020, the Company issued 100,000 shares of common stock11, 2023 and August 14, 2023 respectively, which are related to an accredited investor upon the exercise of options at $0.30 per share.

Effective July 21, 2020, the Company issued 100,000 shares of common stock to an accredited investor upon the exercise of options at $0.30 per share.Note 8 - Promissory Notes Payable - Related Party.

 

On September 23, 2020 Eagle Equities LLC converted in full its outstanding convertible note with an original principal amountJuly 12, 2023, and August 15, 2023, CNTNR advanced $200,000 and $100,000 of $150,000, together with accrued and unpaid interest, into 469,623 shares of common stock.additional funds from the Company, respectively, which are related to Note 10 – Note receivable.

 

Effective November 25, 2020,As of the Company’s chief executive officer converted $180,000date of unpaid salary into 515,000 shares of common stock.

Effective December 3, 2020,this report, the Company issued 100,000 shares of common stock to an accredited investor for $20,000. Included with the purchase were 100,000 options to purchase common stock at $.20 per share exercisable for two years.

Effective December 15, 2020, the Company issued 612,000 shares of common stock to an accredited investor upon conversion of $153,000 in debt.

Effective January 15, 2021, the Company appointed Christopher Mulgrew as its Chief Financial Officer. As part of that engagement Mr. Mulgrew was issued an option to acquire 500,000 sharesand Steve Hall are currently working towards a restructuring of the Company’s Common Stock at $0.45 per share pursuant to the terms of an Option Agreement as well as the terms of the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan (the “Plan”). Mr. Mulgrew’s right to acquire the Shares pursuant to the Option shall vest 20% immediately upon issuance of this option, and an additional 20% every three months thereafter. In the event Mr. MulgrewHall Note. Note detail is able to get all of the required periodic reports filed with the US Securities and Exchange Commission within 60 days of this Agreement, Mr. Mulgrew shall be issued an additional 25,000 options exercisable at $0.45 per share but not subject to vesting.described in Note 8 – Promissory notes payable – related party.

 

33F-19

Table of Contents

 

Item 9. Change in and Disagreement with Accountants on Accounting and Financial Disclosure

 

At inception the Company engaged BF Borgers Certified Public Accountants (“BF Borgers”), to audit its financial statements for the period of inception to June 30, 2018, the fiscal year ended June 30, 2019 and the fiscal year ended June 30, 2020. During the period of inception through June 30, 2020 the Company has not had any disagreements with BF Borgers on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to BF Borger’s satisfaction, would have caused them to make reference thereto in their reports on the Company's financial statements for such periods.None.

 

During the period of inception through June 30, 2020 there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.

During the period of inception to June 30, 2020, the Company has not consulted with BF Borgers regarding either:

1.

the application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company nor oral advice was provided that BF Borgers concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or

2.

any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).

The report of BF Borgers regarding the Company's financial statements for the fiscal year ended June 30, 2020 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

Item 9A. Controls and Procedures

 

Management’s Annual Report on Internal Control over Financial Reporting. 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. In our review, we sought to find potential for material weaknesses in our financial controls, which is defined as a deficiency, or combination of deficiencies, in our accounting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

Because of its inherent limitations, which include a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures, internal control over financial reporting may not prevent or detect misstatement, whether unintentional errors or fraud. s. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

Our management, consisting of Corby Marshall as Chief Executive Officer and ActingChristopher Mulgrew as Chief Financial Officer, reviewed and evaluated the effectiveness of the Company’s internal control over disclosure controls and procedures (as such term is defined in Rules 13a-15(3) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) and financial reporting as of June 30, 2020.2021. In making this assessment, our management used the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as well as the guidance provided in SEC Release 33-8809. In such evaluation, Mr. Marshall and Mr. Mulgrew assessed daily interaction, self-assessment and other on goingongoing monitoring activities as evidence in the evaluation. Furthermore we sought to identify financial reporting risks, identify controls that adequately address financial reporting risks, considered entity level controls, reviewed the role of technology in our controls and reviewed the evidence available to support the assessment.

 

Based on this evaluation, our management concluded that, as of June 30, 2020,2023, our disclosure controls and our internal controls over financial reporting were not effective in recording, processing, summarizing and report on a timetimely basis information required to be disclosed in the reports that we file or submit under the Exchange Act and were not effective in assuring that information required to be disclosed in the reports we file or submit under the Exchange Act due to material weaknesses including (i) the Company having a sole officer and directoronly two officers handling all financial transactions, (ii) lack of appropriate operational controls and consistency in providing our accounting personnel with financial information, (iii) incomplete financial statements on a daily basis and resulting errors in our underlying accounting system, (iv) lack of proper documentation of our assessment and evaluation, and (v) our determination that internal controls were ineffective due to the limited segregation of duties because of the limited management structure.

 

In response to that assessment we have made a determination that all accounting and financial reporting services should be outsourced to a qualified consulting firm, and we immediately engaged a new financial services provider. We subsequently replaced that provider with an internal accounting contractor.

 

We have also made the determination that we need to dedicate more of the company’sCompany’s current and future financial resources to this function and have recently engaged a permanent Chief Financial Officer.

