Hawkeye Digital, Inc.

MARCH 31, 2025

Note 1 – Summary of Significant Accounting Policies

Business Overview

Hawkeye Systems, Inc. (the “Company”), is a Nevada corporation incorporated on May 15, 2018. From inception, we focused on selling personal protective equipment (“PPE”). Then Company was (and still is) liquidating its PPE inventory, while pursuing investment opportunities into target companies in diversified industries, such as cybersecurity, and lending money to companies in the affordable housing and climate mitigation industries.

As of April 1, 2025, our management entered into an agreement with cybersecurity veterans, Christian Schjolberg and Peter Herzog whereby they created an LLC called Rift Cyber LLC, which is focusing on the intersection of physical security and digital or cybersecurity. The Company through Rift Cyber LLC aims to produce modular platforms for physical asset monitoring, behavior anomaly detection, secure access controls, and integrating software and sensor layers.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited condensed consolidated financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended June 30, 2024, as filed with the SEC on September 30, 2024.

The accompanying consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

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.

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.

Revenue recognition

As of March 31, 2025 and 2024, the Company had no revenue.

Cost of sales

As of March 31, 2025 and 2024, the Company had no cost of sales.

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 a convertible note payable with accrued interest. For the nine months ended March 31, 2025, and 2024, potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share because they were anti-dilutive were as follows:

Recent accounting pronouncements

Management has considered all recent accounting pronouncements issued and their potential effect on our financial statements.

Financial Instruments — Credit Losses (ASU 2016-13)

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. The new standard is effective for the Company for fiscal years beginning after December 15, 2022. As the Company has no accounts receivable and only a small amount of cash is deposited in a secured bank, the Company does not believe that ASU 2016-13, Financial Instruments—Credit Losses, will have a material impact on the Company.

Segment Reporting (ASU 2023-07)

In November 2023, the FASB issued Segment Reporting - ASU 2023-07 (Topic 280): Improvements to Reportable Segment Disclosures. FASB ASC Topic 280, “Segment Reporting,” requires the use of a “management approach” model for segment reporting. ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023,* and interim periods within fiscal years beginning after December 15, 2024, *on a retrospective basis. Reportable segments are based on products and services, geographic location, legal structure, management structure, or any other way management breaks down the company.

The Company has adopted Segment Reporting - ASU 2023-07 effective January 1, 2024. Since the Company has no activity and no long-lived assets and management are located primarily in the United States. Management has determined that the Company operates and manages the business as one reportable segment and one operating segment.

Note 2 – 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.

The Company’s unaudited condensed consolidated financial statements are prepared using GAAP, applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. During the nine months ended March 31, 2025, the Company had a net loss of $347,383, and an accumulated deficit of $13,034,586.

Currently, the Company is a non-operating company with no full-time employees. All operating expenses are related to public filings and are supported by a related party loan. 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. 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 (the “Target Business”). We intend to use capital stock, debt or a combination of both to effect business combinations with target businesses that have significant growth potential. 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 3 – Loan payable due to Eagle - JV partner

July 17, 2020, the Company entered into a membership agreement with Eagle Equities LLC (“Eagle”) and Ikon Supplies (“Ikon”) to form a Nevada Limited Liability Company, HIE, LLC (“HIE”) for the purpose of procuring, funding the purchase of and sale of PPE (the “Membership Agreement”). Subject to the provision of the Membership Agreement, the interest of any net profits would be shared 33.3% among each member. If there is a loss in some or all of the capital, the Company is contingently liable to contribute to repay 33.3% of the Origination Loan and Additional Contribution and of any losses of HIE.

In addition, the Company is obliged to repay 1/3 of the loan contributed by Eagle or 1/3 of the capital paid by Eagle according to the Membership Agreement.

HIE did not have any operating activities since July 2021. As a result, the Company’s investment balance in HIE as of March 31, 2025 was $0, and the loan balance payable to joint venture partner Eagle totaled $442,251, unchanged since year 2021.

Note 4 – Related Party Transactions

Related party transactions are described in detail in Note 5, Note 6, Note 7, Note 8, and Note 10.

