0001477932-19-007005.txt : 20191209 0001477932-19-007005.hdr.sgml : 20191209 20191209124812 ACCESSION NUMBER: 0001477932-19-007005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 67 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20191209 DATE AS OF CHANGE: 20191209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Hawkeye Systems, Inc. CENTRAL INDEX KEY: 0001750777 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 830799093 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-227029 FILM NUMBER: 191274778 BUSINESS ADDRESS: STREET 1: 7119 W SUNSET BLVD CITY: LOS ANGELES STATE: CA ZIP: 90046 BUSINESS PHONE: 3106062054 MAIL ADDRESS: STREET 1: 7119 W SUNSET BLVD CITY: LOS ANGELES STATE: CA ZIP: 90046 10-K 1 hwke_10k.htm FORM 10-K hwke_10k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2019

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ________________ to _______________

 

333-180954

(Commission file number)

 

Hawkeye Systems, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

83-0799093

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

2702 Media Center Drive

Los Angeles, CA 90065

323-737-1314

(Address and telephone number of principal executive offices)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes x No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or amendment to Form 10-K. Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, small reporting company or a emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

 

Emerging growth company

x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2019, was $3,150,308.

 

(At June 30, 2019, the registrant had 9,897,116 shares of common stock issued and outstanding, of which 4,116,500 shares of common stock issued and outstanding were held by officers and directors. Market value has been computed based upon the sales price of privately placed shares at or about such date.)

 

As of December 5, 2019, there were 10,417,116 shares of the registrant’s common stock outstanding.

 

 
 
 
 

 

TABLE OF CONTENTS

 

PART I

 

Item 1.

Description of Business

4

Item 2.

Description of Property

14

Item 3.

Legal Proceedings

14

Item 4.

Submission of Matters to a Vote of Security Holders

15

Item 5.

Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

15

Item 6.

Selected Financial Data

16

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

16

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 8.

Financial Statements

19

Item 9.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosures

38

Item 9A.

Controls and Procedures

38

Item 9B.

Other Information

39

Item 10.

Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act

39

Item 11.

Executive Compensation

41

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

43

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

43

Item 14.

Principal Accountant Fees and Services

44

Item 15.

Exhibits

45

 

 
2
 
Table of Contents

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

 

This Annual Report on Form 10-K, the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Indoor Harvest, Corp. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Indoor Harvest”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.

 

Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.

 

The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.

 

 
3
 
Table of Contents

 

Item 1. Description of Business

 

General

 

We were incorporated on May 15, 2018 in the State of Nevada. From inception until the date of this filing our activities have primarily consisted of (i) the incorporation of our company, (ii) the development of our business plan, (iii) development of our products, (iv) recruiting and adding additional consultants and employees, (v) signing contracts for the business, (vi) advancing the products with the U.S. military and (vii) development of our relationship with Radiant Images, Inc.

 

The Company is a technology company that is developing cutting edge optical imaging products for military and law enforcement markets to assist with intelligence, surveillance and reconnaissance (“ISR”). Other potential markets include commercial entertainment and outdoor sportsmanship activities. This “SOCOM to Commercial” model (United States Special Operations Command to Commercial) has worked well for other companies.

 

On June 7, 2018, the Company entered into a joint-venture partnership with Insight Engineering, LLC (“Insight”). On August 1, 2018, the Company and Insight incorporated Optical Flow, LLC and entered into an operating agreement (the “Joint Venture” or “Optical Flow”) which superseded the previous joint-venture partnership. Pursuant to the Joint Venture, the Company and Insight will co-develop high resolution imaging systems. Insight is a Nevada limited liability corporation that is led by Lucas Foster, who has two decades of experience working on advanced camera technology for entertainment/motion picture uses. While this experience provides background for development of our products, our technology must be further developed and enhanced for law enforcement and military applications as provided for in our plan of operations. The Company currently owns fifty (50%) percent of the Joint Venture.

 

On September 19, 2019, the Company entered into a Stock Purchase Agreement with Radiant Images, Inc., a California corporation (“Radiant”), as well as Radiant’s shareholder Gianna Wolfe (“Wolfe”) and key employee, Michael Mansouri (“Mansouri”), pursuant to which the Company will acquire 100% of the shares of common stock (the “Shares”) of Radiant from Wolfe, effectuating the acquisition of Radiant. The purchase price for the Shares is equal to $1,810,904.72 plus the cash and cash equivalents of Radiant as of the close of business on the business day immediately preceding the Closing Date. The purchase price is payable (i) at the Closing by paying the amount of funds required to be paid pursuant to payoff letters payable to various creditors of Radiant (not to exceed $836,104.72), as well as an amount equal to the purchase price, less the payoff amounts and less amounts previously delivered prior to Closing to Radiant pursuant to a Revolving Note with Optical Flow, LLC, a subsidiary of Hawkeye. The closing is anticipated to occur before December 31, 2019. Prior to closing, Hawkeye is required to have received at least $1,500,000 from the sale of equity securities.

 

Also at the closing, the Company will enter into employment agreements with each of Mansouri and Wolfe, with an annual salary of $225,000 and $175,000 annually, respectively. In addition, pursuant to the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan, each of Mansouri and Wolfe will be granted an option to purchase up to 375,000 shares of Company common stock at an exercise price equal to the fair market value of the Company’s common stock as of the closing date, which vest one-third on the first anniversary of the closing date and monthly thereafter.

 

During the year ending June 30, 2019, the Joint Venture advanced $920,800 to Radiant Images, Inc. That amount was initially recorded as a note receivable from Radiant.

 

As a result of the Radiant acquisition agreement, the Company and Insight agreed to contribute no further amounts to the Joint Venture, to cease operations of the Joint Venture and the $920,800 previously advanced by the Joint Venture to Radiant is to be considered a investment in Radiant towards the purchase price. Management’s decision to cease operations of the Joint Venture, the Company’s risk of loss for all activities of the Joint Venture to date, and the executed purchase agreement for Radiant, which was executed subsequent to year end but prior to issuance of these financial statements) have led the Company to conclude the Joint venture should be consolidated as of June 30, 2019.

 

 
4
 
Table of Contents

 

Our business office is located at 2702 Media Center Drive, Los Angeles, CA 90065. Our telephone number is 323-737-1314 and our website is www.hawkeyesystemsinc.com.

 

Business Description

 

We are currently developing a wide field of view, single lens virtual reality imaging product.

 

Initially, these products are being designed to be able to be mounted to law enforcement and/or military personnel to record and stream high resolution images to a wi-fi, Bluetooth network or other proprietary network protocols when required.

 

On August 1, 2018 the Joint Venture and Insight entered into an exclusive and worldwide license for military and law enforcement purposes (the “License”) to use and build products derived from all technology, information, intellectual property and other materials for or relevant to the 360 degree visible and infrared spectrum single lens camera platform, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, hardware, equipment, software, devices, methods, apparatus, and product designs. The License is also subject to a five (5%) percent net sales royalty payable to Insight. The License allows the Joint Venture to excel in developing a next generation body and head camera that sees behind the user and presents a clear and wide field of view. The Company possibly through the joint venture will develop additional technology that may include further iterations of this system, and all the related mounting and charging technologies that facilitate its use. The Board of Managers of the Joint Venture consists of Corby Marshall from the Company and Lucas Foster from Insight.

 

Lucas Foster, the principal of our joint venture partnership, has produced or supervised more than 50 feature films, including Bad Boys, Crimson Tide, Dangerous Minds, The Mask of Zorro, Enemy of the State, Man on Fire, Mr. & Mrs. Smith and Law-Abiding Citizen, among many others. Mr. Foster has managed dozens of projects and project teams numbering in the thousands, through completion. Mr. Foster’s entertainment experience includes substantial work with camera technologies upon which our camera system is based. While this experience provides background for development of our products, our technology must be further developed and enhanced for law enforcement and military applications as provided for in our plan of operations.

 

Mr. Foster is a storyteller, filmmaker and businessman with many years of experience in development, production, marketing and distribution of films and television programs. Mr. Foster started the Warp Group of companies which have been in business for over 20 years. Mr. Foster is also the co-founder of HeadcaseVR – a leading edge virtual reality technology company.

 

Mr. Foster attended UCLA and Princeton University, where he studied applied sciences, and attended film school. Mr. Foster has spoken at the American Film Institute, UCLA Film School, USC Film School, New York University, the Tisch School of the Arts at NYU, Digital Hollywood, and at the Nokia Forum and various other content and media organizations concerned with the future intersection of media and technology.