 

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

 

Changes in Internal Control over Financial Reporting. Other than engaging a new financial services firm to provide financial statements, there

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended June 30, 20202023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

34

Table of Contents

Item 9B. Other Information

 

None.

    

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

Not applicable.

13

Table of Contents

PART III

Item 10. Directors, Executive Officers and Corporate Governance

 

The following persons are our executive officers and directors, and hold the offices set forth opposite their names.

 

Name

 

Age

 

Position

Corby Marshall

 

5153

 

Chairman, President, Secretary, Chief Executive Officer, and Director

Christopher Mulgrew

 

4850

 

Treasurer, Chief Financial Officer

M. Richard Cutler

63

and Director

 

Our Board of Directors consists of two members. All directors may be reimbursed for their expenses, if any, for attendance at meetings of the Board of Directors.

 

The following is a brief account of the business experience during the past five years of each of our directors and executive officers:

 

Corby Marshall, Chairman of the Board of Directors and Chief Executive Officer and Director

 

Corby Marshall is the founder, chief executive officer and director of Hawkeye Systems, Inc. since August 2019. Before that, Mr. Marshall was the Chief Executive Officer of Hilltop Cybersecurity Inc. (CSE: CYBX) and the chief executive officer of Hilltop Security, Inc. starting in March 2017. Previously, Mr. Marshall was Senior Vice President of Alliances and Partnerships for AppOrbit; where he developed and led the go-to-market programs for all consulting, reseller, and solution partners. He previously led sales, consulting, marketing, and operations for several leading companies, including Metastorm (OpenText), Mercator (IBM), Niku and LabCorp. Corby is an expert at developing new programs and leading through transformational change; skills he honed during his service as an Airborne-qualified, Field Artillery Officer in the United States Army. Mr. Marshall also speaks Portuguese.

 

35

Table of Contents

Mr. Marshall is a distinguished graduate of the U.S. Military Academy at West Point. Mr. Marshall’s military career included time in Kuwait, Somalia and various other deployment areas as a Field Artillery Officer specializing in 155mm self-propelled artillery units.

 

Christopher Mulgrew, Chief Financial Officer and Director

 

Mr. Christopher Mulgrew has been our chief financial officer since January 2021 and was elected as a member of our board of directors in May of 2022. Prior to joining Hawkeye Systems, Inc., Mr. Mulgrew performed contract CFO, mergers, and acquisitions consulting for Gimmal, Inc., a private equity backed SaaS company. In 2019 and 2020 he was Chief Financial Officer for Panther Fluids Management, LLC, a Houston-based engineering, and drilling fluids company. Prior to that Mr. Mulgrew ended his tenure at award-winning JEMSU, LLC in 2018 as Chief Executive Officer where he had served as Chief Financial Officer 2011-2017. He helped build JEMSU via multiple acquisitions and an aggressive organic growth strategy. 

In 2009 and 2010 Mr. Mulgrew was the Global Controller for the Shell Technology Ventures Fund (“STV”), a $1.4 billion venture capital fund focused on upstream oil and gas technology companies. While at STV he served on the board of several portfolio companies including Prometheus Energy Group, Inc., ThruBit BV (acquired by Schlumberger), and Smartpipe Technologies.

During 2009-2010 Mr. Mulgrew was Chief Operating Officer of Pacific Western Brewing Ltd., Canada'sCanada’s largest independent brewery and beverage company. Previously he led the IPO via reverse merger of Acro Energy Technologies Corp as Chief Financial Officer. Mr. Mulgrew earned an MBA from the top-ranked Jones Graduate School of Business at Rice University and holds a BBA in Accounting from Simon Fraser University in Canada. Christopher is also qualified as a Chartered Public Accountant in Canada and a Certified Public Accountant in the US and has completed executive programs at the London School of Business.

M. Richard Cutler, Director

Mr. Cutler founded Cutler Law Group in 1996. Mr. Cutler has practiced in the general corporate and securities area and international business transactions since his graduation from law school. Mr. Cutler is a graduate of Brigham Young University (B.A., magna cum laude, 1981); and Columbia University School of Law (J.D. 1984). While at Columbia, Mr. Cutler was honored as a Harlan Fiske Stone Scholar, was Managing Editor of the Columbia Journal of Law and Social Problems, received a Recognition of Achievement with Honors in Foreign and International Law, Parker School of Foreign and Comparative Law and was honored for best senior writing for "United States v. Ross: A Solution to the Automobile Container Dilemma?" published in the Columbia Journal of Law & Social Problems in 1983. Mr. Cutler was admitted to the State Bar of Texas in 1984 and the State Bar of California in 1990. After law school, Mr. Cutler joined Jones, Day, Reavis & Pogue where he practiced in the corporate, securities and mergers and acquisitions departments. Mr. Cutler subsequently spent five years in the corporate and securities department in the Dallas office of Akin, Gump, Strauss, Hauer & Feld. After moving to the west coast, Mr. Cutler was with the Los Angeles office of Kaye, Scholer, Fierman, Hayes & Handler, a New York based law firm, where he continued his corporate securities practice. I n 1991, Mr. Cutler founded the law firm of Horwitz, Cutler & Beam in Anaheim California, a general practice firm, where he managed the corporate and securities practice for five years. In 1996, Mr. Cutler formed Cutler Law Group in Newport Beach, California, a firm which specializes only in general business, corporate and securities law, as well as international business transactions. Cutler Law Group moved to Augusta, Georgia in September 2002, where he continued to practice law and operated The Club at Raes Creek, a first class swim, tennis and fitness club while continuing his legal practice in Augusta. From 2008 until 2010, Mr. Cutler was President and Chief Executive Officer of Sustainable Power Corp., a company in Baytown, Texas specializing in green energy technologies. Cutler Law Group moved to Houston, Texas in June 2009. Mr. Cutler has been admitted to the U.S. Federal District Courts, Central and Northern Districts of California, U.S. Federal District Court, Southern District of Texas, as well as the U.S. Court of Appeals, Ninth Circuit. Mr. Cutler is the author of "Comparative Conflicts of Law: Effectiveness of Contractual Choice of Forum," published in the Texas International Law Journal. Mr. Cutler is a Director of Nymox Pharmaceutical, Inc.

