EDGAR 10-K Filing

Company CIK: 1750777
Filing Year: 2021
Filename: 1750777_10-K_2021_0001477932-21-007236.json

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ITEM 1. BUSINESS
Item 1. Description of Business
General
We were incorporated on May 15, 2018 in the State of Nevada. We are a technology holding company previously with a focus on pandemic management products and services and currently seeking other opportunities. The Company 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 various products, (iv) recruiting and adding additional consultants and employees, (v) signing contracts for the business, and (vi) advancing the sale of PPE products through numerous sources.
Our business office is located at 6605 Abercorn, Suite 204, Savannah, GA 31405. Our telephone number is 912-253-0375 and our website is www.hawkeyesystemsinc.com.
Business Description
In July 2021, the Company determined to cease operations of its PPE business since continued business in that sector was not a productive use of the Company’s resources.
Our current business plan is to serve as a vehicle for the acquisition of or merger or consolidation with another company (a “target business”). We intend to use capital stock, debt or a combination of these to effect a business combination with a target business which we believe has significant growth potential. The business combination may be with a financially stable, mature company or a company that is in its early stages of development or growth, which could include companies seeking to obtain capital and to improve their financial stability.
We will not restrict our search to any particular industry. Rather, we may investigate businesses of essentially any kind or nature and participate in any type of business that may, in our management’s opinion, meet our business objectives as described in this report. We emphasize that the description in this report of our business objectives is extremely general and is not meant to restrict the discretion of our management to search for and enter potential business opportunities. We have not chosen the business in which we will engage and have not conducted any market studies with respect to any business or industry for you to evaluate the possible merits or risks of the target business or the industry in which we may ultimately operate. To the extent we enter into a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we will become subject to numerous risks inherent in the business and operations 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 currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries that experience rapid growth. In addition, although we 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.
Sources of target businesses
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 customarily between 1% and 5% of the size of the overall transaction, based upon a sliding scale of the amount involved.
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 the 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 made available to us.
We will endeavor to structure a business combination to achieve the most favorable tax treatment to us, the target business and both companies’ stockholders. We cannot assure you, however, that the Internal 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 costs 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 connection with the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital otherwise available to complete a business combination.
Limited ability to evaluate the target business’ management
Although we intend to scrutinize 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 target 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 operations of the 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.
Investment Company Act
We may participate in a business or opportunity by purchasing, trading, or selling the securities of a business. We do not intend to engage primarily in these activities, and we are not registered as an “investment company” under the Investment Company Act of 1940. We do not believe that registration under the 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 provisions of the Investment Company Act and its regulations.
The Investment 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 definitional 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 deemed to be an “investment company,” we may become subject to certain restrictions relating to our activities and regulatory 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 characterized as an “investment company,” we would be required to comply with these additional regulatory burdens, which would require additional expense.
Intellectual Property
The company currently does not have IP and this is not part of our current strategy.
Regulation
In our current business we are subject to local, state, federal and foreign governmental laws and regulations. Upon completion of an acquisition, we will have significant additional regulation based on the nature of the business.
Prior Investment in Radiant Images, Inc.
On September 19, 2019, the Company entered into a Stock Purchase Agreement with Radiant Images, Inc., a California corporation (“Radiant”), as well as Radiant’s shareholder Gianna Wolfe (“Wolfe”) and key employee, Michael Mansouri (“Mansouri”), pursuant to which the Company would acquire 100% of the shares of common stock (the “Shares”) of Radiant from Wolfe, resulting in acquisition of Radiant.
In 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. 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. We have made that demand. The interest rate on the note is 12% and accrues daily on the outstanding balance. 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. We have filed a complaint against Radiant and its principals and intend to vigorously pursue this matter and litigation and believes that this amount is fully collectible from Radiant and/or its principals.
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 Marshall, Chief Executive Officer, and M. Richard Cutler. The Company also has one additional officer Christopher Mulgrew, Chief Financial Officer.
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. 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, but has also engaged counsel to provide counterclaims for failure of consideration, fraud in the inducement, general fraud, and other causes of action. Hawkeye anticipates that this litigation 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. 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. We have filed a complaint against Radiant and its principals and intend 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, 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 management of the Company. We do not pay any rent, and there is no agreement to pay any rent in the future.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Not Applicable.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not Applicable.