 

A longer-term plan is to develop a next-gen version of Aerial PTZ (pan-tilt-zoom) cameras during long military surveillance flights - there are thousands of such PTZ camera balls in use with the U.S. Military. We call this the “AXA” platform. The AXA will entail the development of a larger ground and aerial platform-based stabilized system that is of the size, weight and power to allow for Ground Vehicular, Manned and Unmanned Aerial Systems deployment based on a networked system of similar or greater technical camera capabilities.

 

 
5
 
Table of Contents

 

The AXA is intended to provide the military and law enforcement customer with a 360-degree, user-defined and customized, field of view in real-time that is exportable to multiple users or group outputs through various platforms simultaneously. The AXA will also provide geo-location and range data to assist/confirm the objective imagery continuously. In the company’s development path, much effort has been put into the evaluation of licensing the technology versus purchasing Radiant Images in order to benefit from the total upside available in various businesses and industries.

 

Research and Development

 

The Company is conducting research and development for the further development of this imaging system for the body/head camera platform. The milestones over the next 12-months are:

 

 

·Design the single lens platform;

 

 

 

 

·Develop hardware design and source components;

 

 

 

 

·Sign a binding agreement with the imaging sensor provider;

 

 

 

 

·Produce working prototype(s); and

 

 

 

 

·Get user/client feedback on use cases and user requirements.

 

 

 

 

 

 

 

   

 
6
 
Table of Contents

 

Longer-Term Plan

 

A longer-term plan is to develop a next-gen version of Aerial PTZ cameras for use during long-duration military surveillance flights - there are thousands of such PTZ Balls in use with the US Military. We call this the “AXA” platform. The AXA will entail the development of a larger ground and aerial platform-based system that is of the size, weight and power needed to allow for Ground Vehicular, Manned and Unmanned Aerial Systems deployment based on a networked system of similar or greater technical camera capabilities.

 

The AXA is intended to provide the military and law enforcement customer with a 360-degree, user-defined and customized, field of view in real-time that is exportable to multiple users or group outputs through various platforms simultaneously. The AXA will also provide geo-location and range data to assist/confirm the objective imagery continuously.

 

Our research and development initiatives focus on next generation technology. We continue to develop new technologies to enhance existing products and services, and to expand the range of our offerings through research and development, licensing of intellectual property and acquisition of third-party businesses and technology.

 

We are able to leverage a Cooperative Research and Development Agreement (the “CRADA”) with a DOD organization. The CRADA allows companies to work with different areas of DOD to conduct research and development and utilize some of its facilities, vehicles, and personnel.

 

In July 2018, we conducted a field demonstration of the head/body camera platform to JSOC and also had a discussion regarding the capabilities of the AXA and specific unit’s requirements for the AXA.

 

Through the CRADA, this project includes an individual work plan (“IWP”) with DOD that is set to meet conditions of transition by the end of calendar year 2019.

 

The IWP sets out what the parties intend to achieve in the presentation, modification and implementation of the products.

 

 
7
 
Table of Contents

 

The following diagram describes the typical CRADA process:

 

The CRADA Process provides a technology integration deliberate research and development path with a government customer which progresses toward a transitional assessment.

 

 

 
8
 
Table of Contents

 

 

 

 

 

 

 

 

Proposed prototypes for future deployment

 

 

 

 

 

 

Intellectual Property

 

The Joint Venture currently has a license to use and build products derived from all technology, information, intellectual property and other materials for or relevant to the 360 degree visible and infrared spectrum single lens camera platform, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, hardware, equipment, software, devices, methods, apparatus, and product designs, for military and law enforcement purposes. The License will allow the Joint Venture to excel in developing a next generation body and head camera that sees behind the user and presents a clear and wide field of view. The Joint Venture will develop additional technology that may include further iterations of this system, and all the related mounting and charging technologies that facilitate its use. As research and development is undertaken by the Joint Venture it will protect its intellectual property with U.S. and foreign patents and trademarks.

 

Hawkeye’s Position in the Industry and Competitiveness

 

The Hawkeye body worn camera platform is being developed to greatly enhance the quality of imaging on body worn camera platforms. At this point we have developed several early prototypes. We believe it will be different than our competitors because our system will produce up to a 4p steradian (depending on mounting position) image in nearly 8K resolution in both the visible light and infrared spectrums and will offer separate end-user customizable viewing in real-time. Currently, we believe there is a need for much better imaging in the law enforcement and military communities where body/head cameras are regularly utilized.

 

 
9
 
Table of Contents

 

The products that are being developed by the Company were originally developed for the film and entertainment industry. Pursuant to the License, the Joint Venture has an exclusive and worldwide license for military and law enforcement purposes to use and build products derived from all technology, information, intellectual property and other materials for or relevant to the 360 degree visible and infrared spectrum single lens camera platform, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, hardware, equipment, software, devices, methods, apparatus, and product designs. The products are being further developed and enhanced for use by law enforcement and military applications. The products are currently operational in the film and entertainment industries but they are not operational or developed enough for law enforcement and military applications yet.

 

The Company is bringing his decades of experience and technical know-how to the Joint Venture. The 360 degree visible and infrared spectrum camera platform and the AXA are working prototypes and are frequently used in the film and entertainment industries. While this experience provides background for development of our products, our technology must be further developed and enhanced for law enforcement and military applications as provided for in our plan of operations.

 

The Joint Venture is developing and adapting these products for military and law enforcement purposes. While these products are currently functional in the film and entertainment industries, there is no guarantee that these products are developed sufficiently to meet the needs of military and law enforcement. Demonstrations have been conducted with the U.S. Special Forces and the Company intends to continue to develop and test the products throughout the CRADA process.

 

The AXA camera system provides an immediate two-fold revenue opportunity due to competitive technology superiority through our interaction with DOD. First, the AXA camera is fundamentally a linked set of image sensors and aspheric lenses that have a high field-of-view (“FOV”) in each lens that can be stitched together almost instantaneously with the Insight software. As such, the individual camera lens can be utilized in both separate and collective configurations. This creates the opportunity for a single, lightweight camera with 6 degrees of freedom and a 4p Steradian Field-of-View to be marketed. The 2nd revenue opportunity is to the AXA camera employment as a collective set of cameras in one fixed unit that provides the additional feature of being able to measure a position in a given time and space including depth, therefore giving ISR assets a volumetric capture ability. We will first discuss the Hawkeye competitive position in Industry with respect to the body worn camera.

 

The market for body worn camera platforms continues to evolve in response to changing technologies, shifting customer needs and expectations and the potential introduction of new products. Even more importantly is the fact that the body camera market is being driven by litigation and government policy positions that require the use and capture of video streaming by law enforcement and military personnel. As a consequence, not only is the market open to technology insertion but the consumer stakeholders are also in a ‘must-buy’ situation.

 

 
10
 
Table of Contents

 

Competitors in this specific market with a focus on military and law enforcement include Axon Enterprises Inc., GoPro, Inc., and MOHOC, Inc. Continued evolution in the industry and technology shifts are creating opportunities for both established and new competitors. Key competitive factors include: product performance; product features; product quality and warranty; total cost of ownership; data security; data and information work flows; company reputation and financial strength; and relationship with customers. However, no camera is providing a linkable feed opportunity that can provide command and control manipulation from an operations center without losing video capture feed from the originating camera position—meaning, where the camera was originally oriented. Additionally, the value of this approach in a body-worn configuration is that it can be developed to link similar views of perspective—this can be thought of in terms of a buddy-system employment of a group of cameras in close proximity to one another as they would be configured in a patrolling nature or during routine law enforcement activities. This provides the opportunity for the view audience or audiences to ‘FLOW’ the camera to a view that is peripheral and outside the view of the human eye for early warning or post-event capture analysis. For a military or law enforcement return on investment the camera platform provides a way to multiply the view and presence of the deployed force in a sector by literally providing them ‘eyes in the back of their head’. Post-arrest or detention this camera creates the ability to demonstrate threats that were present at the scene or 3rd party influencers (riot instigators, crowd actions, etc.) that are not currently available in a traditional Field-of-View camera.

 

The second revenue opportunity is from the collective camera configuration of the AXA system. This configuration allows for an immersive experience from the feed of multiple camera lenses and creates an immediate and sustained 4p steradian field of view that can be customized to single or multiple viewer desired perspectives depending on the viewers peripheral platforms, such as Oculus-like headset, steradian dome viewers, etc. The additional value proposition of the AXA collective camera system is that because at least three (3) camera lenses are in a fixed-point position to a viewing area a mensuration of any point in the space of the field can be determined. This means the military or law enforcement operations center can quickly allocate available assets to a location that is in the viewing area of the AXA system in any direction. Also, with the advancement of the collective lens the light levels required to form a picture will also be reduced, therefore allowing for the capture of imagery during periods of limited visibility.