 

3614

Table of Contents

 

Committees of the Board

 

Decisions of the Board of Directors are generally taken by unanimous written unanimous resolutions.consents. The current Boardboard comprises two members and is intending to hold regularly scheduled meetings. The entire board provides the functions of Audit, Compensation and Governance committees until such time as charters for these committees can be adopted and they can be populated by independent directors.

 

Code of Ethics

 

The Company has adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Until recently we have had a sole officer and director conducting all operations. We have recently expanded operations, the Board of Directors and the executive team. We anticipate adopting a formal Code of Ethics soon.

 

Family Relationships

 

No family relationships exist between any of our present directors and officers.

 

Compliance with Section 16(A) of The Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the SEC various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of copies of Section 16(a) reports and representations received by us from reporting persons, and without conducting any independent investigation of our own during the fiscal year ended June 30, 2020,2023, all forms required, if any, were filed with the SEC by such reporting persons.

 

Changes in Nominating Procedures

 

None

 

Item 11. Executive Compensation

 

The following table sets forth information concerning the total compensation paid or accrued by us during the fiscal year ended June 30, 20192023 and the fiscal year ended June 30, 20202022 to:

 

 

·

all individuals who served as our chief executive officer, chief financial officer or acted in a similar capacity for us at any time during such periods, and

 

·

all individuals who served as executive officers of ours at any time during such periods and received annual compensation in excess of $100,000.

 

3715

Table of Contents

 

Summary Compensation Table

 

Position

 

Year

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards ($)

 

 

Option

Awards ($)

 

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corby Marshall, Chief Executive Officer,

 

2019

 

 

180,000

 

 

 

0

 

 

 

0

 

 

 

74,789

 

 

 

254,789

 

Chief Financial Officer and Director

 

2020

 

 

180,000

 

 

 

0

 

 

 

0

 

 

 

148,399

 

 

 

328,399

 

(a)

 

(b)

 

(c)

 

 

(d)

 

(e)

 

 

(f)

 

 

(g)

 

(h)

 

(i)

 

(j)

 

Name and Principal

 

 

 

Salary

 

 

Bonus

 

Stock Awards

 

 

Option Awards

 

 

Non-Equity Incentive Plan Compensation

 

Change in Pension Value & Non-qualified Deferred Compensation Earnings

 

All Other

Compensation

 

Totals

 

Position

 

Year

 

($)*

 

 

($)

 

($)

 

 

($)

 

 

(S)

 

($)

 

($)

 

($)

 

Corby Marshall, Chief Executive Officer

 

2023

 

 

250,000

 

 

106,500

(1).  

 

 

 

 

-

 

 

 

 

 

 

 

 

 

356,500

 

Corby Marshall, Chief Executive Officer

 

2022

 

 

243,597

 

 

 

 

 

 

 

 

66,511

 

 

 

 

 

 

 

 

 

310,108

 

 Christopher Mulgrew, Chief Financial Officer & Director

 

2023

 

 

195,000

 

 

 71,000

 (2)

 

 

 

 

-

 

 

 

 

 

 

 

 

 

266,000

 

Christopher Mulgrew, Chief Financial Officer & Director

 

2022

 

 

195,000

 

 

 

 

 

 10,000

 

 

 

17,415

 

 

 

 

 

 

 

 

 

222,415

 

Richard Cutlet, Director (Resigned on August 19, 2022)

 

2022

20,000

-

20,000

 

(1)

Comprised of 750,000 shares of Common Stock issued by the Board of Directors by means of a board resolution dated February 13, 2023.

(2)

Comprised of 500,000 shares of Common Stock issued by the Board of Directors by means of a board resolution dated February 13, 2023.

16

Table of Contents

 

*Mr. Marshall’s salary was accrued but unpaid

Narrative Disclosure Requirements for both years, and subsequent to the 2020 fiscal year end the compensation for 2019 was converted to 515,000 shares of common stockSummary Compensation Table

 

Employment Agreements and BenefitsCompensation

We currently do not currently provide any employee benefit or retirement programs. Our officers’ salaries are determined by the Board of Directors. Officers and employees may receive bonuses from time to time in the form of cash or equity at the sole discretion of the Board of Directors.

