10-Q: Hawkeye Systems Reports Q1 Loss, Pivots to Cybersecurity

Hawkeye Systems, Inc. reported a reduced net loss for the quarter ended September 30, 2025, as it continues to liquidate PPE inventory and strategically pivots towards cybersecurity through its Rift Cyber LLC subsidiary.

Summary

• Hawkeye Systems, Inc. (HWKE) reported a net loss of $101,533 for the three months ended September 30, 2025, an improvement from a net loss of $156,720 for the same period in 2024.
• Total operating expenses decreased significantly to $33,507 for the quarter, down from $95,546 in the prior year, primarily due to reduced professional fees, management compensation, and general and administrative expenses.
• The company has no operating revenues and an accumulated deficit of $13,312,064 as of September 30, 2025.
• Hawkeye Systems is transitioning from selling personal protective equipment (PPE) to pursuing investment opportunities in diversified industries, including cybersecurity through its 25% owned subsidiary, Rift Cyber LLC, and lending in affordable housing and climate mitigation.
• The company's financial statements are prepared on a going concern basis, but management expresses substantial doubt about its ability to continue operations without additional capital.
• Cash on hand was $318 as of September 30, 2025, which is deemed insufficient to cover expenses for the next 12 months.
• The company has significant related-party debt, including a promissory note payable of $2,289,322 and accrued interest of $379,575 to Steve Hall.
• Management identified material weaknesses in internal control over financial reporting due to a single officer handling all financial transactions and limited segregation of duties.

Sentiment

Score: 3

Explanation: The sentiment is largely negative due to the company's going concern issues, lack of revenue, significant accumulated deficit, and material weaknesses in internal controls. While there's a strategic pivot and reduced losses, the fundamental financial health remains precarious and highly speculative.

Positives

• Net loss for the three months ended September 30, 2025, decreased to $101,533 from $156,720 in the prior year, indicating improved financial performance in terms of loss reduction.
• Total operating expenses significantly decreased to $33,507 from $95,546 year-over-year, driven by reductions in professional fees, management compensation, and general and administrative expenses.
• The company is strategically pivoting into the cybersecurity space through its 25% interest in Rift Cyber LLC, which focuses on physical and digital security technologies.
• The stockholders' deficit slightly improved to $(3,068,887) as of September 30, 2025, from $(3,077,354) as of June 30, 2025.

Negatives

• The company reported no operating revenues for the three months ended September 30, 2025, and 2024.
• An accumulated deficit of $13,312,064 as of September 30, 2025, raises substantial doubt about the company's ability to continue as a going concern.
• Cash balance of $318 as of September 30, 2025, is insufficient to cover operating expenses for the next 12 months.
• Significant related-party debt includes a promissory note payable of $2,289,322 and accrued interest of $379,575 to Steve Hall.
• Internal control over financial reporting was deemed ineffective due to material weaknesses, including a single officer handling all financial transactions and limited segregation of duties.
• The company is a non-operating entity with no full-time employees, with operating expenses primarily related to public filings.

Risks

• The company's ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until it becomes profitable.
• There is no assurance that the company will be successful in building Rift Cyber LLC cybersecurity products or that these products will be successful.
• If Rift Cyber LLC is unsuccessful, the company's plan to acquire, merge, or combine with another company (Target Business) may not materialize.
• The company relies on sales of equity instruments, traditional financing (such as loans), and capital from management and significant stockholders, with no assurance of success.
• 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.
• Additional issuances of equity or convertible debt securities will result in dilution to current shareholders, and such securities might have rights, preferences, or privileges senior to common stock.
• Failure to secure the additional financing needed will have an adverse effect on the company's ability to remain in business.
• Material weaknesses in internal control over financial reporting could lead to undetected misstatements in financial statements.

Future Outlook

Management plans to build Rift Cyber LLC cybersecurity products, and if unsuccessful, will seek to acquire, merge, or combine with another company. The company expects to require additional capital to develop its business plan, intending to raise funds through the sale of equity or debt securities. Management anticipates needing approximately $70,000 per quarter to maintain reporting and filing obligations.

Management Comments

• Our current business plan is to build Rift Cyber LLC cybersecurity products and if those are unsuccessful, then we will need to acquire, merge or combine with another company.
• We intend to use capital stock, debt or a combination of both to effectuate business combinations with Target Businesses that have significant growth potential.
• We expect we will require additional capital to develop our business plan. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
• We do not believe these cash reserves are sufficient to cover our expenses for our operations for the next 12 months. We will require additional funding for our ongoing operations.
• Management believes that the material deficiency in internal controls has a limited impact on the Company as it is a dormant entity and all operating activities are incurred to comply with public filing requirements.

Industry Context

The company's strategic pivot into cybersecurity through Rift Cyber LLC aligns with the growing global demand for digital and physical security solutions. This move positions Hawkeye Systems to potentially capitalize on an expanding market, although it is currently in the development stage with no revenue and significant financial challenges.

Comparison to Industry Standards

• Due to the company's development stage, lack of operating revenue, and focus on liquidating prior assets while exploring new ventures, direct comparisons to established industry benchmarks or specific comparable companies/projects are not feasible at this time.
• The company's financial metrics, such as its accumulated deficit and minimal cash balance, are not indicative of a healthy operating business within the cybersecurity or lending industries, but rather reflect a company in a transitional and highly speculative phase.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not aware of any legal proceedings contemplated by any governmental authority or any other party involving the company or its properties.
• No director, officer, or affiliate is a party adverse to the company in any legal proceeding, nor has an adverse interest.

Related Party Transactions

• A promissory note payable to Steve Hall (a related party) had an outstanding balance of $2,289,322 as of September 30, 2025, with $379,575 in accrued interest.
• The company received $69,427 from this related-party promissory note during the three months ended September 30, 2025.
• Corby Marshall, CEO and CFO, received no compensation between July 1 and September 30, 2025, as per his consulting agreement, which provides a flat fee of $500.00 monthly.
• The board of directors granted Corby Marshall 500,000 shares of common stock to settle outstanding accounts payable amounting to $50,000 as of September 30, 2025 (shares not yet issued).
• The board of directors granted former CFO Chris Mulgrew 600,000 shares of common stock to settle outstanding accounts payable amounting to $60,000 as of September 30, 2025 (shares not yet issued).
• Christian Schjolberg and Peter Herzog were granted 250,000 shares of common stock each (total 500,000 shares valued at $50,000) as consideration for intellectual property assigned to Rift Cyber LLC (shares not yet issued).

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances required to fund operations and business development.
• Shareholders are exposed to significant risk due to the company's going concern status and reliance on external financing.
• Management and related parties are significant creditors and recipients of stock grants, indicating their continued involvement and financial support, but also potential conflicts of interest.
• Employees (currently none full-time) and future hires for Rift Cyber LLC will be impacted by the success or failure of the new cybersecurity venture.

Next Steps

• Raise the money necessary to launch 'seeker,' one of Rift Cyber LLC's first products.
• Hire appropriate resources to improve public filings from a time and compliance perspective.
• Develop a Minimum Viable Product (MVP) necessary to acquire Rift Cyber LLC's first customer.
• Further establish the requirements and opportunities for application and the market segment that should emerge from Rift Cyber LLC's technology.
• Seek additional capital through equity or debt securities to fund ongoing operations and potential business combinations.

Key Dates

Keywords

Hawkeye Systems, HWKE, cybersecurity, Rift Cyber LLC, PPE liquidation, going concern, related party debt, quarterly report, financial reporting, SEC filing