 

Overall, the AXA collective and individual camera system provide the Intelligence, Surveillance and Reconnaissance defense and law enforcement sector with, as yet, unforeseen customizable, multi-person consumable imagery in a 3D format that creates a live-virtual experience that can be practically exploited for training, operational targeting and protective early warning. Optical Flow in conjunction with consultants is leading the ISR industry technology integration with the most selective and capable military customer in the US Department of Defense.

 

Background Information on Employment Platforms—Manned and Unmanned Aerial Systems, Mobile and Static Ground surveillance systems, and Surface and Sub-Surface Maritime vessels and equipment.

 

The AXA camera system is platform agnostic – it is adaptable to new cameras and sensors and the math stays the same; only the size of the mounts change. The size, weight and power configuration of the collective camera system as designed, allows it to be employed in/on/from air, ground and water-based surface platforms. The market is wide open in each of these environments, however, we believe the Unmanned Aerial System (“UAS”) market is ready to accept, employ and realize the advantages of the AXA camera system. A couple validations of the concept and the value of AXA include completion of a working stage at Sony Pictures in Los Angeles as well as field tests with DOD organizations that are ongoing.

 

UAS

 

The market for small UAS has grown significantly since the early 2000s driven largely by the demands associated with the global threat environment and the resulting procurement by military customers, the early adopters for this technology. Small UAS now represent an accepted and enduring capability for the military. The U.S. military’s transformation into a smaller, more agile force that operates via a network of observation, communication and precision targeting technologies accelerated following the terrorist attacks of September 11, 2001, as it required improved, distributed observation and targeting of enemy combatants who operate in small groups, often embedded in dense population centers or dispersed in remote locations. We believe that UAS, which range from large systems, such as Northrop Grumman’s Global Hawk and General Atomics’ Predator, Sky Warrior, Reaper and Gray Eagle, to small systems, such AeroVironment’s Raven, Wasp AE, Puma AE and Snipe, serve as integral components of today’s military force. These systems provide critical observation and communications capabilities serving the increasing demand for actionable intelligence, while reducing risk to individual “warfighters.” Small UAS can provide real‑time observation and communication capabilities to the small units who control them.

 

 
11
 
Table of Contents

 

As the company’s strategy has evolved we have evolved from the licensing model which was operated by Optical Flow and now we have transitioned to a place where the acquisition of Radiant is the prudent move to provide maximum value for our shareholders.

 

Radiant Images, Inc.

 

On September 19, 2019, the Company entered into a Stock Purchase Agreement with Radiant Images, Inc., a California corporation (“Radiant”), as well as Radiant Images major shareholder Gianna Wolfe (“Wolfe”) and key employee, Michael Mansouri (“Mansouri”), pursuant to which the Company will acquire 100% of the shares of common stock (the “Shares”) of Radiant from Wolfe, effectuating the acquisition of Radiant. The purchase price for the Shares is equal to $1,810,904.72 plus the cash and cash equivalents of Radiant as of the close of business on the business day immediately preceding the Closing Date. The purchase price is payable (i) at the Closing by paying the amount of funds required to be paid pursuant to payoff letters payable to various creditors of Radiant (not to exceed $836,104.72), as well as an amount equal to the purchase price, less the payoff amounts and less amounts previously delivered prior to Closing to Radiant pursuant to a Revolving Note with Optical Flow, LLC, a subsidiary of Hawkeye. The closing is anticipated to occur before December 31, 2019. Prior to closing, Hawkeye is required to have received at least $1,500,000 from the sale of equity securities.

 

Also at the closing, the Company will enter into employment agreements with each of Mansouri and Wolfe, with an annual salary of $225,000 and $175,000 annually, respectively. In addition, pursuant to the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan, each of Mansouri and Wolfe will be granted an option to purchase up to 375,000 shares of Company common stock at an exercise price equal to the fair market value of the Company’s common stock as of the closing date, which vest one-third on the first anniversary of the closing date and monthly thereafter.

 

Radiant Images is an award-winning digital cinema innovator and rental house providing creative solutions in 2D, 3D, VR and augmented reality, leading-edge cameras and equipment, and unrivaled client support, to the motion picture industry worldwide.

 

Known as a hub of digital cinema innovation, Radiant’s focus on future technologies and pushing the boundaries of filmmaking sets the company apart from any other rental house. Radiant relies on expert technicians – including award-winning R&D – skilled rental agents, and an array of on-site capabilities to enable creative minds to achieve their vision without compromise.

 

At Radiant Images, production companies and filmmakers have access to an in-house design and fabrication team able to quickly provide tailor-made solutions to fit client needs, saving time and money. In addition, an in-house post supervisor is available to assist clients with technical workflows and best practices in virtual and augmented reality as well as 2D productions. Clients also can utilize a high-precision lens and sensor diagnostics room for convenient on-site testing.

 

Radiant’s VR/AR unit also is recognized as an industry leader in testing and developing virtual reality and augmented reality technology. Radiant is the creator of the first-of-its-kind Mobius POV helmet rig, the Dark Corner rigs and the Headcase Codex 360 rig, plus numerous advances in VR mobility and VR power solutions. The company has partnered with VRLIVE (www.VRLIVE.com), a virtual reality live-streaming network that delivers high-quality 360-degree content to any mobile device anywhere.

 

 
12
 
Table of Contents

 

In late 2015, Radiant Images tripled in size to a new, 28-000-square-foot facility custom built with client comfort and convenience in mind. The location at 2702 Media Center Drive in Northeast LA features an expansive prep area, an R&D lab space, and an adjacent, full client kitchen/lounge with all the amenities; ample parking; easy freeway access and a dedicated AR/VR testing area.

 

Founded by Michael Mansouri and Gianna Wolfe in 2005, Radiant Images was an early adopter of digital technology as production transitioned from film to digital. The company is built on a single-minded focus of finding ways to simplify complicated filmmaking technology and equipment. From the beginning, Radiant differentiated itself by working with productions to develop solutions rather than just renting out a camera package, becoming in essence the technology arm of production companies. That mindset has sparked a spirit of innovation and collaboration unmatched in the industry.

 

Radiant is well known for its work with small action cameras and lightweight rigs. For acclaimed Director Danny Boyle’s “127 Hours,” technicians built custom rigs that utilized the SI-2K digital camera to enable key creative shots in the Academy Award-nominated film. For David Ayer’s “End of Watch,” Radiant went a step further, conceiving and developing a mini camera to capture the POV look of the film.

 

Radiant also is the creator of the Novo, the palm-sized, cinema-quality action camera that won a MARIO Award for innovation. The Novo has been used in a number of feature films, including Transformers 4, Ten, Fast & Furious 7 and In the Heart of the Sea as well as NBC’s Revolution.

 

Boasting a deep and varied rental inventory, Radiant offers creative, flexible and affordable solutions for any sized project. The company is able to collaborate with 2D, 3D and VR productions from concept to pre-production to capture to post and distribution.

 

Company Policies

 

The Company has adopted the following policies: (i) code of conduct policy; (ii) information security policy; and (iii) public company communication policy.

 

Employees

 

The Company currently has two directors consisting of Corby Marshall (CEO & CFO) and M. Richard Cutler. The Joint Venture currently has Corby Marshall and Lucas Foster as its managers and it also has several vendors who are currently assisting with development of the body worn camera platform.

 

Our officers currently donate their time to the development of the Company, and intend to do whatever is necessary in order to bring us to the point of earning revenues. We currently have no other employees, although upon completion of the acquisition of Radiant we will effectively have approximately 20 employees.

 

The Joint Venture will continue to hire employees and contractors and license and acquire technologies in order to complete the research and development of the body and head camera and in the future, the AXA.

 

Legal Proceedings

 

On November 13, 2019 5W Public Relations LLC filed a complaint against Hawkeye Systems, Inc. relating to payments allegedly due under a contract for public relations services. That complaint has not been served on Hawkeye. Hawkeye vigorously disputes the allegations in the complaint as 5W Public Relations provided virtually no services to Hawkeye during the term of this arrangement but was paid a substantial amount of funds. Hawkeye will not only defend the litigation when and if it is served, but will also provide counterclaims for failure of consideration, fraud in the inducement, general fraud and other causes of action. Hawkeye anticipates that this litigation if pursued will be resolved favorably for the Company.

 

 
13
 
Table of Contents

 

Other than the foregoing, the Company is not currently a party to any material legal proceedings and is not aware of any material threatened litigation.

 

Offices

 

Our current executive offices are provided by management of the Company. We do not pay any rent, and there is no agreement to pay any rent in the future.

 

Item 1A. Risk Factors.

 

Not Applicable.

 

Item 1B. Unresolved Staff Comments

 

Not Applicable.

 

Item 2. Properties.

 

We own no properties related to our operations. We operate from business offices provided by our executive officers.

 

Item 3. Legal Proceedings.