 

On June 11, 2020, the Company entered into an employment agreement with its Chief Executive Officer, Corby Marshall, (the “Marshall Employment Agreement”). The Marshall Employment Agreement provides that Mr. Marshall will serve as the Company’s chairman of the board of directors, president, and chief executive officer for a period(the “Employment Agreement”). The term of the Employment Agreement is three years. The Employment Agreement will automatically extend for successive three-year terms, unless either party gives written notice of termination 30 days prior to the end of the then current term. Pursuant to the terms of the Employment Agreement, Mr. Marshall willshall receive an annuala base salary from the Company of $180,000$250,000 per year. If the Company is unable to pay this amount in cash, Mr. Marshall may defer cash compensation and receive like kind compensation in shares of the Company’s common stock. Mr. Marshall shall be reimbursed for business expenses, receive a car allowance and health benefits from the Company. As part of his compensation, Mr. Marshall is entitled to receive a target bonus of up to 50%100% of his base salary, based on the Company’s and other employeehis individual performance. If Mr. Marshall’s employment is terminated by the Company without cause, he will be entitled to receive severance benefits. The severance benefits available generallyinclude (i) the continuation of payment of his base salary in effect immediately prior to termination for no less than twelve months (the “Severance Benefit Period”); and (ii) the continuation of all employees or specifically to executives ofemployment benefits for the Company.Severance Benefit Period. If Mr. Marshall is alsoterminated without cause and in conjunction with a change in control, he will be entitled to receive an expense allowance, health insurance and an automobile allowance. Under the termschange in control benefits, which includes (i) continuation of the Marshall Employment Agreement, Mr. Marshall‘s employment may be terminated at any time for cause or change of Control of the company through ownership votes. Under the terms of the Marshall Employment Agreement, if Mr. Marshall’s employment terminates other than for cause, disability or death, he is entitled to continued payment of his then base salarycompensation for one yeara period equal to twice the amount of the Severance Benefit Period (the “Change in one lump sum commencing onControl Benefit Period”), and (ii) the datecontinuation of severancehis employment benefits for the Change in Control Benefit Period. On February 13, 2023, Mr. Marshall received a bonus of 710,000 shares common stock with reimbursementa cash value of reimbursable accrued expenses$106,500, for the years 2021 and any employee accrued amounts.2022, and for agreeing to defer cash compensation.

 

EffectiveOn January 15, 2021, the Company entered into a consulting agreement with its Chief Financial Officer, Christopher Mulgrew, the Company’s chief financial officer (the “Mulgrew Consulting“Consulting Agreement”). The Mulgrew Consulting Agreement provides that Mr. Mulgrew will serve as the Company’s Chief Financial Officer. Mr. Mulgrew will receive an annual base salary of $120,000 as well as a bonus of upwas amended and restated on March 1st, 2021 (the “Restated Agreement”). Pursuant to 50% of his base salary upon achieving certain objectives or a bonus of up to 90% of his base salary upon achieving alternative objectives. Mr. Mulgrew is also entitled to receive reimbursement of expenses and health insurance. Under the terms of the Restated Agreement, the Company shall pay Mr. Mulgrew Consulting Agreement, Mr. Mulgrew’s engagement may be terminated at any time for cause or changea consultant fee of ControlUS$195,000 per annum and issue options to acquire 500,000 shares of the company through ownership votes.

We may also pay bonuses to our named executive officers and other employeesCompany’s Common Stock at the discretion$0.30 per shares, with 20% of the board of directors.

38

Table of Contents

Outstanding Equity Awards

Outstanding Equity Awards at Fiscal Year-End

Name

 

Number of Securities Underlying Unexercised Options

Exercisable(1)

 

 

Number of Securities Underlying Unexercised Options

Unexercisable(1)

 

 

Option Price

 

Option

Expiration Date

 

Corby Marshall

 

 

1,040,000(2)

 

 

260,000

 

 

$0.10 to $0.55

 

2024-2025

 

(1)

Option awards under our 2019 Director’s, Officers, Employees and Consultants Stock Option Plan.

(2)

Vesting schedule: 20% immediately on issuance and 20% every three months thereafter.

During 2019, the Company’s board of directors approved the 2019 Directors, Officers, Employees and Consultants Stock Option Plan (“Option Plan”) which authorized the issuance of options to purchase up to 2,500,000 shares of common stock to its employees directors, and consultants.

During the year ended June 30, 2020, pursuant the Company’s Option Plan, the Company granted 3,200,000 stock options with exercise prices of $0.10 and a term of five years. These options vested 20%vesting immediately upon issuance of thisthe option, and an additional 20% every three months thereafter. The fairagreement also included healthcare premiums and automobile allowance. On February 13, 2023, Mr. Mulgrew received a bonus of 500,000 shares common stock with a cash value of these shares was $467,455 of which $182,982 was recognized in$71,000 for the year ended June 30, 2020. At June 30, 2020, compensation costyears 2021 and 2022, and for non-vested options of $280,473 will be recognized over the next year.agreeing to defer cash compensation.

 

Also, during the year ended June 30, 2020, the Company issued 100,000 stock options with an exercise price of $0.25 with a 5-year term in connection with a sale of shares of common stock for cash. The options vested upon issuance. The fair valueAs of the options was $433 and was recognized in the year ended June 30, 2020.date of this report, no other officer or director has formally entered into any compensation arrangement for services provided under consulting agreements or employment agreements.

