10-Q: Hawkeye Systems Reports Q3 2026 Results Amid Strategic Shift

Hawkeye Systems, Inc. filed its Form 10-Q for the quarter ended March 31, 2026, detailing a strategic pivot towards private equity and advisory services, alongside ongoing operational losses and a going concern warning.

Summary

• Hawkeye Systems, Inc. reported its quarterly results for the period ending March 31, 2026.
• The company is undergoing a strategic realignment to become a private equity and corporate advisory firm, focusing on digital assets and frontier technology verticals.
• The company had no operating revenues or cost of sales during the reported periods.
• Total operating expenses for the three months ended March 31, 2026, were $48,666, and $120,070 for the nine months ended March 31, 2026.
• Net losses were $117,261 for the three months and $326,609 for the nine months ended March 31, 2026.
• The company's cash balance was $385 as of March 31, 2026, down from $24,994 in the prior year, raising concerns about its ability to continue as a going concern.
• Significant events subsequent to the quarter include a change in control, a new convertible promissory note, Series A Preferred Stock issuance, and an investor rights agreement.
• The company has identified material weaknesses in its internal controls over financial reporting.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to significant ongoing losses, a critical going concern warning, identified material weaknesses in internal controls, and a downgrade to the OTC Pink Limited Market, despite a strategic pivot and subsequent financing events.

Positives

• Strategic shift towards private equity and advisory services in digital assets and technology verticals.
• Formation of Rift Cyber LLC, focusing on physical and digital security intersection.
• Subsequent events indicate a significant change in control and new financing/investment agreements that could provide future capital.

Negatives

• No operating revenues or cost of sales reported for the periods.
• Continued net losses: $117,261 for the three months and $326,609 for the nine months ended March 31, 2026.
• Dwindling cash balance of $385 as of March 31, 2026, raising substantial doubt about the company's ability to continue as a going concern.
• Accumulated deficit of $13,537,140 as of March 31, 2026.
• Identified material weaknesses in internal controls over financial reporting, including lack of segregation of duties and incomplete financial statements.
• The company's common stock was moved from the OTCQB Venture Market to the OTC Pink Limited Market.

Risks

• The company has limited operations and expects to incur significant expenses and continuing losses for the foreseeable future.
• The independent registered public accounting firm has expressed doubt about the company's ability to continue as a going concern.
• Limited operating history makes it difficult to evaluate future business prospects.
• Material weaknesses in internal controls over financial reporting have been identified and may not be effectively remediated.
• Concentration of ownership by Hawkeye Holdco, LLC (HH) could lead to significant influence over management and affairs.
• The company may need to raise additional capital, which may not be available on acceptable terms or at all, potentially leading to dilution.
• Failure to manage future growth effectively could materially and adversely affect the business.
• Reliance on network and information systems makes the company vulnerable to disruptions from cyber threats.
• Changes in laws or regulations, or a failure to comply, may adversely affect the business.
• The company's common stock is subject to penny stock rules, limiting market liquidity and making transactions cumbersome.
• The company does not intend to pay dividends for the foreseeable future.
• Volatility in common stock price may subject the company to securities litigation.

Future Outlook

The company intends to raise capital to invest in and acquire controlling interests in companies fitting its investment criteria and to recruit personnel for business advisory services. Management plans to fund working capital requirements through equity or convertible debt offerings, warrant exercises, and related party advances. The company believes it will require approximately $125,000 per quarter to maintain SEC reporting obligations.

Management Comments

• Management is currently evaluating the future funding of Rythe, Rift's application.
• Management believes that ASU 2016-13, Financial Instruments - Credit Losses, has no material impact on the Company due to no accounts receivable and only a small amount of cash deposited in a secured bank.
• Management concluded that disclosure controls and internal controls over financial reporting were not effective as of March 31, 2026, due to material weaknesses including having only one officer handling all financial transactions, lack of appropriate operational controls, incomplete financial statements, lack of proper documentation, and limited segregation of duties.
• Management believes that the material deficiency in internal controls has a limited impact on the Company due to minimal operating activities.

Industry Context

StockSavvy.ai notes that Hawkeye Systems is attempting a significant strategic pivot from its historical PPE business to a private equity and corporate advisory model focused on digital assets and technology. This shift aligns with broader industry trends of fintech and digital asset integration, but the company faces substantial challenges in execution given its current financial state and operational limitations.

Comparison to Industry Standards

• The company has no operating revenue, which is significantly below industry standards for active businesses in the financial services and technology sectors.
• The company's net loss of $326,609 for the nine months ended March 31, 2026, and accumulated deficit of $13,537,140, indicate a financial performance far below that of established private equity or advisory firms.
• The identified material weaknesses in internal controls are a significant concern compared to industry best practices, which emphasize robust financial reporting and oversight.
• The company's reliance on related party loans and lack of substantial cash reserves ($385) is not comparable to the typical capital structures and liquidity positions of firms operating in the private equity and advisory space.

Management Changes

Corporate Governance

Legal Proceedings

• No legal proceedings are currently known to be 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 or has an adverse interest.

Related Party Transactions

• Accounts payable and accrued liabilities - related party: $27,463 as of March 31, 2026.
• Accrued interest - related party: $518,088 as of March 31, 2026.
• Promissory note payable - related party: $2,318,263 as of March 31, 2026.
• Steve Hall provided a $1,000,000 loan on March 29, 2023, which was consolidated and amended, maturing on December 31, 2025, and subsequently amended and restated into a convertible promissory note with Hawkeye Holdco LLC on April 1, 2026.
• On May 7, 2026, Steve Hall entered into a Share Subscription Agreement to subscribe for 228,858 shares of common stock, settling an outstanding payable amount of $27,463.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to future capital raises and convertible note conversions. Concentration of ownership by HH may impact voting power and strategic decisions. Stock price volatility and penny stock status create investment risk.
• Creditors: The company has substantial liabilities, including related party loans, and its going concern status raises questions about repayment ability.
• Employees: The company currently has no full-time employees, indicating minimal immediate impact on personnel.
• Management: New leadership appointed, and significant board changes are occurring due to the change in control.

Next Steps

• Begin research and development for private equity business and merchant banking services.
• Explore the purchase of a FINRA registered financial services firm.
• Recruit and retain personnel to provide business advisory services.
• Evaluate Rift's seeker technology and negotiate potential working capital infusion.
• File a registration statement within 30 days of request by HH to register resale of Registrable Securities.
• Increase the size of the Board of Directors to five members and appoint four individuals designated by HH.

Key Dates

Recommendation

The company is in a critical transitional phase with a strategic pivot, a change in control, and new financing arrangements. However, significant ongoing losses, a going concern warning, and identified material weaknesses in internal controls present substantial risks. While the subsequent events offer potential for future capital and strategic direction, the immediate financial health and operational execution remain highly uncertain, warranting a cautious 'hold' stance until clearer progress is demonstrated.

Keywords

Hawkeye Systems, Form 10-Q, Quarterly Report, Financial Statements, Going Concern, Internal Controls, Private Equity, Advisory Services, Digital Assets, Rift Cyber LLC, Change in Control, Convertible Note