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ITEM 2. PROPERTIES
Item 2. Properties.
We own no properties related to our operations. We operate from business offices provided by our executive officers.

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ITEM 3. LEGAL PROCEEDINGS
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. 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, but has engaged counsel to 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. 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. We have filed a complaint against Radiant and its principals and intend 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, we 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.
PART II

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
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 September 24, 2021 was $0.083 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
June 30, 2021 to date
$ 0.13
$ 0.06
Quarter ended June 30, 2021
$ 0.18
$ 0.09
Quarter ended March 31, 2021
$ 0.55
$ 0.13
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
Holders
As of September 23, 2021, there were approximately 33 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
Effective April 6, 2021, the Company issued 56,489 shares of common stock to an accredited investor upon the stock payable in consideration for services rendered.
Effective April 9, 2021, the Company issued 200,000 shares of common stock to an accredited investor for consulting services.
Effective June 1, 2021 the Company issued 1,750,000 shares to its principals contingent upon completion of an acquisition or reverse takeover.
Effective June 1, 2021 the Company issued 1,500,000 options to its principals.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data.
Not applicable.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
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, 2021.
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. 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. 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” 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.
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.
We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Results of Operations
Fiscal Year Ended June 30, 2021
We had operating revenues of $2,556,942 in our fiscal year ended June 30, 2021. Cost of sales was $2,576,875 resulting in gross loss of $19,933, or (0.8%). These revenues are from the sale of PPE products. During our fiscal year ended June 30, 2021, we raised approximately $20,000 from private offerings of our common stock and an additional $67,500 from exercise of warrants. We raised additional funds of $500,000, net from a related party, which is included in inventory financing payable and $250,000 from convertible notes related party, as of June 30, 2021.
Total operating expenses in the year ended June 30, 2021 were $2,583,100 compared to $2,217,981 for the same period in 2020. The increase in operating expenses is primarily a result of increased write down of inventory. The Company’s net loss was $4,741,834 for the fiscal year ended June 30, 2021 compared to $2,600,468 for the fiscal year ended June 30, 2020. The net loss for this period is primarily a result of operating expenses, loss on settlement of debt and financing expense.
Fiscal Year Ended June 30, 2020
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.
Total operating expenses in the year ended June 30, 2020 were $2,217,981 compared to $1,356,340 for the same period in 2019. The increase in operating expenses is primarily a result of increased compensation, professional fees and a result of write down of inventory. The Company’s net loss was $2,600,468 for the fiscal year ended June 30, 2020 compared to $1,866,998 for the fiscal year ended June 30, 2019. The net loss for this period is a result of general and administrative costs, professional fees, management compensation and significant cost of sales.
Liquidity and Capital Resources
Our cash balance at June 30, 2021 was $282,131 compared to $911,747 at June 30, 2020. We do not believe these cash reserves are sufficient to cover our expenses for our operations for fiscal year ending June 30, 2022. We will require additional funding for our ongoing operations. While we have a loan payable from Radiant Systems of $1,305,800 and interest 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 litigation and expect to recover those amounts.
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. If we cannot raise any additional financing prior to the expiration of the first quarter of 2021, 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 growth company and have limited revenue 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 financings 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. We have no guarantees or firm commitments that the related party advances will continue in the near term.
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. We have no lines of credit or other bank financing arrangements. 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) developmental expenses; and (ii) marketing expenses. We intend to finance these expenses with issuances of securities and through the exercise of outstanding warrants.
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 restrict our business operations.
Material Commitments
As of the date of this Current Report, we do not have any material commitments.
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, 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 $9,251,675 at June 30, 2021 and net loss from operations of $2,603,033.