 

Also, during the year ended June 30, 2020, the Company issued 400,000 stock options to a related party with an exercise price of $0.50 with a 5-year term. These options vested 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of the options was $121,278 of which $48,511 was recognized in the year ended June 30, 2020. At June 30, 2020, compensation cost for non-vested options of $72,767 will be recognized over the next year.

During the year ended June 30, 2019, pursuant the Company’s Option Plan, the Company granted 522,000 stock options with exercise prices ranging from $0.50 to $0.55 and a term of five years. These options vested 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $650,717 of which $342,726 was recognized in the year ended June 30, 2019 and $307,991 was recognized in the year ended June 30, 2020.

Also during the year ended June 30, 2019, the Company issued 150,000 stock options with an exercise price of $0.50 for a 5-year term in lieu of interest payments for the note due on demand which vested upon issuance. The fair value of the options was $74,800 and was recognized as interest expense in the year ended June 30, 2019.

In connection with his engagement with Hawkeye Systems Mr. Mulgrew was granted an option to acquire 500,000 shares of the Company’s Common Stock at $0.45 per share pursuant to the terms of the Option Agreement as well as the terms of the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan. Mr. Mulgrew’s right to acquire the Shares pursuant to the Option vests 20% immediately upon issuance of this option, and an additional 20% every three months thereafter. In the event Mr. Mulgrew is able to get all of the required periodic reports filed with the US Securities and Exchange Commission within 60 days of this Agreement, Mr. Mulgrew shall be issued an additional 25,000 options exercisable at $0.45 per share but not subject to vesting.

39

Table of Contents

Long-Term IncentiveRetirement, Resignation or Termination Plans

 

There areWe sponsor no arrangementsplan, whether written or plans in which weverbal, that would provide pension,compensation or benefits of any type to an executive upon retirement, or similar benefitsany plan that would provide payment for directorsretirement, resignation, or executive officers, except that our directors and executive officers may receive stock options at the discretiontermination as a result of a change in control of our boardcompany or as a result of directors pursuant to our 2019 Officers, Directors, Employees and Consultants Stock Option Plan. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors ora change in the responsibilities of an executive officers, except that stock options may be granted at the discretionfollowing a change in control of our board of directors.company.

 

Directors’ Compensation of Directors

 

The persons who served as members of our Board of Directors, including executive officers, did not receive any cash compensation for services as directors in 2023 or 2022. We may reimburse our directors for expenses incurred in connection with attending board meetings.

 

17

Table of Contents

We did

Option Exercises and Stock Vested

In fiscal year 2023, the Company has not pay director's fees or other cash compensation for services renderedgranted any stock options. No stock options have been exercised as a director inof June 30, 2023.

During fiscal year 2022, the Company has issued 2,400,000 stock options that are fully vested on the grant date to the officers and directors. The exercise prices of these options ranged from $0.05 to $0.11. The term of all options is five years. The aggregate fair value of these stock options total $115,642 and was recognized fully as of June 30, 2022. 900,000 options were exercised by the Company’s officers and directors during the fiscal year ended June 30, 2020.2022.

 

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected inIn 2019, the future to receive stock options to purchase common shares as awarded by our board of directors adopted the 2019 Directors, Officers, Employees and Consultants Stock Option Plan (“Option Plan”) whereby the Company reserved for issuance 2,500,000 shares of common stock and agreed that such shares shall, when issued and paid for in accordance with the provisions of the Option Plan, constitute validly issued, fully paid and non-assessable shares of common stock.

The Company has granted the aggregate total of 5,325,000 stock options issued to the directors, and officers, of which 1,150,000 stock options were granted under the Option Plan, and 4,175,000 options, were granted as non-statutory stock options, outside of the Option Plan. The Company has had a 1-to-10 reversed stock split commenced on February 9, 2023, of which options outstanding balance is reduced proportionally. As of the day of this annual report, 425,600 shares are exercisable.

Director and Executive Officer Outstanding Equity Awards at Fiscal Year-End

The following table provides certain information concerning any common share purchase options, stock awards or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetingsequity incentive plan awards held by each of our boardnamed executive officers that were outstanding as of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.June 30, 2023.

 

Option Awards

 

Stock Awards

 

 

 

Number of

Securities

Underlying

Unexercised

Options (#)

 

 

Number of

Securities

Underlying

Unexercised

Options (#)

 

 

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

 

 

Option

Exercise Price

 

 

Option

Expiration

 

Number of

Shares or

Units of

Stock That

Have Not

Vested

 

 

Market

Value of

Shares or

Units of

Stock That

Have Not

 

 

Equity

Incentive

Plan

Awards:

Number

of

Unearned

Shares,

Units or

Other

Rights

That Have

Not

 

 

Equity

Incentive Plan

Awards:

Market or

Payout Value of

Unearned

Shares, Units or

Other Rights

That Have Not

 

Name

 

Exercisable

 

 

Un-exercisable

 

 

Options (#)

 

 

($)

 

 

Date

 

(#)

 

 

Vested

 

 

Vested

 

 

Vested

 

Corby Marshall, Chief Executive Officer

 

 

100,000

 

 

 

0

 

 

 

0

 

 