 

On November 13, 2019 5W Public Relations LLC filed a complaint against Hawkeye Systems, Inc. relating to payments allegedly due under a contract for public relations services. That complaint has not been served on Hawkeye. Hawkeye vigorously disputes the allegations in the complaint as 5W Public Relations provided virtually no services to Hawkeye during the term of this arrangement but was paid a substantial amount of funds. Hawkeye will not only defend the litigation when and if it is served, but will also provide counterclaims for failure of consideration, fraud in the inducement, general fraud and other causes of action. Hawkeye anticipates that this litigation if pursued will be resolved favorably for the Company.

 

Other than the foregoing, we are not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. We are not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

 
14
 
Table of Contents

 

PART II

 

Item 4. Submission of Matters to a Vote of Security Holders

 

Not applicable

 

Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “HWKE”. On June 12, 2019, the Company obtained clearance to trade on OTC Markets and on September 12, 2019 the Company’s stock began trading on the OTCQB market maintained by OTC Markets. The high and low closing sale prices per share of our common stock since listing has been $3.00 low and $5.00 high. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The closing sale price of our common stock on October 21, 2019 was $2.50 per share.

 

Prior to such period the average trading volume per day of our common stock was less than 500 shares.

 

Holders

 

As of October 22, 2019, there were approximately 58 record holders of our common stock. This does not include the holders of our common stock who held their shares in street name as of that date.

 

Dividends

 

We have never paid or declared any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future but rather intend to retain future earnings, if any, for reinvestment in our future business. Any future determination to pay cash dividends will be in compliance with our contractual obligations and otherwise at the discretion of the board of directors and based upon our financial condition, results of operations, capital requirements and such other factors as the board of directors deems relevant.

 

Transfer Agent

 

Our registrar and transfer agent is VStock Transfer, LLC.

 

Recent Sales of Unregistered Securities

 

Effective January 30, 2019, 715,000 shares of common stock were issued to five accredited investors at a purchase price of $0.50 per share for total cash proceeds of $357,500. The investors for this purchase also received options to purchase up to 2,860,000 shares via warrants at exercise prices of $1.00 and $2.00.

 

Effective January 30, 2019, 59,100 shares were issued at a value of $0.50 per share to four consultants as compensation for $29,550 in website, advertising, legal and advisory services provided to the Company during the period.

 

Effective April 18, 2019, 236,600 shares of common stock were issued for cash to two accredited investors at a purchase price of $0.50 and $1.00 per share for total cash proceeds of $155,800. The investors for this purchase also received options to purchase up to 150,000 shares via warrants at exercise prices of $1.50 and $2.00.

 

 
15
 
Table of Contents

  

Item 6. Selected Financial Data.

 

Not applicable.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion relates to the historical operations and financial statements of Hawkeye Systems, Inc. for the fiscal year ended June 30, 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

 

From inception on May 15, 2018 to period ended June 30, 2018

 

We had no operating revenues since our inception on May 15, 2018 through the fiscal year ended June 30, 2018. Our activities were financed by the proceeds of share subscriptions. From our inception to June 30, 2018 we raised over $1 million from private offerings of our common stock.

 

Total expenses in the period of inception to June 30, 2018 were $42,375. The operating loss for these periods is a result of legal and professional fees required to form the Company and complete the joint venture and licensing arrangements.

 

Our financial statements reflect a net loss of $42,375 from inception through June 30, 2018. The loss includes legal, accounting and other professional fees, as well as general corporate expenses.

 

 
16
 
Table of Contents

 

Fiscal Year Ended June 30, 2019

 

We have had no operating revenues in our fiscal year ended June 30, 2019. Our activities have been financed by the proceeds of share subscriptions and loans. During our fiscal year ended June 30, 2019, we raised approximately $260,000 from private offerings of our common stock. We raised an additional $400,000 during the period in connection with two promissory notes issued to accredited investors.

 

Total expenses in the year ended June 30, 2019 were $1,163,286 which is also the Company’s operating loss. The operating loss for this period is a result of legal and professional fees required to form the Company, complete the joint venture and licensing arrangements, investment in our joint venture and continued development of products through that joint venture, and regulatory filing expenses and fees. Are revenues also reflect a credit of $510,568 in interest with is based on the value of securities issued in lieu of interest payments.

 

Liquidity and Capital Resources

 

Our cash balance at June 30, 2019 was $18,372. We do not believe these cash reserves are sufficient to cover our expenses for our operations for fiscal year ending June 30, 2020. We will require additional funding for our ongoing operations. We have an investment in Radiant Systems of $920,800 at June 30, 2019.

 

On February 11, 2018 our Registration Statement on Form S-1 became effective. We intend to raise up to $10,000,000 through that offering by the sale of 5,000,000 shares of common stock at $2.00 per share. In addition, we intend to raise funds through the exercise of warrants issued in private placements with underlying shares registered in the Registration Statement. 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 this offering or through the exercise of warrants. If we cannot raise any additional financing prior to the expiration of the first quarter of 2020, we believe we will be able to obtain loans from management in the future, if necessary, but have no agreement in writing.

 

We are an emerging growth company and have generated no revenue to date. Under a limited operations scenario to maintain our corporate existence, we believe we will require additional funds over the next 12 months to complete our regulatory reporting and filings. However, we will require maximum participation in the public offering 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.

 

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 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.

 

 
17
 
Table of Contents

 

Management anticipates additional increases in operating expenses and capital expenditures relating to: (i) funding operations of Radiant Images; (ii) developmental expenses; and (iii) marketing expenses. We intend to finance these expenses with issuances of securities 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.

 

Material Commitments

 

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

 

Purchase of Significant Equipment

 

We do not intend to purchase any significant equipment during the next twelve months.

 

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.

 

Going Concern

 

The independent auditors’ report accompanying our June 30, 2019 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

 

As reflected in the accompanying financial statements, the Company had an accumulated deficit of approximately $(1,716,319) at June 30, 2019 and net loss from operations of $1,163,286.

 

The Company does not yet have a history of financial stability. Historically, the principal source of liquidity has been the issuance of equity securities and related party advances. In addition, the Company is in the development stage and has generated no revenues since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue operations is dependent on the success of Management’s plans, which include the raising of capital through the issuance of equity securities, until such time that funds provided by operations are sufficient to fund working capital requirements.

 

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Critical Accounting Policies and Estimates

 

For a discussion of our accounting policies and related items, please see the Notes to the Financial Statements, included in Item 8.

 

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

 

Not applicable.

 

 
18
 
Table of Contents

 

Item 8. Financial Statements and Supplementary Data.

 

Contents

 

 

 

 

Part I

FINANCIAL INFORMATION

 

 

 

 

 

Report of Independent Auditor

 

20

 

 

 

 

Balance Sheets as of June 30, 2019 and June 30, 2018

 

21

 

 

 

 

Statements of Operations for the year ending June 30, 2019 and period from May 15, 2018 (inception) to June 30, 2018

 

22

 

 

 

 

Statements of Changes in Stockholders’ Equity for the year ending June 30, 2019 and period from May 15, 2018 (inception) to June 30, 2018

 

23

 

 

 

 

Statements of Cash Flows for the year ending June 30, 2019 and period from May 15, 2018 (inception) to June 30, 2018

 

24

 

 

 

 

Notes to Financial Statements

 

25

 

 

 
19
 
Table of Contents

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Hawkeye Systems, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Hawkeye Systems, Inc. (the “Company”) as of June 30, 2019 and 2018, the related statement of operations, stockholders’ equity (deficit), and cash flows for the year ended June 30, 2019 and for the period from May 15, 2018 (inception) to June 30, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results of its operations and its cash flows for the year ended June 30, 2019 and for the period from May 15, 2018 (inception) to June 30, 2018, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ BF Borgers CPA PC

BF Borgers CPA PC

 

Served as Auditor since 2018

Lakewood, CO

December 6, 2019

 

 
20
 
Table of Contents

 

Hawkeye Systems, Inc.

Balance Sheets

 

 

 

June 30,

2019

 

 

June 30,

2018

 

Assets

Current assets:

 

 

 

 

 

 

Cash

 

$18,372

 

 

$334,650

 

Prepaid and other assets

 

 

4,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

23,227

 

 

 

334,650

 

 

 

 

 

 

 

 

 

 

Investment in joint venture

 

 

-

 

 

 

150,000

 

Investment in Radiant Images, Inc.

