Hawkeye Digital, Inc 10-K for FY2022

Hawkeye Digital, Inc. (HWKE)

10-K 2022-12-14 For: 2022-06-30

Added on April 06, 2026

About this 10-K

Hawkeye Digital, Inc filed this 10-K on December 14, 2022, covering the fiscal year ended June 30, 2022 (FY2022).

Headline figures

Fiscal year ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $0; compared with $2.56M a year earlier
Net loss: $1.29M; compared with a net loss of $5.2M a year earlier

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Nevada		83-0799093
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

FORWARD-LOOKING STATEMENTS

PART I
Item 1.	Business.	4
Item 1A.	Risk Factors.	7
Item 1B.	Unresolved Staff Comments.	7
Item 2.	Properties.	7
Item 3.	Legal Proceedings.	7
Item 4.	Mine Safety Disclosures.	8

Part II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	8
Item 6.	[Reserved]	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	10
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk.	12
Item 8.	Financial Statements and Supplemental Data.	F-1
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	13
Item 9A.	Controls and Procedures.	13
Item 9B.	Other Information.	14
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Part III
Item 10.	Directors, Executive Officers and Corporate Governance.	14
Item 11.	Executive Compensation.	16
Item 12.	Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters.	19
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	19
Item 14.	Principal Accountant Fees and Services.	20

Part IV
Item 15.	Exhibit and Financial Statement Schedules.	21
Item 16.	Form 10-K Summary.

	·	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.

	·	restrictions on the nature of our investments; and
	·	the issuance of securities,

	·	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.

	*High*		*Low*
June 30, 2022 to date	$	0.02	$	0.01
Quarter ended June 30, 2022	$	0.05	$	0.02
Quarter ended March 31, 2022	$	0.06	$	0.04
Quarter ended December 31, 2021	$	0.13	$	0.02
Quarter ended September 30, 2021	$	0.14	$	0.06
Quarter ended June 30, 2021	$	0.13	$	0.06
Quarter ended March 31, 2021	$	0.55	$	0.13

Part 1	FINANCIAL INFORMATION

	Report of Independent Registered Public Accounting Firm (PCAOB ID: 5081)	F-2

	Balance Sheets as of June 30, 2022 and 2021	F-3

	Statements of Operations for the years ended June 30, 2022 and 2021	F-4

	Statements of Changes in Stockholders’ Equity (Deficit) for the years ended June 30, 2022 and 2021	F-5

	Statements of Cash Flows for the years ended June 30, 2022 and 2021	F-6

	Notes to Financial Statements	F-7

	June 30,			June 30,
	2022			2021 (Restated)
ASSETS
Current assets:
Cash	$	325		$	282,131
Prepaid expenses		1,333			3,000
Total current assets		1,658			285,131

Investment in HIE		-		245,667

Total assets	$	1,658		$	530,798

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities	$	273,592		$	133,088
Convertible note payable, net of discount - related party		500,000			450,933
Line of credit – related party		265,000			-
Inventory financing payable - related party		-			500,000
Common stock payable		-			200,000
Common stock payable - related party		624,344			277,000
Total current liabilities		1,662,936			1,561,021

Long-term liabilities:
Loan payable to Eagle - JV partner	442,251			707,654
PPP loan		-			16,983
Total liabilities		2,105,187			2,285,658

Commitments and contingencies (Notes 16)

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; 25,604,148 and 17,921,148 shares issued and outstanding, respectively		2,560			1,792
Additional paid-in capital		8,776,087			7,957,009
Accumulated deficit		(10,882,176	)		(9,713,661	)
Total stockholders’ equity (deficit)		(2,103,529	)		(1,754,860	)
Total liabilities and stockholders’ equity (deficit)	$	1,658		$	530,798

	Years Ended
	June 30,
	2022			2021 (Restated)

Sales	$	-		$	2,556,942
Cost of sales		-			2,576,875
Gross profit (loss)		-			(19,933	)

Operating expenses:
General and administrative		284,751			166,713
Management compensation		799,593			897,651
Professional fees		78,811			173,226
Professional fees - related party		61,500			367,228
Marketing		5,813			94,809
Write-down of inventory		-			883,473
Total operating expenses		1,230,468			2,583,100

Loss from operations		(1,230,468	)		(2,603,033	)

Other income and (expense):
Interest expense		-			(14,613	)
Interest expense - related party		(95,363	)		(180,305	)
Financing expense		-			(65,402	)
Financing expense - related party		-			(1,508,211	)
PPP loan forgiveness		17,293			-
Gain (loss) on investment in HIE		19,736			(461,987	)
Loss on settlement of debt		-			(370,269	)
Total other expense		(58,334	)		(2,600,787	)

Net loss	$	(1,288,802	)	$	(5,203,820	)

Net loss per common share - basic and diluted	$	(0.06	)	$	(0.31	)
Weighted average common shares outstanding - basic and diluted		23,123,336			16,784,557