$

0.20

 

 

05/22/2027

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Christopher Mulgrew, Chief Financial Officer & Director

 

 

50,000

 

 

 

0

 

 

 

0

 

 

$

0.10

 

 

05/22/2027

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Richard Cutlet, Director

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

4018

Table of Contents

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth, as of January 21, 2021,September 25, 2023, the beneficial ownership of Hawkeye Systems, Inc. common stock by each of our directors and named executive officers, each person known to us to beneficially own more than 5% of our common stock, and by the officers and directors of the Company as a group. Except as otherwise indicated, all shares are owned directly. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power (subject to applicable community property laws) and that person’s address is carethat of the Company. Shares of Common Stock subject to options, warrants, or convertible notes currently exercisable or convertible or exercisable or convertible within 60 days after October 18, 2019September 25, 2023 are deemed outstanding for computing the share ownership and percentage of the person holding such options, warrants, or convertible notes but are not deemed outstanding for computing the percentage of any other person. As of September 25, 2023, there were 5,552,222 shares of our common stock outstanding:

 

Title of Class

 

Name and Address of Beneficial Owner

 

Number of Shares Owned Beneficially

 

Percent of

Class Owned

 

 

Name and Address of Beneficial Owner

 

Number of Shares Owned Beneficially

 

 

Percent of

Class Owned

 

Common Stock

 

Corby Marshall (1)

 

4,500,000

 

26.3%

 

Corby Marshall (1)

 

1,236,500

 

22,270%

Common Stock

 

M. Richard Cutler (2)

 

691,000

 

3.9%

 

Christopher Mulgrew (2)

 

587,000

 

10.57%

All Executive Officers and Directors as a Group (2 persons)

 

 

 

1,823500

 

32.84%

 

 

 

 

 

 

 

Common Stock

 

Lucas Foster

 

600,000

 

3.6%

 

Steve Hall (3)

 

2,061,134

 

37,12%

Common Stock

 

Christopher Mulgrew (3)

 

500,000

 

2.9%

 

CEDE&CO

 

918,333

 

16,54%

Common Stock

 

Steve Hall(4)

 

1,356,669

 

8.2%

All Executive Officers and Directors as a Group (3 persons)

 

 

 

5,541,000

 

31.5%

 

 

 

 

 

 

 

Executive Officers and Directors and 5% Beneficial Owners

 

 

 

4,802,967

 

86.5%

_____________

(1) c/o Hawkeye Systems, Inc. Consists of 3,000,000 shares held by Mr. Marshall and 1,500,000 pursuant to options.

(2)c/o Cutler Law Group, P.C., 6575 West Loop South, Suite 500, Bellaire, TX 77401. Consists of 241,000 shares held by Mr. Cutler and 500,000 pursuant to options.

(3)Consists of options to purchase 500,000

(1)

Consists of 1,236,500 shares of stock held by Mr. Marshall, and 100,000 shares pursuant to options.

(2)

Consists of 587,000 shares of stock held by Mr. Mulgrew, and options to purchase 50,000 shares of common stock.

(4)Mr. Hall also holds warrants exercisable for up to 2,075,330 shares of common stock but which are limited to exercise to no more than 4.99% of the Company’s common stock.

(3)

Consists of 2,061,134 shares of stock held by Mr. Hall, which also included 239,401 shares of warrants, 50,000 shares of option, 317,507 from Line of Credit, 2,813,682 from revolver note and 3,324,658 shares from convertible notes.

 

Note: Beneficial Ownership of Securities: Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, involving the determination of beneficial owners of securities, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within sixty days through means including the exercise of any option, warrant or conversion of a security.

 

41

Table of Contents

Item 13. Certain Relationships and Related Transaction, and Director Independence

 

In addition to the cash and equity compensation arrangements of our directors and executive officers discussed above under “Director Compensation” and “Executive Compensation,” the following is a description of transactions to which we have been a party in which the amount involved exceeded or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock, or entities affiliated with them, had or will have a direct or indirect material interest.

 

19

Table of Contents

As

On April 6, 2020, and December 15, 2020, the Company issued two convertible notes payable of $250,000 each to Steve Hall. Both notes have one year term with simple interest at 10% per annum if repaid within 90 days, and simple interest at 20% per annum thereafter. At the option of holder, this note is convertible at any time which is six months from the date of this Annual Report, other than as disclosed belowissuance through that date which is one year from the date of issuance at a conversion price of $0.25 per share. In consideration for the loans, the Company also granted to the Mr. Hall 200,000 stock options exercisable at $0.25 for a two-year term. The options vested upon issuance. On November 2, 2021, the Company issued 160,000 shares of common stock for cashless exercise of 200,000 shares of stock option. Both notes and in this Current report, nonethe accrued interests totaling $594,344 have been converted on September 1, 2021, and issued on July 28, 2022 for the aggregate total of our directors, officers or principal stockholders, nor any associate or affiliate16,666,667 shares of common stock. On February 9, 2023, the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, which has materially affected or will materially affect us.

M. Richard Cutler is President and sole shareholder16,666,667 shares of Cutler Law Group, P.C. Cutler Law Group, P.C. acts as our corporate and securities counsel.common stock were reduced to 1,666,667 shares to reflect the 1-for-10 reverse stock split.

