The following discussion relates to the historical operations and financial statements of Hawkeye Systems, Inc. for the three and six months ended December 31, 2020 and 2019.





Forward-Looking Statements

The following Management's Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks Factors" in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report.

Financial Condition and Results of Operations

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.





Results of Operations

Three Months Ended December 31, 2020 compared to three months ended December 31, 2019

We had no revenues for the three months ended December 31, 2020 compared with no revenues for the comparable period in 2019. Our activities have been financed by the proceeds of share subscriptions and loans.

Total operating expenses in the three month period ended December 31, 2020 were $319,197 compared to $266,466 in the comparable period in 2019. The operating loss for the three months ended December 31, 2020, is principally the result of management compensation paid in connection with the Company's operations, together with legal and professional fees and marketing expenses. For the three months ended December 31, 2019, operating losses were primarily from professional fees of $254,320.

Our financial statements reflect a net loss of $356,701 for the three month period ended December 31, 2020 compared to a net loss of $197,097 for the comparable period in 2019. This net loss again reflects management compensation and legal and professional expenses during the periods and a non-operating expense of $37,504, which related to interest expense in the three months ended December 31, 2020.

Six Months Ended December 31, 2020 compared to six months ended December 31, 2019

We had operating revenues of $382,246 for the six months ended December 31, 2020 compared with no revenues for the comparable period in 2019. Our activities have been financed by the proceeds of share subscriptions, exercises of warrants and loans.






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Total operating expenses in the six month period ended December 31, 2020 were $752,602 compared to $575,363 in the comparable period in 2019. The operating loss for the six months ended December 31, 2020, is principally the result of management compensation paid in connection with the Company's operations, together with legal and professional fees and marketing expenses. For the six months ended December 31, 2019, operating losses were primarily from professional fees of $544,805 (primarily from warrants and commons shares issued for services).

Our financial statements reflect a net loss of $2,701,848 for the six month period ended December 31, 2020 compared to a net loss of $505,994 for the comparable period in 2019. This net loss again reflects management compensation and legal and professional expenses during the periods and a non-operating expenses of $2,011,213, which related primarily to financing expenses for the issuances of common stock warrants and loss on settlement of debt in the six months ended December 31, 2020.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of December 31, 2020 and June 30, 2020, respectively.





                       December 31,       June 30,
                           2020             2020           Change          %
Cash                  $      250,410     $   911,747     $ (661,337 )     (72.5 )%
Current assets        $    1,636,122     $ 1,475,587     $  160,535        10.9 %
Current liabilities   $    1,291,715     $ 1,317,257     $  (25,542 )      (1.9 )%
Working Capital       $      344,407     $   158,330     $  186,077       117.5 %

Our cash balance at December 31, 2020 was $250,410. We continue to raise funds from the sale of equity securities to investors, exercises of warrants and through issuance of notes. Beginning in early 2020, we also commenced the receipt of revenues from sales of our PPE products. We do not believe the cash reserves are sufficient to cover our expenses for our operations for fiscal year ending June 30, 2021. We will require additional funding for our ongoing operations.

We intend to raise funds through private placements and the exercise of warrants issued in private placements. Although to date we have had some warrant exercises for cash, there can be no assurance that we will be able to raise money through private offerings or through the exercise of warrants. If we cannot raise any additional financing prior to the expiration of the fiscal year ending June 30, 2021, we believe we will be able to obtain funding from private investment firms and/or lenders, if necessary, but have no agreement in writing.

We are an emerging growth company and have generated limited revenue to date. Under a limited operations scenario to maintain our corporate existence, we will require additional funds over the next 12 months to complete our regulatory reporting and filings. However, we will require maximum participation in private offerings or through alternative financings to implement our complete business plan.

There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.





Cash Flows



                                          Three months ended
                                             December 31,              Change
                                          2020           2019          Amount           %
Cash flows (used in) operating
activities                             $ (998,837 )   $ (118,595 )   $ (880,242 )       742.2 %
Cash flows (used in) investing                                                         (100.0
activities                                      -       (198,000 )      198,000               )%
Cash flows provided by financing
activities                                337,500        299,000         38,500          12.9 %

Net change in cash during period $ (661,337 ) $ (17,595 ) $ (643,742 ) 3,658.7 %







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Cash Flow from Operating Activities

As of December 31, 2020, we had not generated positive cash flow from operating activities. For the six months ended December 31, 2020, net cash flows used by operating activities was $998,837 compared to $118,595 used during the six months ended December 31, 2019. Cash flows used by operating activities for the six months ended December 31, 2020, comprised of a net loss of $2.7 million, which was reduced by non-cash expenses of $2.3 million, primarily from $1.8 million for stock based compensation and $370,000 for loss on settlement of debt, and was increased by a net change in working capital of $558,000.