The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been the issuance of equity securities and related party advances. In addition, the Company is in the development stage and has generated limited revenues 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 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. 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.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Contents
Part 1 FINANCIAL INFORMATION
Report of Independent Auditor
Balance Sheets as of June 30, 2021 and 2020
Statements of Operations for the years ended June 30, 2021 and 2020
Statements of Changes in Stockholders’ Equity (Deficit) for the years ended June 30, 2021 and 2020
Statements of Cash Flows for the years ended June 30, 2021 and 2020
Notes to Financial Statements
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 sheets of Hawkeye Systems, Inc. (the “Company”) as of June 30, 2021 and 2020, the related statement of operations, stockholders’ equity (deficit), and cash flows for the years 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, 2021 and 2020, and the results of its operations and its cash flows for the years 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’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.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
Served as Auditor since 2018
Lakewood, CO
October 13, 2021
HAWKEYE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
June 30,
ASSETS
Current assets:
Cash
$ 291,166
$ 911,747
Accounts receivable
-
47,656
Inventory, net
-
509,517
Prepaid expenses
3,000
6,667
Total current assets
294,166
1,475,587
Equipment, net
-
Total assets
$ 294,166
$ 1,476,324
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities
$ 133,088
$ 332,327
Convertible note payable, net of discount
-
137,625
Convertible note payable, net of discount - related party
450,933
211,305
Note payable - related parties
-
200,000
Inventory financing payable - related party
500,000
-
Common stock payable
-
6,000
Common stock payable - related party
477,000
430,000
Total current liabilities
1,561,021
1,317,257
Long-term liabilities:
Loan payable
16,983
-
Total liabilities
1,578,004
1,317,257
Stockholders’ equity (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; 17,921,148 and 14,828,036 shares issued and outstanding, respectively
1,792
1,483
Additional paid-in capital
7,957,009
4,527,925
Common stock to be issued - 0 and 425,000 shares, respectively
-
139,500
Accumulated deficit
(9,242,639 )
(4,509,841 )
Total stockholders’ equity (deficit)
(1,283,838 )
159,067
Total liabilities and stockholders’ equity (deficit)
$ 294,166
$ 1,476,324
The accompanying notes are an integral part of these consolidated financial statements.
HAWKEYE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended
June 30,
Sales
$ 2,556,942
$ 3,020,672
Cost of sales
2,576,875
1,992,809
Gross profit
(19,933 )
1,027,863
Operating expenses:
General and administrative
166,713
264,250
Management compensation
897,651
778,085
Professional fees
173,226
581,132
Professional fees - related party
367,228
377,707
Marketing
94,809
90,807
Write-down of inventory
883,473
126,000
Total operating expenses
2,583,100
2,217,981
Loss from operations
(2,603,033 )
(1,190,118 )
Other expense:
Interest income
-
154,042
Interest expense
(14,613 )
(47,024 )
Interest expense - related party
(180,305 )
-
Financing expense
(65,402 )
-
Financing expense - related party
(1,508,211 )
(57,526 )
Loss on settlement of debt
(370,269 )
-
Allowance for Radiant Images, Inc. - note receivable
-
(1,459,842 )
Total other expense
(2,138,800 )
(1,410,350 )
Net loss
$ (4,741,833 )
$ (2,600,468 )
Net loss per common share - basic and diluted
$ (0.28 )
$ (0.21 )
Weighted average common shares outstanding - basic and diluted
16,784,557
12,584,616
The accompanying notes are an integral part of these consolidated financial statements.
HAWKEYE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Additional
Common
Stockholders’
Common Stock
Paid-in
Stock To Be
Accumulated
Equity
Shares
Amount
Capital
Issued
Deficit
(Deficit)
Balance, June 30, 2019
9,897,116
2,198,891
170,000
(1,909,373 )
460,508
Common shares issues for stock to be issued
430,000
169,957
(170,000 )
-
-
Common stock and warrants issued for cash
1,782,666
392,822
-
393,000
Common stock and warrants issued for services
984,253
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
199,960
-
-
200,000
Warrants exercised for cash
516,000
220,948
-
-
221,000
Warrants exercised for services
53,333
15,995
-
-
16,000
Common stock issued for investment in Radiant Images, Inc.