 

On JuneOctober 1, 20202021, the Company and Steve Hall entered into an agreementa restated and amended promissory note, to consolidate and restate the terms pursuant to which Steve Hall had provided funds to the Company (the “Consolidated Note”). The Consolidated Notes consolidated and restated the terms of advances made on February 17, 2021, for $500,000 for inventory financing, February 18, 2021, for $500,000 for inventory financing, November 12, 2021, for $30,000 and December 13, 2021, for $75,000. In addition to consolidating the advances singled out above, the Consolidated Note included the extension of a line of credit of up to $1,000,000, from Steve Hall to the Company. The principal amount of the Consolidated Note, excluding the $1,000,000 line of credit, is $1,105,000, payable on demand at any time after October 1, 2022 (the “Due Date”), and accruing interest at a rate of 12% per year, if repaid within 90 days of the due date and 20% if repaid thereafter. Principal and interest due under the line of credit extended pursuant to the Consolidated Note shall be added to the principal amount due under the Consolidated Note and shall be payable pursuant to the same terms. The line of credit is due and payable on the Due Date unless extended.  At the option of holder, this note is convertible at any time into shares of common stock at a conversion price of $0.02 per share. As of June 30, 2023, and 2022, the accrued interest was $164,932, and $64,932, respectively.

The Consolidated Note’s Due Date was extended to September 30, 2023.

On October 1, 2021, Steve Hall agreed to provide a Line of Credit of up to $1,000,000 to the Company with simple interest at 12% for the first 90 days, and simple interest at 20% per annum thereafter. The principal and interest payable shall be added to the principal amount of the Consolidated Note and payable pursuant to the same terms. As of June 30, 2023, the term of Line of Credit was extended to October 1, 2023. Over the fiscal years 2023, and 2022 in multiple transactions dates, the Company has withdrawn a total of $525,000, and $265,000, respectively. In connection with the Line of Credit, the Company has accrued interest of $101,238, and $15,015 in the fiscal years 2023, and 2022, respectively.

On March 29, 2023, Steve Hall provided the Company with a related party andloan in the principal amount of $1,000,000, as evidenced by a third party for the primarypromissory note with an annual interest rate of 12% per year (the “Steve Hall Note”). The purpose of procurement, financing, transportation, sale and disposition and related mattersthe Steve Hall Note was to provide the Company with a funding source to make a follow-on investment in personal protection equipment (PPE)CNTNR USA Inc., and all such other business incidental thereto. Pursuant toa Delaware corporation (“CNTNR”). On May 31, 2023 (or upon the agreement,closing of a debt financing), the related party and third party paid $2,000,000 for a deposit on PPE  TheCompany will repay the outstanding principal balance of the $2,000,000 is payable from net profits fromSteve Hall Note to Steve Hall and transfer 90% of the venture as follows: 43.5%shares of CNTNR, issued by CNTNR to the Company 43.5%pursuant to the related party and 13.0% to the third party. Subsequent to repaymentCompany’s investment in CNTNR, plus 90% of the $2,000,000, net profits are distributed 40% toCNTNR Warrants as described in Note 10 - Note Receivable in the Company, 20% toFinancial Statements. As of June 30, 2023, the related party and 40% to the third party.outstanding loan balance was $1,000,000 with accrued interest of $31,989.

 

On June 1, 2020,January 30, 2023, Hawkeye entered into a related party provided $277,000 for the purchaseconsulting agreement with Steve Hall, a shareholder of PPE.  The related party agreed to convert $277,000 of such amount into common stock at $.25 per share.  As at June 30, 2020, the Company, has recorded this as amount asto provide real estate and development consulting services, including the supervision of the Company’s senior management, staff and all personnel, whether employees or consultants, strategic planning, property acquisitions and annual budget review. The contract period is 12 months with no option for renewal thereafter. The Company paid Steve Hall a common stock payable.one-time flat service fee of $250,000 on January 31, 2023. Compensation is without recourse and there is no requirement for performance of services during the term of the contract.

 

Director Independence

 

Our directors are not "independent,"“independent,” as defined by SEC rules adopted pursuant to the requirements of the Sarbanes-Oxley Act of 2002. Although our stock is not listed for trading on the Nasdaq Stock Market at this time, we are required to determine the independence of our directors by reference to the rules of a national securities exchange or of a national securities association (such as the Nasdaq Stock Market). In accordance with these requirements, we have determined that Corby Marshall and M. Richard Cutlernone of our directors are not "independent“independent directors," as determined in accordance with Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock Market, Inc. Subsequent to June 30, 2022, our board of directors is comprised of Corby Marshall and Chris Mulgrew, none of which are independent directors.

 

20

Table of Contents

Item 14. Principal Accounting Fees and Services

 

Audit Fees

 

The aggregate fees billed for the fiscal year ended June 30, 20192023 and the fiscal year ended June 30, 20202022 for professional services rendered by the principal accountants for the audit of the registrant'sregistrant’s annual financial statements and review of financial statements included in the registrant'sregistrant’s Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were: $37,060$42,500 and $65,000,$52,340, respectively.

 

Audit-Related Fees

 

No aggregate fees were billed in either the fiscal year ended June 30, 20192023 and the fiscal year ended June 30, 20202022 for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant'sregistrant’s financial statements.