Note 5 – Inventory Financing Payable – related party

On February 19, 2021, Steve Hall, a shareholder of the Company, advanced $1 million to the Company. The purpose of the advance was to purchase inventory to satisfy customer orders. The advance would be repaid upon cash being received from the end customer. In addition to the principal amount of advance, the related party will be entitled to 1/3 of the gross profit earned on the transaction with non-interest-bearing term. The creditor is 100% at risk as this is a non-recourse funding vehicle.

In June 2021 the Company cancelled the contemplated purchase of inventory and returned $500,000 to Mr. Hall. Mr. Hall agreed to allow the Company to retain the balance to fund future purchases and general operating expenses.

On October 1, 2021, the Company and Steve Hall entered into a restated and amended promissory note, to consolidate and restate the terms pursuant to which Steve Hall had provided funds to the Company (the “Consolidated Note”). The Consolidated Note consolidated and restated the terms of advances made on February 17, 2021, for $500,000 for inventory financing, February 18, 2021, for $500,000 for inventory financing, November 12, 2021, for $30,000 and December 13, 2021, for $75,000. In addition to consolidating the advances singled out above, the Consolidated Note included the extension of a line of credit of up to $1,000,000, from Steve Hall to the Company. The principal amount of the Consolidated Note, excluding the $1,000,000 line of credit, was $1,105,000, payable on demand at any time after October 1, 2022 (the “Due Date”), and accruing interest at a rate of 12% per year, if repaid within 90 days of the due date and 20% if repaid thereafter. Principal and interest due under the line of credit extended pursuant to the Consolidated Note would be added to the principal amount due under the Consolidated Note and be payable pursuant to the same terms. The line of credit was due and payable on the Due Date unless extended. At the option of holder, the Consolidated Note was convertible, at any time, into shares of common stock at a conversion price of $0.02 per share.

On April 1, 2024, the Company and Steve Hall entered into a debt consolidation agreement, which consolidated all amounts due by the Company to Steve Hall (the “Debt Consolidation Agreement”), including amounts due under the Consolidated Note, which amounted to accrued interest of $240,274 and the principal balance of $500,000. As the result of consolidation on April 1, 2024, the balance of Inventory Financing Payable – related party was zero as of and after the consolidation. See note 11 – Debt Consolidation Agreement.

Note 6 – Line of Credit – related party

On October 1, 2021, Steve Hall agreed to provide a line of credit of up to $1,000,000 to the Company with simple interest at a rate of 12% for the first 90 days, and simple interest at a rate of 20% per annum thereafter. All principals disbursed under the line of credit would accrue interest and be payable on the same terms as the principal due under the Consolidated Note. The line of credit expired on October 1, 2022, and was renewed and extended with same terms and a new maturity date of October 1, 2023.

On April 1, 2024, the Company and Steve Hall entered into the Debt Consolidation Agreement, which consolidated all amounts due by the Company to Steve Hall under the line of credit. These amounted to accrued interest of $182,092 and the principal balance of $570,250. As the result of consolidation on April 1, 2024, the balance of Line of Credit - related party is zero as of and after the consolidation. See note 11 – Debt Consolidation Agreement.

Note 7 – Promissory Notes Payable – related party

On March 29, 2023, Steve Hall provided the Company with a loan in the principal amount of $1,000,000, as evidenced by a promissory note with an annual interest rate of 12% per year (the “Steve Hall Note”). The purpose of the Steve Hall Note was to provide the Company with a funding source to make a follow-on investment in CNTNR USA, Inc., a Delaware corporation (“CNTNR”). On May 31, 2023 (or upon the closing of a debt financing), the Company would repay the outstanding principal balance of the Steve Hall Note to Steve Hall and transfer to him 90% of the shares of CNTNR, issued by CNTNR to the Company pursuant to the Company’s investment in CNTNR, plus 90% of the CNTNR Warrants as described below in Note 9 - Note Receivable.

On April 1, 2024, the Company and Steve Hall entered into the Debt Consolidation Agreement, which consolidated all amounts due by the Company to Steve Hall under the Steve Hall Note. These amounts included accrued interest of $170,183 and the principal balance of 1,708,000. As the result of consolidation on April 1, 2024, the balance of Promissory Notes Payable – related party is zero as of and after the consolidation. See Note 11 – Debt Consolidation Agreement.