704,668
206,929
-
-
207,000
Common stock reissued to replace lost shares
60,000
(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
Common shares issues for stock to be issued
425,000
139,457
(139,500 )
-
-
Common shares issued for conversion of debt
469,623
525,931
-
-
525,978
Common stock and warrants issued for cash
100,000
19,990
-
-
20,000
Common stock and warrants issued for services - related parties
740,000
146,486
-
-
146,560
Stock based compensation - options
-
-
485,455
-
-
485,455
Stock based compensation - warrants
-
-
1,563,708
-
-
1,563,708
Debt forgiveness
-
-
20,932
-
-
20,932
Warrants exercised for cash
175,000
67,483
-
-
67,500
Common stock issued for settlement of debt
515,000
179,949
-
-
180,000
Common stock issued exchanged for common stock payable
668,489
161,933
-
-
162,000
Beneficial conversion feature
-
-
117,760
-
-
117,760
Net loss
-
-
-
-
(4,741,833 )
(4,741,833 )
Balance, June 30, 2021
17,921,148
$ 1,792
$ 7,957,009
$ -
$ (9,251,674 )
$ (1,292,873 )
The accompanying notes are an integral part of these consolidated financial statements.
HAWKEYE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
June 30,
Cash flows from operating activities:
Net loss
$ (4,741,833 )
$ (2,600,468 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
2,408
Allowance for note receivable - Radiant Images, Inc.
-
1,459,842
Bad debt
79,000
-
Write-down of inventory
883,473
126,000
Loss on settlement of debt
370,269
-
Amortization of debt discount
119,763
17,024
Stock based compensation - options and warrant
2,049,163
599,457
Common stock issued and warrants exercised for services
146,560
471,476
Warrants exercised for services
-
16,000
Change in operating assets and liabilities:
Accounts receivable
(31,344 )
(47,656 )
Inventory
(373,956 )
(635,517 )
Prepaid expense
3,667
(1,812 )
Interest receivable
-
(154,042 )
Accounts payable and accrued liabilities
7,402
245,663
Common stock payable
3,000
436,000
Net cash used in operating activities
(1,484,099 )
(65,625 )
Cash flows from investing activities:
Investment in Radiant Images, Inc.
-
(158,000 )
Net cash used in investing activities
-
(158,000 )
Cash flows from financing activities:
Sales of common stock and warrants, net of issuance costs
20,000
393,000
Issuances of notes payable, net of financing costs
16,983
-
Net proceeds from notes payable - related party
1,000,000
-
Repayment of notes payable - related party
(500,000 )
-
Net proceeds from convertible note
-
133,500
Net proceeds from convertible note - related party
250,000
250,000
Proceeds from exercise of warrants
67,500
221,000
Stock subscription receivable
-
119,500
Net cash provided by financing activities
854,483
1,117,000
Net change in cash
(629,616 )
893,375
Cash beginning of period
911,747
18,372
Cash end of period
$ 282,131
$ 911,747
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 for investment in Radiant Images, Inc.
$ -
$ 207,000
Common stock issued on conversion of note payable
$ 535,978
$ 200,000
Common stock issued for accrued salary
$ 180,000
$ -
Common stock issued exchanged for common stock payable
$ 162,000
$ -
Common stock reissued to replace lost shares
$ -
$ 6
Beneficial conversion feature
$ 117,760
$ 51,594
Reclassification from note payable related party to stock payable
$ 200,000
$ -
Reclassification from common stock to be issued to common stock
$ 109,500
$ 170,000
Debt forgiveness
$ 20,932
$ -
The accompanying notes are an integral part of these consolidated financial statements.
HAWKEYE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended June 30, 2021 and 2020
Note 1 - Organization
Hawkeye Systems, Inc. (“the Company”), a Nevada corporation incorporated on May 15, 2018, is a technology holding company with a focus on pandemic management products and services. 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. 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.
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 cash equivalents as of June 30, 2021 and 2020.
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 allowance for doubtful accounts at June 30, 2021 or 2020.
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.
Property 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 years
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 exception are classified as liabilities. The Company assesses 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.
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.
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.
Cost of sales
Cost of sales includes inventory costs and shipping and freight expenses.
Related parties
The Company follows ASC 850, “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.
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’s common stock, and convertible note payable. For the years ended June 30, 2021 and 2020, 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,
June 30,
Warrants
3,069,329
7,047,135
Options
7,280,000
5,255,000
Convertible notes
2,000,000
1,000,000
Total possible dilutive shares
12,349,329
13,302,135
Stock-based compensation
Stock-based compensation to employees and non-employees consist 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 share of common stock is based on the trading price of the Company’s share.
The Company calculates the fair value of option 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. During the year ending June 30, 2021 and 2020, volatility was based on average rates for similar publicly traded companies.
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.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current year presentation.
