10-K: Hawkeye Systems Pivots to Cyber Amidst Deep Losses

Hawkeye Systems, Inc. reported continued net losses and a going concern doubt for fiscal year 2025, while strategically pivoting its business focus to the cybersecurity industry through a new LLC.

Summary

• Hawkeye Systems, Inc. (HWKE) reported a net loss of $523,327 for the fiscal year ended June 30, 2025, following a net loss of $578,717 in the prior year.
• The company generated no operating revenues for both fiscal years 2025 and 2024, having ceased its personal protective equipment (PPE) business in July 2021.
• An accumulated deficit of $13,210,531 was reported as of June 30, 2025, raising substantial doubt about the company's ability to continue as a going concern.
• Hawkeye Systems is actively pursuing opportunities to invest in, acquire, merge, or consolidate with a target business, with a narrowed focus on the cybersecurity industry.
• The company formed Rift Cyber LLC on March 21, 2025, holding a 25% membership interest, and plans to issue 500,000 common shares (valued at $50,000) in Q3 2025 as consideration for intellectual property assigned to Rift Cyber LLC.
• Cash balance at June 30, 2025, was $502, an increase from $0 at June 30, 2024, but deemed insufficient for operations over the next 12 months.
• Operating expenses decreased to $270,669 in FY2025 from $373,390 in FY2024, primarily due to company downsizing.
• The company has no full-time employees and relies on its sole officer, Corby Marshall, who serves as Chairman, President, Secretary, CEO, and CFO.
• Material weaknesses in internal control over financial reporting were identified, including ineffective review and approval procedures and lack of segregation of duties for the CEO and CFO.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with zero operating revenue, recurring net losses, a substantial accumulated deficit, and a going concern doubt. Material weaknesses in internal controls and heavy reliance on related party financing further exacerbate the negative outlook, despite a strategic pivot to cybersecurity.

Positives

• Strategic pivot towards the cybersecurity industry through the formation of Rift Cyber LLC, indicating a new growth direction.
• Operating expenses decreased by approximately 27.5% from $373,390 in FY2024 to $270,669 in FY2025, primarily due to company downsizing.
• Cash balance increased to $502 at June 30, 2025, from $0 at June 30, 2024, though still minimal.

Negatives

• The company reported zero operating revenues for both fiscal years 2025 and 2024, indicating a complete lack of core business operations.
• A significant accumulated deficit of $13,210,531 as of June 30, 2025, highlights severe historical losses.
• The financial statements include a going concern doubt, indicating uncertainty about the company's ability to continue operations without additional funding.
• The cash balance of $502 at June 30, 2025, is insufficient to cover expenses for the next 12 months, necessitating additional capital raises.
• Material weaknesses in internal control over financial reporting were identified, including ineffective review and approval procedures and lack of segregation of duties for the CEO and CFO.
• Heavy reliance on related party financing, with a promissory note payable to a related party (Steve Hall) totaling $2,219,895 as of June 30, 2025.
• The company has no full-time employees, which may hinder operational execution and growth.

Risks

• Inability to obtain adequate additional capital through equity offerings, warrant exercises, or related party advances, which could force the company to cease operations.
• Risks inherent in acquiring financially unstable companies or entities in early stages of development, including those without established sales or earnings records.
• Potential classification as an investment company under the Investment Company Act of 1940, leading to costly and restrictive regulatory burdens.
• Cybersecurity threats, despite current risk management, could materially affect business strategy, operations, or financial condition.
• Reliance on a single executive (Corby Marshall) for multiple critical roles (Chairman, President, Secretary, CEO, CFO) creates key person risk and contributes to internal control weaknesses.
• Lack of independent directors on the board, which may compromise corporate governance and oversight.

Future Outlook

The company expects to require additional capital to develop its business plan and fund ongoing operations, anticipating raising funds through the sale of equity or debt securities, private placements, or alternative financing. There is no assurance that sufficient funds will be obtained or that related party advances will continue. The company's ability to continue as a going concern is dependent on successfully raising capital and eventually generating sufficient revenue from business operations.