Cash flows used in operating activities for the six months ended December 31, 2019, comprised of a net loss of $506,000, which was reduced by non-cash expenses of $468,000, for $1,205 for depreciation and $467,000 for stock-based compensation and a net change in working capital of $81,000.

Cash Flows from Investing Activities

During the six months ended December 31, 2020, we did not use cash for investing activities. During the six months ended December 31, 2019, we used $198,000 for the investment in Radiant Images, Inc.

Cash Flows from Financing Activities

We have financed our operations primarily from the issuance of equity instruments. For the six months ended December 31, 2020, net cash provided by financing activities was $337,500, consisting of the proceeds from the exercise of warrants of $67,500, proceeds from convertible note $250,000, and $20,000 from the sale of common stock units. For the six months ended December 31, 2019, net cash provided by financing activities was $299,000, consisting mostly of proceeds from the sale of shares of our common stock unites $100,000, proceeds from the exercise of common stock warrants of $52,000 and stock subscriptions received of $147,000.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through equity offerings, warrant exercises, and related party advances in the near term. We have no guarantees or firm commitments that the related party advances will continue in the near term. Our working capital requirements are expected to increase with the growth of our business.

Existing working capital, further advances, together with anticipated capital raises, warrant exercises and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through proceeds from the sale of our common stock, warrant exercises and convertible loans.

Management anticipates additional increases in operating expenses and capital expenditures relating to: (i) funding our PPE purchases and sales; (ii) developmental expenses; and (iii) marketing expenses. We intend to finance these expenses with issuances of securities, funding agreements with third parties for PPE products, and through the exercise of outstanding warrants.

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Effective April 2, 2020 the Company's agreement with Radiant Images was terminated. The Company has engaged counsel and will be bringing legal action against Radiant for numerous causes of action, including breach of contract and fraud. The investment was structured as a revolving note and as a consequence the company has reclassified the Investment in Radiant as a Note Receivable from Radiant. Pursuant to the terms of the revolving note, Radiant is required to repay the money we have already invested to Hawkeye. The note receivable is due upon demand of the Company at any time commencing April 26, 2020 and is payable with 12% interest.






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In December 2019 coronavirus (COVID-19) emerged in Wuhan, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to almost all other countries, including the United States, and infections have been reported globally.

Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.

The ultimate impact of the COVID-19 pandemic on the Company's operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations.

The significance of the impact of the COVID-19 outbreak on the Company's business and the duration for which it may have an impact cannot be determined at this time.

Because of the COVID-19 pandemic, the Company has focused on pandemic management products and services.

The Company has continued its focus on sourcing and delivering other PPE products, including without limitation masks, nitrile gloves, gowns, and sanitizer. The Company has numerous transactions in progress and anticipates significant additional sales of PPE products during 2021.





Material Commitments

As of the date of this Current Report, we do not have any material commitments.

Purchase of Significant Equipment

While we maintain some inventory of PPE products, we do not intend to purchase any significant equipment during the next twelve months.

Application of Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact on our business operations and any associated risks related to these policies are discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported or expected financial results.

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with U.S. GAAP. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.






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The material estimates for our company are that of the stock-based compensation recorded for options and financing expenses for warrants. The fair values of options and warrants are determined using the Black-Scholes option pricing model. We have no historical data on the accuracy of these estimates. The estimated sensitivity to change is related to the various variables of the Black-Scholes option pricing model. The specific quantitative variables are included in the notes to the consolidated financial statements.

We prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

For our critical accounting policies and estimates for "Revenue Recognition" see Note 1, Summary of Significant Accounting Policies, to the unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report. Other than the policy changes disclosed in Note 1, Summary of Significant Accounting Policies, to the unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report, there have been no material changes to our critical accounting policies and estimates during the six months ended December 31, 2020 from those disclosed in our Annual Report on Form 10-K for the year ended June 30, 2020.

Off-Balance Sheet Arrangements

As of the date of this Current Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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