Note 8 – Accrued Expenses – related party

Between September 2021 to September 2022, the Company had accepted deposits in the total amount of $33,218 from Central National Gottesman, Inc., on sale of face masks on behalf of Steve Hall, a shareholder of Hawkeye Systems, Inc.

On April 1, 2024, the accrued expenses of $33,218 owed to Mr. Hall were included in the Debt Consolidation Agreement. As the result of consolidation on April 1, 2024, the balance of Accrued Expenses – related party is zero as of and after the consolidation. See Note 11 – Debt Consolidation Agreement.

Note 9 – Note Receivable

On February 27, 2023, the Company and CNTNR USA, Inc. (“CNTNR”) entered into a promissory note under which the Company disbursed $200,000 to CNTNR (the “CNTNR Note”). Subsequently, on April 6, 2023, the Company and CNTNR amended and restated the CNTNR Note (the “Amended CNTNR Note”). In the Amended CNTNR Note, the Company agreed to lend CNTNR the total principal amount of $1,000,000 (“Principal Amount”) with a commitment fee equivalent to 5% of the Principal Amount. CNTNR further agreed to pay the Company a monthly consulting fee of $5,000 beginning on March 1, 2023 that would continue until the Principal Amount was repaid. The balance of the consulting fee was recorded as accounts receivable. As of March 31, 2025, the accounts receivable has a zero balance.

The Amended CNTNR Note had an annual interest rate of 12% and matured on the earlier of September 30, 2023, or the closing of a material debt or equity financing. Upon maturity of the Amended CNTNR Note, CNTNR would pay to the Company all outstanding Principal Amount and interest, plus any outstanding consulting fee and issue the Company 10% of the issued and outstanding shares of CNTNR (equivalent to 6,170,879 shares).

Moreover, the Amended CNTNR Note includes warrant coverage of one warrant for every share issued in repayment of the Principal Amount at the closing of an intended merger with CNTNR which is equal to 6,170,879 shares. The warrants will have a 30% discount rate to the current fair market price of the shares of CNTNR when exercised and will expire 36 months after April 6, 2023.

On April 1, 2024, the Company assigned and transferred the Amended CNTNR Note to Steve Hall as part of the Debt Consolidation Agreement. The total amounts assigned to Steve Hall were accrued interest of $143,994 and the principal balance of $1,563,000. As the result of consolidation on April 1, 2024, the balance of Note Receivable is zero as of and after the consolidation. See Note 11 – Debt Consolidation Agreement.

Note 10 – Consulting Agreement-Related Party

On January 30, 2023, Hawkeye entered into a consulting agreement with Steve Hall, a shareholder of the Company, to provide real estate and development consulting services, including the supervision of the Company’s senior management, staff and all personnel, whether employees or consultants, strategic planning, property acquisitions and annual budget review.

The contract period was 12 months with no option for renewal thereafter. The Company paid Steve Hall a one-time flat service fee of $250,000 on January 31, 2023 which was recorded in accounts payable. Compensation was without recourse and there was no requirement for the performance of services during the term of the contract.

On April 1, 2024, the service fee of $250,000 was included in the amounts settled with the Debt Consolidation Agreement. As the result of consolidation on April 1, 2024, the balance of Consulting Agreement - Related Party is zero as of and after the consolidation. For further discussion see Note 11 – Debt Consolidation Agreement.

Note 11 – Debt Consolidation Agreement

The Company and Steve Hall executed a Debt Consolidation Agreement that was effective as of April 1, 2024, that consolidated the Company’s various historic loans from Steve Hall to an amount of $1,770,713.10 (the “Steve Hall Indebtedness”) and the final consolidated amount was $1,708,000. The debt consolidation transaction included the assignment to and assumption by Steve Hall of all amounts due to the Company by CNTNR pursuant to the note receivable described in Note 9- Note Receivable. The amounts assigned to Steve Hall under the note receivable were subtracted from the amounts payable by the Company to Steve Hall. The resulting outstanding loan balance was documented by the execution the Company and Steve Hall of the New Consolidated Note described in Note 7 – Notes Payable Related Party.

Mr. Hall agreed that there are no rights to set off, counterclaim or any defenses to the obligations of the amounts consolidated and/or assigned to Mr. Hall.