					Additional			Common
	Common Stock				Paid-in			Stock			Accumulated			Stockholders’
	Shares		Amount		Capital			To Be Issued			Deficit			Equity (Deficit)
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		43		139,457			(139,500	)		-			-
Common shares issued for conversion of debt		469,623		47		525,931						-			525,978
Common stock and warrants issued for cash		100,000		10		19,990			-			-			20,000
Common stock and warrants issued for services - related parties		740,000		74		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		17		67,483			-			-			67,500
Common stock issued for settlement of debt		515,000		51		179,949			-			-			180,000
Common stock issued for common stock payable		668,489		67		161,933			-			-			162,000
Beneficial conversion feature		-		-		117,760			-			-			117,760
Net loss		-		-		-			-			(5,203,820	)		(5,203,820	)
Balance, June 30, 2021 (Restated)		17,921,148	$	1,792	$	7,957,009		$	-		$	(9,713,661	)	$	(1,754,860	)

Cumulative-effect adjustment from adoption of ASU 2020-06		-		-		(169,354	)		-			120,287			(49,067	)
Common stock issued for settlement of account payable		300,000		30		29,970			-			-			30,000
Stock based compensation – options		-		-		482,200			-			-			482,200
Stock option cashless exercised		6,275,000		627		(627	)		-			-			-
Common stock issued for common stock payable		1,108,000		111		476,889			-			-			477,000
Net loss		-		-		-			-			(1,288,802	)		(1,288,802	)
Balance, June 30, 2022		25,604,148	$	2,560	$	8,776,087		$	-		$	(10,882,176	)	$	(2,103,529	)

	June 30, 2022		June 30, 2021
Warrants		2,493,996		3,069,329
Options		4,256,000		7,280,000
Convertible notes		42,247,315		2,000,000
Total possible dilutive shares		48,997,311		12,349,329

	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.

Balance Sheet at June 30, 2021:	Originally Reported			Restatement Adjustment			As Restated
ASSETS
Current assets:
Cash	$	282,131		$	-		$	282,131
Prepaid expenses		3,000						3,000
Total current assets		285,131			-			285,131

Investment in HIE		-			245,667			245,667

Total assets	$	285,131		$	245,667		$	530,798

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	133,088		$	-		$	133,088
Convertible note payable, net of discount - related party		450,933			-			450,933
Inventory financing payable - related party		500,000			-			500,000
Common stock payable		200,000						200,000
Common stock payable - related party		277,000			-			277,000
Total current liabilities		1,561,021			-			1,561,021

Long-term liabilities:
Loan payable to Eagle - JV partner		-			707,654			707,654
PPP loan		16,983						16,983
Total liabilities		1,578,004			707,654			2,285,658

Stockholders’ deficit:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; no shares issued or outstanding		-			-			-
Common stock, $0.0001 par value, 400,000,000 shares authorized; 25,604,148 and 17,921,148 shares issued and outstanding, respectively		1,792			-			1,792
Additional paid-in capital		7,957,009			-			7,957,009
Accumulated deficit		(9,251,674	)		(461,987	)		(9,713,661	)
Total stockholders’ equity deficit		(1,292,873	)		(461,987	)		(1,754,860	)
Total liabilities and stockholders’ deficit	$	285,131		$	(461,987	)	$	530,798

Statements of Operations from 07/01/2020 to 06/30/2021	Originally Reported			Restatement Adjustment			As Restated
Sales	$	2,556,942		$	-		$	2,556,942
Cost of sales		2,576,875			-			2,576,875
Gross profit		(19,933	)		-			(19,933	)

Operating expenses:
General and administrative		166,713			-			166,713
Management compensation		897,651			-			897,651
Professional fees		173,226			-			173,226
Professional fees - related party		367,228			-			367,228
Marketing		94,809			-			94,809
Write-down of inventory		883,473			-			883,473
Total operating expenses		2,583,100			-			2,583,100

Loss from operations		(2,603,033	)		-			(2,603,033	)

Other expense:
Interest expense		(14,613	)		-			(14,613	)
Interest expense - related party		(180,305	)		-			(180,305	)
Financing expense		(65,402	)		-			(65,402	)
Financing expense - related party		(1,508,211	)		-			(1,508,211	)
Loss on investment in HIE		-			(461,987	)		(461,987	)
Loss on settlement of debt		(370,269	)		-			(370,269	)
Total other expense		(2,138,800	)		(461,987	)		(2,600,787	)

Net loss	$	(4,741,833	)	$	(461,987	)	$	(5,203,820	)

Net loss per common share - basic and diluted	$	(0.28	)	$	-		$	(0.31	)
Weighted average common shares outstanding - basic and diluted		16,784,557			-			16,784,557

	·	Issued 300,000 shares of common stock valued at $30,000 associated with the settlement of Accounts Payable of $30,000.
	·	Issued 1,108,000 shares of common stock valued $477,000 for stock payable.
	·	Issued 6,275,000 shares of common stock for cashless exercise of 7,900,000 stock options.

	·	On September 1, 2021, Steve Hall converted a note with a principal amount of $500,000 and the associated accrued interest of $94,344 into16,666,667 shares of common stock at $0.03566 per share. The transaction was being classified as common stock payable-related party as of June 30, 2022. The shares were registered on July 28, 2022.