 

 

920,800

 

 

 

 

 

Equipment, Net

 

 

3,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$947,172

 

 

$484,650

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$86,664

 

 

$12,800

 

Notes payable, related party

 

 

400,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

486,664

 

 

 

12,800

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

486,664

 

 

 

12,800

 

 

 

 

 

 

 

 

 

 

Contingencies (note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholder’s Equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding

 

-

 

 

-

 

Common stock, $0.0001 par value, 400,000,000 shares authorized, 9,897,116 and 8,886,416 shares issued and outstanding as of June 30, 2019 and June 30, 2018

 

 

990

 

 

 

889

 

Additional paid-in capital

 

 

2,198,891

 

 

 

655,836

 

Stock subscription receivable

 

 

-

 

 

 

(142,500)

Stock subscription received

 

 

170,000

 

 

 

 

 

Accumulated deficit

 

 

(1,909,373)

 

 

(42,375)

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

460,508

 

 

 

471,850

 

 

 

 

 

 

 

 

 

 

Total liabilities and Stockholders’ Equity

 

$947,172

 

 

$484,650

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

 
21
 
Table of Contents

 

Hawkeye Systems, Inc.

Statements of Operations

 

 

 

For the year

ended

June 30,

2019

 

 

For the period

from May 15, 2018 (inception)

to June 30,

2018

 

 

 

 

 

 

 

 

Revenue

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

General and administrative expenses**

 

 

114,058

 

 

 

1,075

 

Stock compensation expense

 

 

193,054

 

 

 

-

 

Legal and professional expenses**

 

 

183,370

 

 

 

41,300

 

Regulatory filing expenses and fees

 

 

59,282

 

 

 

-

 

Escrow fees

 

 

11,893

 

 

 

-

 

Marketing expenses**

 

 

54,438

 

 

 

-

 

Consulting expenses**

 

 

340,425

 

 

 

-

 

Management compensation**

 

 

399,820

 

 

 

-

 

Total expenses

 

 

1,356,340

 

 

 

42,375

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,356,340)

 

 

(42,375)

 

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Interest expense**

 

 

(510,658)

 

 

-

 

Total non-operating expense

 

 

(1,673,944)

 

 

(42,375)

 

 

 

 

 

 

 

 

 

Net loss

 

$(1,866,998)

 

$(42,375)

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$(0.20)

 

$(0.01)

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding

 

 

9,253,980

 

 

 

4,443,208

 

 

**Includes stock based remuneration

The accompanying notes form an integral part of these consolidated financial statements.

 

 
22
 
Table of Contents

 

Hawkeye Systems, Inc.

Statements of Changes in Stockholders’ Equity

  

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Stock Subscription Received/

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 Capital

 

 

(Receivable) 

 

 

 Deficit

 

 

 Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – May 15, 2018 (Inception)

 

 

-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Common stock issued for cash

 

 

8,886,416

 

 

 

889

 

 

 

350,662

 

 

 

(142,500)

 

 

-

 

 

 

209,051

 

Warrants issued (Stock based Compensation)

 

 

-

 

 

 

-

 

 

 

305,174

 

 

 

-

 

 

 

-

 

 

 

305,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(42,375)

 

 

(42,375)

Balance – June 30, 2018

 

 

8,886,416

 

 

$889

 

 

$655,836

 

 

$

(142,500

 

$(42,375)

 

$471,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

951,600

 

 

 

95

 

 

 

260,347

 

 

 

142,500

 

 

 

-

 

 

 

402,942

 

Common stock issued as compensation

 

 

59,100

 

 

 

6

 

 

 

29,544

 

 

 

-

 

 

 

-

 

 

 

29,550

 

Warrants issued

 

 

-

 

 

 

-

 

 

 

252,858

 

 

 

-

 

 

 

-

 

 

 

252,858

 

Stock options issued as compensation

 

 

-

 

 

 

-

 

 

 

422,326

 

 

 

 

 

 

 

-

 

 

 

422,326

 

Extension of warrants

 

 

-

 

 

 

-

 

 

 

193,054

 

 

 

-

 

 

 

-

 

 

 

193,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock subscription received

 

 

-

 

 

 

-

 

 

 

-

 

 

 

170,000

 

 

 

-

 

 

 

170,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of conversion feature of note payable

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Relative fair value of warrants issued with convertible debt

 

 

-

 

 

 

-

 

 

 

184,926

 

 

 

-

 

 

 

-

 

 

 

184,926

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,866,998)

 

 

(1,866,998)

Balance – June 30, 2019

 

 

9,897,116

 

 

$990

 

 

$2,198,891

 

 

$

170,000

 

 

$(1,909,373)

 

$460,508

 

 

The accompanying notes form an integral part of these consolidated financial statements

 

 
23
 
Table of Contents

 

Hawkeye Systems, Inc.

Statements of Cash Flows

 

 

 

For the year ended June 30,

2019

 

 

For the period from May 15, 2018 (inception) to

June 30,

2018

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(1,866,998)

 

 

(42,375)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,673

 

 

 

 

 

Accrued interest

 

 

932

 

 

 

-

 

Shares issued in lieu of interest payment

 

 

50,000

 

 

 

-

 

Options issued for services

 

 

347,526

 

 

 

-

 

Shares and warrants issued for services

 

 

29,550

 

 

 

-

 

Stock compensation expense for warrant extensions

 

 

193,054

 

 

 

 

 

Amortization of debt discount

 

 

200,000

 

 

 

-

 

Warrants issued in lieu of interest payments

 

 

184,926

 

 

 

-

 

Options issued in lieu of interest payments

 

 

74,800

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(4,856)

 

 

 

 

Accounts payable and accrued liabilities

 

 

72,933

 

 

 

12,800

 

Net cash used in operating activities

 

 

(716,460)

 

 

(29,575)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Investment in joint venture

 

 

 

 

 

 

(150,000)

Investment in Radiant Images, Inc.

 

 

(770,800)

 

 

 

 

Equipment purchases

 

 

(4,818)

 

 

 

 

Net cash used in investing activities

 

 

(775,618)

 

 

(150,000)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock and receipt of paid-in capital

 

 

775,800

 

 

 

514,225

 

Notes issued

 

 

400,000

 

 

 

-

 

Net cash provided by financing activities

 

 

1,175,800

 

 

 

514,225

 

 

 

 

 

 

 

 

 

 

Net increase(decrease) in cash

 

 

(316,278)

 

 

334,650

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

334,650

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$18,372

 

 

 

334,650

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Interest

 

$-

 

 

 

-

 

Income taxes

 

$-

 

 

 

-

 

 

Refer to Note 2 in the financial statements for disclosures over all non-cash investing and financing activities during the period.

 

The accompanying notes form an integral part of these consolidated financial statements

 

 
24
 
Table of Contents

 

Hawkeye Systems, Inc.

Notes to Condensed Financial Statements

 

Note 1 - Organization and Basis of Presentation

 

Organization and Business

 

Hawkeye Systems, Inc., a Nevada corporation incorporated on May 15, 2018, is a technology company developing optical imaging products for military and law enforcement markets to assist with intelligence, surveillance and reconnaissance (“ISR”). Other potential markets include commercial entertainment and outdoor sportsmanship activities.

 

Note 2 - Summary of Significant Accounting Policies

 

Basis of presentation

 

The accompanying financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

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, useful lives of intangible assets, debt discounts, valuation of derivatives, fair value assumptions used for stock based compensation arrangements, and the valuation allowance on deferred tax assets.

 

Principles of Consolidation

 

These financials statements include the results of the Company and the results of the prior reported joint venture, Optical Flow. See Note 4 Investment in Joint Ventures and Acquisitions, for further discussion of the change in accounting for the joint venture from the equity method in prior year and quarters to being considered a consolidated subsidiary as of June 30, 2019.

 

Cash

 

The Company maintains a cash balance in a non-interest-bearing account. The Company considers short-term, highly liquid investments that are readily convertible to known amounts of cash and that are so near their maturity that they present insignificant risk of changes in value because of changes in interest rate to be cash equivalents. There were no cash equivalents as of June 30, 2019 and 2018.

 

 
25
 
Table of Contents

 

Investment in Joint Venture

 

The investment in the Joint Venture was accounted for by the Company using the equity method in 2018 in accordance with FASB ASC 323. The Company currently owns fifty percent (50%) of the Joint Venture, pursuant to the terms and conditions of the Joint Venture and has made contributions of $150,000 as of June 30, 3018 to the Joint Venture. There was no operating activity of the Joint Venture during 2018.

 

Derivative Financial Instruments

 

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain embedded features that qualify as derivatives. Certain debt agreements have warrants and conversion features that have been evaluated as derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes option pricing model to value the derivative instruments at the grant date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash, accrued interest, accounts payable and accrued liabilities, the carrying amounts approximate their fair values due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

 

·Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

 

 

 

·Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

 

 

 

·Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.