 

Tax Fees

 

No aggregate fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

Other fees billed for professional services provided by the principal accountant, other than the services reported above, for the fiscal yearyears ended June 30, 20192023 and the fiscal year ended June 30, 20202022 were $0 and $0.

 

Audit Committee Pre-Approval Policies

 

Our Board of Directors performing as the Audit Committee by their Chair has approved the principal accountant'saccountant’s performance of services for the audit of the registrant'sregistrant’s annual financial statements and review of financial statements included in our Form 10-K orfor services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year ending June 30, 2020.2023. Audit-related fees, tax fees, and all other fees, if any, were approved by the Board of Directors.

 

4221

Table of Contents

 

Item 15. Exhibits, Financial Statement Schedules

 

The following exhibits are filed as part of this registration statement.

 

Exhibit

 

Description

 

 

 

3.1

 

Articles of Incorporation of Registrant*Registrant (as filed with the SEC on August 27, 2018)

3.2

 

Bylaws of Registrant*Registrant (as filed with the SEC on August 27, 2018)

3.3

 

2019 Employees, Directors and Consultants Stock Option Plan (as filed with the sec on September 3, 2019)

10.1

 

Joint Venture Agreement dated May 9, 2018*

10.2

Joint Venture Operating Agreement for Optical Flow, LLC dated August 1, 2018*

10.3

Exclusive License Agreement between Insight Engineering LLC and Optical Flow, LLC dated as of August 1, 2018*

10.4

Form of Subscription Agreement*

10.5

Form of Series A Warrant for $.15 stock issuance*

10.6

Form of Series B Warrant for $.15 stock issuance*

10.7

Form of Series C Warrant for $.15 stock issuance*

10.8

Form of Series D Warrant for $.15 stock issuance*

10.9

Form of Series A Warrant for $.50 stock issuance*

10.10

Form of Series B Warrant for $.50 stock issuance*

10.11

Corporate Development, Investor Relations and Advisory Agreement, dated as of August 1, 2019 between the Registrant and Stratcon Advisory and Tysadco Partners. *

10.12

Stock Purchase Agreement dated as of September 19, 2019 among the Registrant, Radiant Images, Inc., Gianna Wolfe and Michael Mansouri *

10.13

Secured Revolving Promissory Note dated April 26, 2019 from Radiant Images, Inc. in favor of Optical Flow, LLC *

10.14

Security Agreement dated as of April 26, 2019 between Radiant Images, Inc. and Optical Flow, LLC. *

10.15

Convertible Note dated January 22, 2019 between the Registrant and Jon Bakshi. *

10.16

Securities Purchase Agreement dated as of March 17, 2020 by and between the Registrant and Eagle Equities, LLC *

10,17

10% Convertible Redeemable Note dated as of March 17, 2020 due March 17, 2021 from the Registrant to Eagle Equities, LLC *

10.18

Joint Venture Agreement dated as of May 20, 2020 among the Registrant, Eagle Equities LLC and Ikon Supplies. *

10.19

Joint Venture Agreement dated as of June 1, 2020 between the Registrant and Steve Hall *

10.20

Security Agreement dated as of July 17, 2020 among the Registrant, HIE LLC and Eagle Equities, LLC. *

10.21

Profit Sharing Agreement dated as of September 10, 2020 among the Registrant and Ikon Supplies *

10.22

Consulting Agreement dated as of January 15, 2021 among the Registrant and Christopher Mulgrew *(as filed with the SEC on February 1, 2021)

2110.2

 

ListEmployment Agreement dated as of Subsidiaries. *June 11, 2020 between Registrant and Corby Marshall*

31.110.3

 

Promissory note agreement dated as of February 27, 2023 between the Registrant and CNTNR as amended and restated on April 6, 2023 (as filed with the SEC on April 12, 2023)

10.4

Promissory note agreement dated as of March 29, 2023 between the Registrant and Steve Hall (as filed with the SEC on April 12, 2023)

10.5

Consulting Agreement dated as of January 30, 2023 between the Registrant and Steve Hall*

10.6

Membership Agreement dated July 17, 2020, between the Registrant, Eagle Equities LLC and Ikon Supplies*

21

List of Subsidiaries (as filed with the SEC on December 9, 2019).

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934

32.1

 

Certification of Chief Executive Officer pursuant to Section 1350

32.2

 

Certification of Chief Financial Officer pursuant to Section 1350

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

Item 16. Form 10-K Summary

None.

___________ 

* Previously filedFiled Herewith

4322

Table of Contents

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment No. 1 to the reportAnnual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Hawkeye Systems, Inc.

 

 

 

 

 

April 26, 2021October 16, 2023

By:

/s/ Corby Marshall

 

 

 

Corby Marshall

 

 

 

Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

 

 

 

April 26,  2021October 16, 2023

By:

/s/ Christopher Mulgrew

 

 

 

Christopher Mulgrew

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: April 26, 2021October 16, 2023

/s/ Corby Marshall

Corby Marshall, Director

and Principal Executive Officer

Date: April 26, 2021

/s/ M. Richard Cutler

 

 

M. Richard Cutler,Corby Marshall, Director

 

and Principal Executive Officer

     

4423