Recent accounting pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt-Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging-Contracts in Entity’s Own Equity”. 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 of this standard on its consolidated financial statements.
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, 2021, the Company had a net loss of $4,741,833. As of June 30, 2021, the Company had an accumulated deficit of $9,251,674. 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: 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 - Inventory
Inventory at June 30, 2021 and 2020 consist of the following:
June 30,
June 30,
Finished goods
$ -
$ 545,112
Goods in transit
-
90,405
Less: Obsolescence
-
(126,000 )
Inventory, net
$ -
$ 509,517
During the year ended June 30, 2021 and 2020, the Company wrote off of inventories of $883,473 and $126,000, respectively.
Note 5 - Advances to Radiant Images, Inc.
Advances to Radiant Images, Inc.
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 and were recorded as stock based compensation. These shares and options will be cancelled.
As of June 30, 2021 and 2020, advances to Radiant was $0.
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.
As of June 30, 2021 and 2020, note receivable and interest receivable are as follows;
June 30,
June 30,
Note receivable
$ 1,305,800
$ 1,305,800
Interest receivable
154,042
154,042
1,459,842
1,459,842
Allowance for note receivable
(1,305,800 )
(1,305,800 )
Allowance for interest receivable
(154,042 )
(154,042 )
Note 6 - Notes Payable - Related Parties
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.
On June 13, 2020, the note matured, became due on demand and as a condition of maturity became convertible with a 40% discount to market price, but not lower than $1.00 per share.
On July 1, 2020, the Company and note holder agreed to convert the note of $200,000 into 800,000 shares of common stock and accrued interest of $20,932 was forgiven. As a result, the Company reclassed note payable - related party of $200,000 to common stock payable - related party and recorded debt forgiveness of $20,932 as additional paid in capital.
During the years ended June 30, 2021 and 2020, interest expense of $0 and $20,000 was recognized on this note payable - related party, respectively. Accrued interest payable, included in accounts payable and accrued liabilities, was $0 and $20,932 at June 30, 2021 and 2020, respectively.
Note 7 - Convertible Notes Payable
Convertible note
On March 17, 2020, the Company entered into a Securities Purchase Agreement with Eagle Equities LLC pursuant to which the Company issued a 10% Convertible Redeemable Note (“Convertible Note”) for the original principal amount of $150,000. The Convertible Note is due on March 17, 2021 and on the sixth month anniversary of the Note may be converted into shares of Common Stock of the Company at a 40% discount 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.
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.
On August 4, 2020, the note of $150,000 and accrued interest of $5,708 were converted into 469,623 shares of common stock resulting in a loss of settlement of debt totaling $370,269.
During the year ended June 30, 2021 and 2020, amortization of $12,375 and $4,125 was recognized as interest expense, respectively. As of June 30, 2021 and 2020, the balance of the note payable is $0 and $150,000 less unamortized debt discount of $0 and $12,375 or $0 and $137,625. respectively. Interest expense of $1,958 and $3,750 was recognized on the convertible note during the years ended June 30, 2021 and 2020, respectively.
Convertible note - related party
On April 6, 2020, the Company issued convertible note payable of $250,000 with simple interest at 10% per annum if repaid within 90 days, and simple interest at 20% per annum thereafter. The convertible note is due on April 6, 2021. 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 loan 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. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $51,594, which is being amortized over the term of the note.
On December 15, 2020, the Company issued convertible note payable of $250,000 with simple interest at 10% per annum if repaid within 90 days, and simple interest at 20% per annum thereafter. The convertible note is due on December 15, 2021. 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 loan 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 $46,380 and was recognized as debt discount as a part of beneficial conversion feature in the year ended June 30, 2021. The Company recorded a discount on the convertible note due to a beneficial conversion feature of $117,760, which is being amortized over the term of the note.
During the years ended June 30, 2021 and 2020, amortization of $119,763 and $12,899 was recognized as interest expense, respectively. As of June 30, 2021 and 2020, the balance of the note payable is $500,000 and $250,000 less unamortized debt discount of $49,067 and $38,695 or $450,933 and $211,305, respectively. Interest expense of $72,917 and $6,250 was recognized on the convertible notes during the years ended June 30, 2021 and 2020, respectively.