 

 
26
 
Table of Contents

  

For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including notes due on demand, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company has no assets required to carried at fair value on a recurring basis. The Company has certain liabilities, primarily the beneficial conversion feature of certain debt agreements that are considered financial liabilities and would be measured at fair value under level 3 of the Fair value hierarchy. The disclosures related to the fair value of this item are in Note 5.  The Company has no level 1 or level 2 instruments.

 

 

 

   Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial conversion feature

 

$-

 

 

$-

 

 

$200,000

 

 

$200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$-

 

 

$-

 

 

$200,000

 

 

$200,000

 

 

Beneficial Conversion Feature

 

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (“BCF”). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt. The Company had a $200,000 debt discount related to the warrants issued in connection with the debt. The $200,000 was amortized during 2019 over the life of the debt prior to becoming due on demand.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

 

 
27
 
Table of Contents

 

Revenue Recognition

 

The Company has not yet recorded revenue, however, revenue when recorded will be recorded in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). As sales are expected to be primarily from sales of equipment, installation of equipment and technical support services. The Company does not expect significant post-delivery obligations. Revenue from sales of equipment will be recorded upon shipment of the product and acceptance by the customer, assuming collection is reasonably assured. Revenue from installation services and technical services will be recorded over the period earned and are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:

 

·

executed contracts with the Company’s customers that it believes are legally enforceable;

 

·

identification of performance obligations in the respective contract;

 

·

determination of the transaction price for each performance obligation in the respective contract;

 

·

allocation the transaction price to each performance obligation; and

 

·

recognition of revenue only when the Company satisfies each performance obligation.

 

Basic and Diluted Earnings Per Share

 

Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS includes the effect of all potentially dilutive securities as if such are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net loss incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.

 

 

 

June 30,

2019

 

 

June 30,

2018

 

Warrants

 

 

14,655,664

 

 

 

11,645,664

 

Options

 

 

672,000

 

 

 

-

 

Convertible notes

 

 

400,000

 

 

 

-

 

Total

 

 

15,727,664

 

 

 

11,645,664

 

 

Share-based Compensation

 

Stock-based compensation to employees consist of stock options grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant. The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for employee awards is generally recognized on a straight- line basis over the requisite service period of the award.

 

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.

 

 
28
 
Table of Contents

 

Recent Accounting Pronouncements

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement.

 

Note 3 - Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had an accumulated deficit of $(1,909,373) as of June 30, 2019. 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. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The Company is currently seeking additional investment through equity financings and/or debt offerings, including without limitation the exercise of warrants previously issued to shareholders as part of the prior private placements. While the Company has received some financing subsequent to the period from such sources, there are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

 

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 4 - Joint Ventures and Acquisitions

 

On June 7, 2018, the Company entered into a joint-venture partnership with Insight Engineering, LLC (“Insight”). On August 1, 2018, the Company and Insight incorporated Optical Flow, LLC and entered into an operating agreement (the “Joint Venture” or “Optical Flow”) which superseded the previous joint-venture partnership. Pursuant to the Joint Venture, the Company and Insight will co-develop high resolution imaging systems. The Company and Insight each own fifty (50%) percent of the Joint Venture.

 

 
29
 
Table of Contents

 

The investment in the Joint Venture is accounted for by the Company using the equity method in 2018 in accordance with FASB ASC 323. The Company made a contribution of $150,000 as of June 30, 3018 to the Joint Venture. There was no operating activity of the Joint Venture during the period from inception to June 30, 2018.

 

During the year ending June 30, 2019, the company invested an additional $1,225,000 in cash into the Joint venture and Optical Flow had activity during the year ended June 30, 2019 including the following operations activity:

  

 

 

 

Joint Venture Income Statement

For the year ended June 30, 2019

 

Operating revenue

 

 

-

 

 

 

 

 

 

Expenses:

 

 

 

 

Management fees

 

 

228,500

 

Consulting fees

 

 

45,000

 

Legal and professional fees

 

 

24,781

 

Marketing expenses

 

 

23,888

 

Meals, entertainment and travel expenses

 

 

71,410

 

Project management expenses

 

 

13,413

 

General and administrative expenses

 

 

24,126

 

Depreciation

 

 

1,673

 

Total operating expenses

 

 

432,791

 

 

 

 

 

 

Loss from operations

 

 

(432,791)

 

During the year ended June 30, 2019, the Joint Venture advanced $920,800 to Radiant Images, Inc.

 

On September 19, 2019, the Company entered into a Stock Purchase Agreement with Radiant Images, Inc., a California corporation (“Radiant”), as well as Radiant’s shareholder Gianna Wolfe (“Wolfe”) and key employee, Michael Mansouri (“Mansouri”), pursuant to which the Company will acquire 100% of the shares of common stock (the “Shares”) of Radiant from Wolfe, effectuating the acquisition of Radiant.

 

As a result of the Radiant acquisition agreement, the Company and Insight agreed to contribute no further amounts to the Joint Venture, to cease operations of the Joint Venture and the $920,800 previously advanced by the Joint Venture to Radiant is to be considered a deposit on the purchase price and is reported on the accompanying balance sheet as “Investment in Radiant”. Management’s decision to cease operations of the Joint Venture, the Company’s risk of loss for all activities of the Joint Venture to date, and the executed purchase agreement for Radiant, which was executed subsequent to year end but prior to issuance of these financial statements, have led the Company to conclude the Joint venture should be consolidated as of June 30, 2019.

 

 
30
 
Table of Contents

 

The Radiant purchase price is equal to $1,810,905 plus the cash and cash equivalents of Radiant as of the close of business on the closing date. The purchase price is payable (i) at closing by paying the amount of funds required to be paid pursuant to payoff letters payable to various creditors of Radiant (not to exceed $836,104.72), as well as an amount equal to the purchase price, less the payoff amounts and less amounts previously delivered prior to closing to Radiant pursuant to a Revolving Note with Optical Flow, LLC, a subsidiary of Hawkeye. The closing is anticipated to occur before December 31, 2019. Prior to closing, Hawkeye is required to have received at least $1,500,000 from the sale of equity securities.

 

Also at the closing, the Company will enter into employment agreements with each of Mansouri and Wolfe, with an annual salary of $225,000 and $175,000 annually, respectively. In addition, pursuant to the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan, each of Mansouri and Wolfe will be granted an option to purchase up to 375,000 shares of Company common stock at an exercise price equal to the fair market value of the Company’s common stock as of the closing date, which vest one-third on the first anniversary of the closing date and monthly thereafter.

 

Note 5 - Notes Payable – Related Party

 

Related party notes payable to shareholders are comprised of the following:

 

 

 

2019

 

 

2018

 

Related Party Note 1 -

 

$200,000

 

 

 

-

 

Related Party Note 2 -

 

$200,000

 

 

 

-

 

Total

 

$400,000

 

 

 

-

 

  

Related Party Note 1

On January 22, 2019, the Company obtained a $200,000 note from a shareholder of the Company that was used to fund the Joint Venture. The note terms provide the note was due on demand after 60 days at which point the lender could request repayment at any time. The Company had the ability to repay the note (in full or in instalments) at any time without notice or penalty. In lieu of interest payments, the Company granted stock options to purchase 150,000 shares of common stock as discussed below.

 

At the option of the lender, the note was convertible at any time from the date of issuance for one year subsequent at a conversion price of $0.50 per share. Upon conversion the lender will also be issued (i) two times the number of shares converted in Series A warrants each exercisable for one year for one share of the Company’s common stock at an exercise price of $1.00 per share, and (ii) two times the number of shares converted in Series B warrants each exercisable for one year for one share of the Company’s common stock at an exercise price of $2.00 per share.

 

The conversion feature with additional warrants to be issued was recorded as a debt discount up to the face amount of the note and was amortized to interest expense over the 60 day term of the note.

 

 
31
 
Table of Contents

 

The fair value of the warrants was approximately $200,000 and was determined using the Black-Scholes option pricing model with the following assumptions:

 

Expected life:

 

0.75 years 

 

Volatility:

 

 

233

%**

Dividend yield:

 

 

0

%**

Risk free interest rate:

 

 

2.00

%*** 

 

* The volatility is based on the average volatility rate of similar publicly traded companies

** The Company has no history or expectation of paying cash dividends on its common stock

*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.

 

Subsequent to the year end this note was converted into 400,000 shares of common stock (see subsequent event footnote).

 

The fair value of the stock options issued in lieu of interest payments on the note was determined using the Black-Scholes option pricing model with the following assumptions:

 

Expected life:

 

 

5.00 years

Volatility:

 

 

267

%*

Dividend yield:

 

 

0

%**

Risk free interest rate:

 

 

2.57

%***

  

* The volatility is based on the average volatility rate of similar publicly traded companies

** The Company has no history or expectation of paying cash dividends on its common stock

*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.