On April 1, 2024, the various historical loans and the CNTNR Note were consolidated amounting to $1,708,000 under the Debt Consolidation Agreement as follows:

As a result of the debt consolidation on April 1, 2024, the debt balances referenced in Notes 5, 6, 7, 8, 9, and 10 are zero as of and after the consolidation.

Note 12 – Stockholders’ Equity

Common Stock

The Company issued 45,000 shares of common stock to former CFO Christopher Mulgrew on July 15, 2024, for cashless conversion of stock options.

Stock Options

Transactions in stock options for the three months ended March 31, 2025 are as follows:

During the nine months ended March 31, 2025, the Company had not granted any stock options. And all stock options were vested at the fiscal year end June 30, 2023.

At March 31, 2025, the intrinsic value of the outstanding options was $0.

Note 13 – Commitments and Contingencies

On July 17, 2020, the Company entered into a Membership Agreement with Eagle and Ikon to form HIE. Under the terms and conditions of the Membership Agreement, in the event of a loss of capital of HIE, the Company shall contribute to repay 33.3% of the Origination Loan and Additional Contribution and of any losses of HIE. HIE did not have operating activities during the quarter ended March 31, 2025. As of March 31, 2025, the Membership Agreement is still active. Detailed discussions are included in Note 3 – Loan payable due to Eagle - JV partner.

On December 1, 2023, the Company entered into a consulting agreement with Corby Marshall, the Company’s President, Secretary, Chief Executive Officer and Chairman of the Board of Director, to restructure the compensation received by Mr. Marshall from the Company (the “Marshall Consulting Agreement”). Pursuant to the terms of the Marshall Consulting Agreement, Mr. Marshall shall receive $500 for his services rendered to the Company starting from December 1, 2023, and thereafter.

On March 21, 2025, Hawkeye Systems, Inc. (the “Company”), Christian Schjolberg, and Peter Herzog, filed articles of organization with the Secretary of State of the State of Nevada to form a member managed limited liability company called Rift Cyber LLC (“Rift”). The Company holds 25% of Rift’s membership interest; while Christian Schjolberg, and Peter Herzog hold the remaining 75% of Rift’s membership interest. Each of Christian Schjolberg, and Peter Herzog, received 250,000 shares of common stock of the Company. See Note 15 – Subsequent Events for additional detail.

Note 14 – New Consolidated Note – related party

On April 1, 2024, as we had mentioned on Note 11 – Debt Consolidation Agreement**,**the Company consolidated all amounts owed to Steve Hall in one instrument and assigned and transferred to Steve Hall all receivables by the Company from CNTNR USA, Inc., described in Note 9 - Note Receivable.

To document the outstanding loan balance (consolidated debt minus note receivable) the Company and Steve Hall entered into a new consolidated promissory note on April 1, 2024, for $1,770,713.10 (the “New Consolidated Note”). The New Consolidated Note accrues interest at a rate of 12% per year and its maturity date is December 31, 2025.

As of March 31, 2025, the outstanding loan balance on the New Consolidated Note was $2,156,895, with accrued interest of $245,941 for the period from April 1, 2024 to March 31, 2025.

Note 15 – Subsequent Events

Management has evaluated subsequent events through the date of these financial statements were available to be issued. Based on our evaluation, the following event have occurred that require disclosure.

On April 1, 2025, the Company, Christian Schjolberg, and Peter Herzog, filed articles of organization with the Secretary of State of the State of Nevada to form a member managed limited liability company called Rift Cyber LLC (“Rift”). The membership interest of Rift is divided as follows, the Company holds 25% of Rift’s membership interest; Christian Schjolberg, and Peter Herzog hold the remaining 75% of Rift’s membership interest. In connection with the formation of Rift, Jö & Fyse UG, and Peter Herzog executed an intellectual property assignment agreement (the “IP Assignment”), whereby they assigned to Rift, all of the intellectual property rights in and to the core technology, RF environment mapping methodology, authentication framework, data collection and aggregation mechanism, applications and use cases, and prototype implementations and source code of Rift Tech. As consideration for the IP Assignment, the Company’s board granted each of Christian Schjolberg, and Peter Herzog,250,000 shares of common stock of the Company. Such shares have not yet been issued as of the date of this report but will be issued as soon as possible.

Rift will be focused on developing technologies that operate at the intersection of physical and digital security. This move marks a strategic realignment of Hawkeye’s resources into the cyber security space.