Note 8 - Common stock payable
As of June 30, 2021 and 2020, common stock payable are as follows:
June 30,
June 30,
Purchase of inventory - related party
$ -
$ 153,000
Related parties
477,000
277,000
Commitments
-
6,000
$ 477,000
$ 436,000
Note 9 - Stockholders’ Equity
Common Stock
2021 Stock Issuances
During the year ended June 30, 2021, the Company had the following common stock transactions:
•
Issued 469,623 shares of common stock in exchange for conversion of debt and accrued interest of $525,978.
•
Issued 175,000 shares of common stock associated with the exercise of warrants for $67,500.
•
Issued 425,000 shares of common stock for stock subscriptions of $139,500 received prior to June 30, 2020.
•
Issued 515,000 shares of common stock in exchange for settlement of $180,000 in accrued salary to our CEO.
•
Issued 100,000 units consisting of: (i) 100,000 shares of common stock, and (ii) 100,000 options that are exercisable for 2 years for an exercise price of $0.25 per share. The purchase was at $0.20 per unit, for a total purchase price of $20,000.
•
Issued 668,489 shares of common stock for common stock payable of $162,000
•
Issued 740,000 shares of common stock for service of $146,560 to related parties
2020 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 430,000 shares of common stock for stock subscriptions of $170,000 received prior to June 30, 2019.
·
Issued a total of 704,668 shares 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.
Common Stock to be Issued
As of June 30, 2021 and 2020, the Company received payment for unissued capital stock resulting in 0 and 425,000 share of common stock to be issued for payments of $0 and $139,500, respectively.
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
Received on subscription
-
Common stock certificates issued
(139,500 )
Balance at June 30, 2021
$ -
Stock Purchase Warrants
Transactions in stock purchase warrants for the years ended June 30, 2021 and 2020 are as follows:
Number of
Weighted Average
Warrants
Exercise Price
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 - subscription received
(11,824,655 )
1.12
Balance at June 30, 2020
7,047,135
1.52
Granted
2,278,996
1.06
Exercised - shares issued
(175,000 )
0.39
Expired
(6,081,802 )
1.60
Balance at June 30, 2021
3,069,329
$ 2.27
The intrinsic value of the warrants as of June 30, 2021 is $0. All of the outstanding warrants are exercisable as of June 30, 2021.
During the year ended June 30, 2021, the Company issued 2,278,996 warrants to purchase common stock. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:
Year ended
June 30,
Year ended
June 30,
Exercise price
$ 0.30 to 2.00
$ 1.00
Expected term (in years)
0.04 - 2.00 years
1.00 years
Risk-free rate
0.12-0.17
%
0.13to0.18
%
Volatility
440-660
%
111to190
%
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.
During the year ended June 30, 2021, pursuant the Company’s Option Plan, the Company granted 2,125,000 stock options with exercise prices of a range from $0.10 to $0.30 and a term of two or five years. These options vested immediately or 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $369,979 of which $127,993 was recognized in the year ended June 30, 2021. At June 30, 2021, compensation cost for non-vested options of $241,986 will be recognized over the next year.
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% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $474,491 of which $189,797 was recognized in the year ended June 30, 2020 and $284,695 was recognized in the year ended June 30, 2021.
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 and $72,767 was recognized in the year ended June 30, 2021.
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.
The fair value of the options was determined using the Black-Scholes option pricing model with the following assumptions:
June 30,
Trading price
$ 0.15 - 0.55
$ 0.06 - 0.47
Exercise price
$ 0.10 - 0.30
$ 0.10 - 0.50
Expected term (in years)
1.0 to 2.50
1.0 to 5.0
Risk-free rate
0.09%-0.27
%
0.19%-2.46
%
Volatility
235%-539
%
97%-174
%
Dividend yield
-
-
For options issued in the year ended June 30, 2021 and 2020, the volatility rate is based on the Company’s volatility. 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, 2021 and 2020 is as follows:
Weighted average
Number of
Weighted average
remaining life
options
exercise price
(in years)
Outstanding, June 30, 2019
1,455,000
$ 4.59
4.59
Granted
3,800,000
0.15
4.79
Expired or Forfeited
-
-
-
Exercised
-
-
-
Outstanding, June 30, 2020
5,255,000
0.25
4.28
Granted
2,125,000
0.16
4.86
Expired or Forfeited
(100,000 )
-
-
Exercised
-
-
-
Outstanding, June 30, 2021
7,280,000
0.23
3.76
Exercisable, June 30, 2021
5,765,000
$ 0.25
3.46
At June 30, 2021, the intrinsic value of the outstanding options was $60,500.