 

Stock compensation expense (recorded as interest expense on the accompanying statement of operations) of $74,800 was recorded during 2019, which is the amount of the option expense vested and earned during the period.

 

Related Party Note 2

 

On June 13, 2019, the Company entered into a Securities Purchase Agreement pursuant to which it issued a Promissory Note for $200,000 due on the second anniversary of issuance that was used to fund the joint venture. In connection with the Securities Purchase Agreement the Company issued 100,000 origination shares, and a warrant to purchase 400,000 shares at $1.50 per share exercisable for two years from issuance.

 

The origination shares were valued at $0.50 per share and the $50,000 was recorded to interest expense. The 400,000 warrants were valued at $184,926 and recorded to interest expense.

 

The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:

 

Expected life:

 

 

2.00 years

Volatility:

 

 

269

 %*

Dividend yield:

 

 

0

 %**

Risk free interest rate:

 

 

2.00

 %***

 

* The volatility is based on the average volatility rate of similar publicly traded companies

** The Company has no history or expectation of paying cash dividends on its common stock

*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.

 

 
32
 
Table of Contents

 

Note 6 - Stockholders’ Equity

 

Common Stock

 

2018 Stock Issuances

 

Effective May 15, 2018, 3,000,000 shares of common stock were issued to Corby Marshall, Director, CFO and CEO, at a purchase price of $0.0001 per share for total cash proceeds of $300.

 

Effective May 22, 2018, 2,362,500 shares of common stock were issued to 14 investors at a purchase price of $0.01 per share for total cash proceeds of $23,652. This included 1,250,000 shares to directors of the Company.

 

Effective June 1, 2018, 612,500 shares of common stock were issued to 9 investors at a purchase price of $0.05 per share for total cash proceeds of $30,625.

 

Effective June 15, 2018, 2,438,666 shares of common stock were issued to 12 investors at a purchase price of $0.15 per share for total cash proceeds of $365,800. The investors for this purchase also received options to purchase up to 9,754,644 shares via warrants at various exercise prices between $0.30 and $2.00, refer to stock purchase warrants table. See stock warrants table below.

 

Effective June 29, 2018, 472,750 shares of common stock were issued to 29 investors at a purchase price of $0.50 per share for total cash proceeds of $236,375. The investors for this purchase also received options to purchase up to 1,891,000 shares via warrants at exercise prices of $1.00 and $2.00 refer to stock purchase warrants table. See stock warrants table below.

 

2019 Stock Issuances

 

Effective January 30, 2019, 715,000 shares of common stock were issued to five investors at a purchase price of $0.50 per share for total cash proceeds of $357,500. The investors for this purchase also received options to purchase up to 2,860,000 shares via warrants at exercise prices of $1.00 and $2.00 refer to stock purchase warrants table. See stock warrants table below.

 

Effective January 30, 2019, 59,100 shares were issued at a value of $0.50 per share to four consultants as compensation for $29,550 in website, advertising, legal and advisory services provided to the Company during the period.

 

Effective April 18, 2019, 236,600 shares of common stock were issued for cash to two investors at a purchase price of $0.50 and $1.00 per share for total cash proceeds of $155,800. The investors for this purchase also received options to purchase up to 150,000 shares via warrants at exercise prices of $1.50 and $2.00 refer to stock purchase warrants table. See stock warrants table below.

 

 
33
 
Table of Contents

 

Stock Subscription Receivable

 

The Company issued capital stock during Fiscal 2018 for which payment was not received by the Company as of June 30, 2018, resulting in a stock subscription receivable of $142,500 as of June 30, 2018. The payment of $142,500 was received during 2019. During Q4 of the fiscal year ended June 30, 2019, the Company received payment for unissued capital stock as of June 30, 2019, resulting in a stock subscription received of $170,000 as of June 30, 2019.

 

Stock Purchase Warrants

 

During the year the company issued warrants in connection with the sales of shares as referenced above. Warrants outstanding are as follows:

 

 

 

Warrant

Shares

 

 

Weighted Average Exercise Price

 

Balance at May 15, 2018 (inception)

 

 

-

 

 

$-

 

Granted

 

 

11,645,654

 

 

$1.04

 

Exercised

 

 

-

 

 

 

-

 

Forfeit or cancelled

 

 

-

 

 

 

-

 

Balance at June 30, 2018

 

 

11,645,654

 

 

$1.04

 

Granted

 

 

3,010,000

 

 

$1.51

 

Exercised

 

 

-

 

 

 

-

 

Forfeit or cancelled

 

 

-

 

 

 

-

 

Balance at June 30, 2019

 

 

14,655,664

 

 

$1.14

 

 

The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:

 

Expected life:

 

 

1 to 2 years

Volatility:

 

 

267% to 269

%*

Dividend yield:

 

0

%**

Risk free interest rate:

 

2.57 to 2.44

%***

 

* The volatility is based on the average volatility rate of three similar publicly traded companies

** The Company has no history or expectation of paying cash dividends on its common stock

*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant

 

8,661,498 of the warrants issued during the year ended June 30, 2018 had a 1 year to maturity and were due to expire on June 30, 2019. On June 28, 2019, a board resolution was passed to extend the expiry of the warrants for one year and these warrants are set to expire on June 30, 2020.

 

 
34
 
Table of Contents

 

Stock Options

 

During the year, pursuant to the Company’s 2019 Directors, Officers, Employees and Consultants Stock Option Plan the Company granted stock options as remuneration for work performed. The holders of the options rights to acquire shares shall vest 20% immediately upon issuance of this option, and an additional 20% every three months thereafter.

 

The Company also issued 150,000 stock options with a strike price of $0.50 for a 5 year term in lieu of interest payments for the note due on demand which vested upon issuance.

 

Refer to tables below for summary of options issued and vested during the year:

 

Options Granted

 

# of Options

 

 

Weighted Average strike price

 

 

Weighted Average Grant date fair value

 

 

Weighted Average remaining life (in years)

 

Outstanding as of 7/1/2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Granted

 

 

1,455,000

 

 

 

0.52

 

 

 

725,000

 

 

 

4.59

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding as of 6/30/2019

 

 

1,455,000

 

 

 

0.52

 

 

 

725,000

 

 

 

4.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested as of 6/30/2019

 

 

672,000

 

 

 

0.52

 

 

 

335,000

 

 

 

4.59

 

 

During the year the fair value of the options granted was $725,517, of which $422,326 has vested. The fair value of the options was determined using the Black-Scholes option pricing model with the following assumptions:

 

Expected life:

 

 

5 years

Volatility:

 

 

267

%*

Dividend yield:

 

 

0

%**

Risk free interest rate:

 

 

2.43 to 2.57

%***

 

* The volatility is based on the average volatility rate of three similar publicly traded companies

** The Company has no history or expectation of paying cash dividends on its common stock

*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant

 

There were no options issued during the period ending June 30, 2018.

 

Note 7 – Income Taxes

 

Our effective tax rate differs from the statutory federal income tax rate, primarily as a result of the changes in valuation allowance, nondeductible permanent differences.

 

 
35
 
Table of Contents

 

A reconciliation of the federal statutory income tax to our effective income tax is as follows:

 

 

 

June 30,

2019

 

 

June 30,

2018

 

Federal statutory rates

 

$(392,070)

 

$(8,899)

Permanent difference

 

 

72,981

 

 

 

-

 

Valuation allowance against net deferred tax assets

 

 

319,089

 

 

 

8,899

 

Effective rate

 

$-

 

 

$-

 

 

The tax effect of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities at June 30, 2019 and June 30, 2018 is presented below:

 

 

 

June 30,

2019

 

 

June 30,

2018

 

Deferred income tax asset

 

 

 

 

 

 

Net operating loss carryforwards

 

$310,808

 

 

$6,211

 

Accruals

 

 

17,180

 

 

 

2,688

 

Total deferred income tax asset

 

 

327,988

 

 

 

8,899

 

Valuation allowance

 

 

(327,988)

 

 

(8,899)

Total deferred income tax asset

 

$-

 

 

$-

 

 

Due to the uncertainty surrounding the realization of the benefits of our deferred tax assets in future tax periods, we have placed a valuation allowance against our deferred tax assets at June 30, 2019 and 2018. The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s net deferred income tax asset is not more likely than not to be realized due to the lack of sufficient sources of future taxable income and cumulative losses that have resulted over the years. During the year ended June 30, 2019, the valuation allowance increased by $319,089.

 

As of June 30, 2019, we had cumulative net operating loss carryforwards for federal income tax purposes of $1,480,038 which can be carried forward to offset future taxable income.