Management Comments

• Management believes current cash reserves are insufficient to cover expenses for operations for the next 12 months.
• Management plans to obtain additional resources through sales of equity instruments, traditional financing, and capital from management and significant stockholders.
• Management acknowledges that there is no assurance the company will be successful in accomplishing its plan to obtain sufficient additional funds or attain profitability.
• Management concluded that, as of June 30, 2025, internal controls over financial reporting were not effective due to ineffective review and approval procedures and lack of segregation of duties.

Industry Context

Hawkeye Systems is transitioning from a defunct PPE business to a holding company seeking acquisitions, specifically targeting the cybersecurity industry through its new subsidiary, Rift Cyber LLC. This move aligns with the growing global demand for cybersecurity solutions. However, as a shell company with no current revenue and significant financial distress, it faces substantial challenges in establishing a competitive position within this rapidly evolving and capital-intensive sector. Its current state makes it more comparable to a distressed asset or a special purpose acquisition company (SPAC) in its early search phase, rather than an active operating entity within the cybersecurity industry.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any material legal proceedings and is not aware of any material threatened litigation.

Related Party Transactions

• Loan balance payable to joint venture partner Eagle Equities LLC (HIE, LLC) totaled $442,251, unchanged since 2021, with the company contingently liable for 33.3% of any capital loss.
• A Debt Consolidation Agreement was executed with Steve Hall (a 37% shareholder) on April 1, 2024, consolidating $1,770,713.10 of historical loans to $1,708,000, with a 12% annual interest rate and maturity date of December 31, 2025.
• As part of the Debt Consolidation Agreement, the company formally assigned $1,753,247.34 due from CNTNR USA, Inc. to Steve Hall.
• Steve Hall received a one-time consulting fee of $250,000 on January 31, 2023, which was settled via the Debt Consolidation Agreement.
• Corby Marshall (CEO/CFO) received $1,500 for services in FY2025 and 2,345,175 restricted shares (valued at $375,228.01) on January 23, 2024, to settle past due compensation.
• Christopher Mulgrew (former CFO) received $32,500 for services in FY2025 (including $29,000 as a consultant post-resignation) and 764,375 restricted shares (valued at $122,300) on January 23, 2024, to settle past due compensation.

Stakeholder Impact

• Shareholders face significant dilution risk from future equity offerings required to fund operations and acquisitions.
• Shareholders are exposed to substantial investment risk due to the company's going concern doubt, recurring losses, and lack of revenue.
• Creditors, particularly related parties like Steve Hall and Eagle Equities LLC, are exposed to repayment risk given the company's financial instability.
• Potential employees or consultants for future acquisitions may face uncertainty regarding the company's long-term viability and compensation stability.

Next Steps

• Identify, negotiate, and materialize a business combination with a target business, with a focus on the cybersecurity industry.
• Raise additional capital through equity offerings, warrant exercises, private placements, or alternative financing to fund operations and potential acquisitions.
• Address and remediate identified material weaknesses in internal control over financial reporting, including improving review procedures and segregation of duties.
• Develop technologies for Rift Cyber LLC, focusing on the intersection of physical and digital security.

Key Dates

Recommendation

Hawkeye Systems, Inc. is in severe financial distress, evidenced by zero operating revenue, recurring net losses, a substantial accumulated deficit, and an explicit 'going concern' doubt from its auditors and management. The company relies heavily on related party financing, has critically low cash reserves, and has identified material weaknesses in its internal controls. While a strategic pivot to cybersecurity is noted, the company has no full-time employees and no clear path to profitability. The stock price has plummeted from $1.03 in Q4 2024 to $0.10 in Q4 2025. Given these fundamental issues and the high risk of investment loss, a strong sell recommendation is warranted for any existing holders, and new investors should avoid this stock.

Keywords

Cybersecurity, Acquisition, Merger, Shell Company, Going Concern, SEC Filing, Financial Reporting, Risk Management, Corporate Governance, Related Party Transactions, Net Loss, Accumulated Deficit, Capital Raise