Note 10 - Income Taxes
The Company did not recognize a provision (benefit) for income taxes for the years ended June 30, 2021 and 2020.
At December 31, 2020 and 2019, 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 exists at June 30, 2021 and 2020.
A reconciliation of the federal statutory income tax to our effective income tax is as follows:
June 30,
June 30,
Federal statutory rates
$ (995,785 )
$ (546,098 )
Income tax adjustment
Expense not deductible in current period
-
306,567
Permanent difference
Valuation allowance against net deferred tax assets
995,442
239,358
Effective rate
$ -
$ -
At June 30, 2021, the Company had federal net operating loss carry forwards of approximately $1,563,000 will never expire but its utilization is limited to 80% of taxable income in any future year.
Net deferred tax assets consist of the following components as of:
June 30,
June 30,
Operating loss carry forward
$ 1,562,788
$ 567,346
Valuation allowance
(1,562,788 )
(567,346 )
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 2020 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 11 - Related Party Transactions
In addition to the notes payable described in Note 7, the Company had the following transactions with related parties:
·
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.
Note 12 - Commitments and Contingencies
On August 1, 2019, the Company entered into an agreement with Stratcon Advisory and Tysadco Partners. Pursuant to the agreement, the Company will pay $6,000 per month for twelve months for corporate development, investment advisory, and investor relations services, payable $3,000 in restricted common stock and $3,000 in cash. Total expense recognized under this agreement during the year ended June 30, 2020 was $70,855. At June 30, 2021 and 2020, the Company has a balance of $30,000 and $27,000 payable and $0 and $6,000 worth of common stock, respectively.
On June 11, 2020, 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, 2021 and 2020, compensation expense of $317,497 and $284,130 was recognized under this agreement, respectively. At June 30, 2021 and 2020, the Company has a payable due to its CEO of $0 and $150,000, respectively. The agreement contained provisions for severance, health benefits, and a car allowance.
Note 13 - Inventory Financing Payable - Related Party
On February 19, 2021, a related party advanced $1 million to the Company. The purpose of the advance is to purchase inventory to satisfy a customer order. The advance will 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 investor is 100% at risk as this is a non-recourse funding vehicle.
During the year ended June 30, 2021 the company cancelled the contemplated purchase of inventory and returned $500,000 to the related party. The related party has agreed to allow the Company to retain the balance to fund future purchases and general operating expenses.
Note 14 - Subsequent Events
On September 24, 2021, the Company issued 300,000 shares of common stock to settle $30,000 of accounts payable.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Change in and Disagreement with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
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 Christopher 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, 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 going 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, 2021, our disclosure controls and our internal controls over financial reporting were not effective in recording, processing, summarizing and report on a time 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 only 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’s current and future financial resources to this function and 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’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permits us to provide only 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 were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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
Chief Executive Officer and Director
Christopher Mulgrew
Chief Financial Officer
M. Richard Cutler
Director
Our Board of Directors consists of two members. All directors may be reimbursed 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, 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.
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
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, 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’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. In 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.
Committees of the Board
Decisions of the Board of Directors are generally taken by written unanimous resolutions. The current Board 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, 2021, all forms required, if any, were filed with the SEC by such reporting persons.
Changes in Nominating Procedures
None

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ITEM 11. EXECUTIVE COMPENSATION
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, 2021 and the fiscal year ended June 30, 2020 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 $100,000.
Summary Compensation Table
Position
Year
Salary
($)
Bonus
($)
Stock
Awards ($)
Option
Awards ($)
Total
($)
Corby Marshall, Chief Executive Officer,
180,000
100,000
37,497
317,497
180,000
148,399
328,399
Christopher Mulgrew, Chief Financial Officer
195,000
-
-
182,493
*Mr. Marshall’s salary was accrued but unpaid for both 2020 and 2019, and subsequent to the 2020 fiscal year end the compensation for 2019 and 2020 was converted to 515,000 shares of common stock
Employment Agreements and Benefits
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.