	·	On May 23, 2022, the board of directors granted two related parties 500,000 and 250,000 shares of restricted common stock, respectively with conversion value of $0.04 per share. The shares were granted as consideration for services granted. All shares are restricted until an acquisition or reverse takeover of the Company.

	·	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.

	Number of			Weighted Average
	Warrants			Exercise Price
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
Granted		-			-
Exercised – shares issued		-			-
Expired		(575,333	)		0.96
Balance at June 30, 2022		2,493,996		$	1.78

Exercise Price		Number of Warrants		Weighted Average Remaining Life (in years)
$	0.20		100,000		0.43
$	0.30		349,998		1.84
$	0.50		666,666		1.84
$	1.00		708,666		1.84
$	2.00		668,666		1.84
			2,493,996		1.78

	June 30,
	2022			2021
Trading price	$	0.02 - 0.13		$	0.15 - 0.55
Exercise price	$	0.00		$	0.10 - 0.30
Expected term (in years)		5.00		1.0 to 2.50
Risk-free rate	0.71%-2.84		%	0.09%-0.27		%
Volatility	229%-255		%	235%-539		%
Dividend yield		-			-

Name	Age	Position
Corby Marshall	52	Chief Executive Officer and Director
Christopher Mulgrew	49	Chief Financial Officer and Director
M. Richard Cutler¹	64	Director

	·	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.

(a)	(b)	(c)		(d)	(e)		(f)		(g)	(h)	(i)	(j)
Name and Principal		Salary		Bonus	Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation	Change in Pension Value & Non-qualified Deferred Compensation Earnings	All Other Compensation	Totals
Position	Year	($)*		($)	($)		($)		(S)	($)	($)	($)
Corby Marshall, Chief Executive Officer	2022		243,597					66,511					310,108
Corby Marshall, Chief Executive Officer	2021		250,000			100,000		37,497					387,497
Christopher Mulgrew, Chief Financial Officer & Director	2022		195,000			10,000		17,415					222,415
Christopher Mulgrew, Chief Financial Officer & Director	2021		80,000					182,493					262,493
Richard Cutlet, Director (Resigned on August 19, 2022)	2022					20,000		31,716					51,716
Richard Cutlet, Director (Resigned on August 19, 2022)	2021							37,497					37,497

Option Awards										Stock Awards
	Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned		Option Exercise Price		Option Expiration	Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not
Name	Exercisable		Un-exercisable		Options (#)		($)		Date	(#)		Vested		Vested		Vested
Corby Marshall, Chief Executive Officer		1,000,000		0		0	$	0.02	05/22/2027		0		0		0		0
Christopher Mulgrew, Chief Financial Officer & Director		500,000		0		0	$	0.01	05/22/2027		0		0		0		0
Richard Cutlet, Director		0		0		0		0			0		0		0		0

Title of Class	Name and Address of Beneficial Owner	Number of Shares Owned Beneficially		Percent of Class Owned
Common Stock	Corby Marshall (1)		1,000,000		2.19	%
Common Stock	M. Richard Cutler (2)		500,000		1.09	%
Common Stock	Christopher Mulgrew (3)		750,000		1.64	%
Common Stock	Steve Hall (4)		40,643,996		88.98	%
All Executive Officers and Directors as a Group (3 persons)			2,250,000		5.25	%

(1)	c/o Hawkeye Systems, Inc. Consists of 1,000,000 shares held by Mr. Marshall pursuant to options.
(2)	c/o Cutler Law Group, P.C., 6575 West Loop South, Suite 500, Bellaire, TX 77401. Consists of 500,000 shares held by Mr. Cutler to be issued which are restricted until acquisition or reverse takeover of the company.
(3)	c/o Hawkeye Systems, Inc. Consists of 1,250,000 shares of stock held by Mr. Mulgrew Christopher, of which options to purchase 500,000 shares of common stock, and 250,000 shares of stock to be issued which are restricted until acquisition or reverse takeover of the company.
(4)	c/o Hawkeye Systems, Inc. Consists of 29,060,663 shares of stock held by Mr. Hall Steve, of which included 2,393,996 shares of warrants, 25,000,000 shares from convertible note, and 16,666,667 shares of stock to be issued.

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 *
21		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
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	Hawkeye Systems, Inc.

December 14, 2022	By:	/s/ Corby Marshall
		Corby Marshall
		Chief Executive Officer
		(Principal Executive Officer)

December 14, 2022	By:	/s/ Christopher Mulgrew
		Christopher Mulgrew
		Chief Financial Officer
		(Principal Financial Officer)

Date: December 14, 2022	/s/ Corby Marshall
	Corby Marshall, Director
	and Principal Executive Officer

Date: December 14, 2022	/s/ M. Richard Cutler
	M. Richard Cutler, Director

1.	I have reviewed this annual report on Form 10-K of Hawkeye Systems, Inc. (the "Registrant");

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Corby Marshall
Corby Marshall,
Chief Executive Officer (Principal Executive Officer)