We may also pay bonuses to our named executive officers and other employees at the discretion of the board of directors.
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
1,200,000
(2 )
200,000
$0.10 to $0.55
2024-2026
Christopher Mulgrew
775,000
(2 )
775,000
$0.11 to $0.30
Richard Cutler
250,000
(2 )
250,000
$ 0.11
(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, 2021, pursuant the Company’s Option Plan, the Company granted 3,725,000 stock options with exercise prices of a range from $0.10 to $0.30 and a term of two or five years. These options vested immediately or 20% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $369,979 of which $127,993 was recognized in the year ended June 30, 2021. At June 30, 2021, compensation cost for non-vested options of $241,986 will be recognized over the next year.
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% immediately upon issuance of this option and an additional 20% every three months thereafter. The fair value of these shares was $467,455 of which $182,982 was recognized in the year ended June 30, 2020. At June 30, 2020, compensation cost for non-vested options of $280,473 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.
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.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board 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 or executive officers, except that stock options may be granted at the discretion of our board of directors.
Compensation of Directors
We may reimburse our directors for expenses incurred in connection with attending board meetings.
We did not pay director’s fees or other cash compensation for services rendered as a director in the fiscal year ended June 30, 2021
We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors 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 meetings of our board 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.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of September 23, 2021, 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 care 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 September 23, 2021 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.
Title of Class
Name and Address of Beneficial Owner
Number of Shares Owned Beneficially
Percent of
Class Owned
Common Stock
Corby Marshall (1)
4,720,000
24.5 %
Common Stock
M. Richard Cutler (2)
1,241,000
6.7 %
Common Stock
Lucas Foster (3)
1,700,000
9.3 %
Common Stock
Christopher Mulgrew (4)
775,000
4.2 %
Common Stock
Steve Hall (5)
3,216,668
16.8 %
All Executive Officers and Directors as a Group (3 persons)
5,541,000
31.5 %
_____________
(1)
c/o Hawkeye Systems, Inc. Consists of 3,000,000 shares held by Mr. Marshall and 1,850,000 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 1,200,000 pursuant to options.
(3)
c/o Hawkeye Systems, Inc. Consists of 800,00 shares held by Mr. Foster and 900,000 pursuant to options.
(4)
c/o Hawkeye Systems, Inc.Consists of options to purchase 775,000 shares of common stock.
(5)
c/o Hawkeye Systems, Inc. Consists of 1,436,668 shares of stock and options to purchase 1,780,000 shares of common stock.
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.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
As of the date of this Annual Report, other than as disclosed below and in this Current report, none of our directors, officers or principal stockholders, nor any associate or affiliate of 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 shareholder of Cutler Law Group, P.C. Cutler Law Group, P.C. acts as our corporate and securities counsel.
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, 2021, the Company has recorded this as amount as a common stock payable.
Director Independence
Our directors are not “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 Cutler are not “independent directors,” as determined in accordance with Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock Market, Inc.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
Audit Fees
The aggregate fees billed for the fiscal year ended June 30, 2021 and the fiscal year ended June 30, 2020 for professional services rendered by the principal accountants for the audit of the registrant’s annual financial statements and review of financial statements included in the registrant’s Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were: $45,060 and $65,000, respectively.
Audit-Related Fees
No aggregate fees were billed in either the fiscal year ended June 30, 2021 and the fiscal year ended June 30, 2020 for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’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 year ended June 30, 2021 and the fiscal year ended June 30, 2020 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’s performance of services for the audit of the registrant’s annual financial statements and review of financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year ending June 30, 2021. Audit-related fees, tax fees, and all other fees, if any, were approved by the Board of Directors.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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*
3.2
Bylaws of Registrant*
3.3
2019 Employees, Directors and Consultants Stock Option Plan
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 *
List of Subsidiaries. *
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
___________
* Previously filed
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Hawkeye Systems, Inc.
Date: October 13, 2021
By:
/s/ Corby Marshall
Corby Marshall
Chief Executive Officer
(Principal Executive Officer)
Date: October 13, 2021
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: October 13, 2021
/s/ Corby Marshall
Corby Marshall, Director
and Principal Executive Officer
Date: October 13, 2021
/s/ M. Richard Cutler
M. Richard Cutler, Director