 

Note 8 - Related Party Transactions

 

During the year the Company issued shares and warrants to an investor with direct control over Insight in exchange for $200,000 which was used to fund the Joint Venture. The shares were issued at the prevailing share price and conditions on warrants available to arms length investors. The Company also received an additional $50,000 that was used to fund the Joint Venture from the same investor for which shares and warrants will be issued, but have not been issued as of the date of this filing.

 

Note 9 - Subsequent Events

 

Management has evaluated events that occurred subsequent to the end of the reporting period shown herein:

 

Effective July 3, 2019 the Company issued 333,333 shares to an accredited investor for $50,000. As part of the investment, the investor was also issued 333,333 warrants to purchase shares of common stock for two years at $.50 per share and 100,000 options to purchase shares of common stock for two years at $.25 per share.

 

 
36
 
Table of Contents

 

On July 19, 2019 the Company issued 260,000 shares to Michael Mansouri and 260,000 shares to Gianna Wolfe as partial consideration pursuant to the terms sheet to acquire Radiant Images, Inc. (see discussion below).

 

Effective July 28, 2019 the Company issued 200,000 shares to a related party in consideration for the payment of $50,000 to the Joint Venture, 80,000 shares to an accredited investor in consideration for $20,000 paid on behalf of the Joint Venture, and 22,000 shares to an accredited investor for legal services valued at $11,000.

 

On August 2, 2019 the investor who acquired a note on January 22, 2019 converted that note to 400,000 shares of common stock.

 

On August 23, 2019 the Company issued 40,000 shares to an existing investor to replace shares acquired in a previous private placement that were lost.

 

On September 10, 2019 the Company sold 56,000 shares to an accredited investor for $28,000. Included with the purchase was warrants to 112,000 shares at $1.00 per year for two years and warrants to purchase 112,000 shares at $2.00 per year for two years.

 

On September 11, 2019 M. Richard Cutler was appointed to the Board of Directors of the Company.

 

On October 1, 2019 the Company sold 20,000 shares to an accredited investor for $10,000. Included with the purchase was warrants to 20,000 shares at $1.00 per year for two years and warrants to purchase 20,000 shares at $2.50 per year for two years.

 

On October 9, 2019 the Company issued 18,400 shares for accounting services, 18,000 shares for computer services and 330,000 shares to a related party for legal services and services as a director of the Company. The shares were valued at $183,200.

 

On October 9, 2019 the Company issued 380,000 shares upon exercise of warrants to an accredited investor.

 

On October 11, 2019 the Company issued 6,000 shares upon exercise of warrants to an accredited investor.

 

On October 17, 2019 the Company sold 40,000 shares to an accredited investor for $20,000. Included with the purchase was warrants to purchase 40,000 shares at $1.00 per share for one year.

 

On October 17, 2019 the Company issued 100,000 shares upon exercise of warrants to an accredited investor.

 

On October 17, 2019 the Company issued 18,000 shares in consideration for investor relations services.

 

Note 10 – Commitments and Contingencies

 

The Company is subject to various legal and governmental claims or proceedings, many involving routine litigation incidental to the business including product liability or employment related matters. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company’s business and that resolution of these claims will not have a material effect on the Company’s business, results of operations or financial condition.

 

Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company does not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our expected requirements.

 

Management of the Company is not aware any other commitments or contingencies that would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

 

 
37
 
Table of Contents

 

Item 9. Change in and Disagreement with Accountants on Accounting and Financial Disclosure

 

At inception the Company engaged BF Borgers, Certified Public Accountants (“BF Borgers”), to audit its financial statements for the period of inception to June 30, 2018 and the fiscal year ended June 30, 2019. During the period of inception through June 30, 2019 the Company has not had any disagreements with BF Borgers on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to BF Borger’s satisfaction, would have caused them to make reference thereto in their reports on the Company’s financial statements for such periods.

 

During the period inception through June 30, 2019 there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.

 

During the period inception to June 30, 2019, the Company has not consulted with BF Borgers regarding either:

 

 

1.

the application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that BF Borgers concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or

 

 

2.

any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).

 

The report of BF Borgers regarding the Company’s financial statements for the fiscal year ended June 30, 2019 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

 

Item 9A. Controls and Procedures

 

Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

Our management evaluated the effectiveness of the Company’s internal control over financial reporting as of June 30, 2019. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our management, consisting of a sole officer and director at that time, concluded that, as of June 30, 2019, our internal control over financial reporting were not effective.

 

 
38
 
Table of Contents

 

In response to that assessment we have made a determination that all accounting and financial reporting services should be outsources to a qualified consulting firm and we have engaged a new provider.

 

We have also made the determination that we need to dedicate more of the company’s current and future financial resources to this function

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permits us to provide only management’s report in this annual report.

 

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

None.

 

Item 10. Directors, Executive Officers and Corporate Governance

 

The following persons are our executive officers and directors, and hold the offices set forth opposite their names.

 

Name

 

Age

 

Position

Corby Marshall

 

50

 

Chief Executive Officer, Chief Financial Officer and Director

M. Richard Cutler

 

61

 

Director

 

Our Board of Directors consists of two members. All directors may be reimbursed their expenses, if any, for attendance at meetings of the Board of Directors.

 

The following is a brief account of the business experience during the past five years of each of our directors and executive officers:

 

Corby Marshall, Chief Executive Officer, Chief Financial Officer and Director

 

Corby Marshall is the founder, chief executive officer and director of Hawkeye Systems, Inc. Mr. Marshall is also Chief Executive Officer of Hilltop Cybersecurity Inc. (CSE: CYBX) and the chief executive officer of Hilltop Security, Inc. Previously, Mr. Marshall was Senior Vice President of Alliances and Partnerships for AppOrbit; where he developed and led the go-to-market programs for all consulting, reseller, and solution partners. He previously led sales, consulting, marketing, and operations for several leading companies, including Metastorm (OpenText), Mercator (IBM), Niku and LabCorp. Corby is an expert at developing new programs and leading through transformational change; skills he honed during his service as an Airborne-qualified, Field Artillery Officer in the United States Army. Mr. Marshall also speaks Portuguese.

 

Mr. Marshall is a distinguished graduate of the U.S. Military Academy at West Point. Mr. Marshall’s military career included time in Kuwait, Somalia and various other deployment areas as a Field Artillery Officer specializing in 155mm self-propelled artillery units.

 

 
39
 
Table of Contents

 

M. Richard Cutler, Director

 

Mr. Cutler founded Cutler Law Group in 1996. Mr. Cutler has practiced in the general corporate and securities area and international business transactions since his graduation from law school. Mr. Cutler is a graduate of Brigham Young University (B.A., magna cum laude, 1981); and Columbia University School of Law (J.D. 1984). While at Columbia, Mr. Cutler was honored as a Harlan Fiske Stone Scholar, was Managing Editor of the Columbia Journal of Law and Social Problems, received a Recognition of Achievement with Honors in Foreign and International Law, Parker School of Foreign and Comparative Law and was honored for best senior writing for “United States v. Ross: A Solution to the Automobile Container Dilemma?” published in the Columbia Journal of Law & Social Problems in 1983. Mr. Cutler was admitted to the State Bar of Texas in 1984 and the State Bar of California in 1990. After law school, Mr. Cutler joined Jones, Day, Reavis & Pogue where he practiced in the corporate, securities and mergers and acquisitions departments. Mr. Cutler subsequently spent five years in the corporate and securities department in the Dallas office of Akin, Gump, Strauss, Hauer & Feld. After moving to the west coast, Mr. Cutler was with the Los Angeles office of Kaye, Scholer, Fierman, Hayes & Handler, a New York based law firm, where he continued his corporate securities practice. I n 1991, Mr. Cutler founded the law firm of Horwitz, Cutler & Beam in Anaheim California, a general practice firm, where he managed the corporate and securities practice for five years. In 1996, Mr. Cutler formed Cutler Law Group in Newport Beach, California, a firm which specializes only in general business, corporate and securities law, as well as international business transactions. Cutler Law Group moved to Augusta, Georgia in September 2002, where he continued to practice law and operated The Club at Raes Creek, a first class swim, tennis and fitness club while continuing his legal practice in Augusta. From 2008 until 2010, Mr. Cutler was President and Chief Executive Officer of Sustainable Power Corp., a company in Baytown, Texas specializing in green energy technologies. Cutler Law Group moved to Houston, Texas in June 2009. Mr. Cutler has been admitted to the U.S. Federal District Courts, Central and Northern Districts of California, U.S. Federal District Court, Southern District of Texas, as well as the U.S. Court of Appeals, Ninth Circuit. Mr. Cutler is the author of “Comparative Conflicts of Law: Effectiveness of Contractual Choice of Forum,” published in the Texas International Law Journal. Mr. Cutler is a Director of Nymox Pharmaceutical, Inc.

 

Committees of the Board

 

Decisions of the Board of Directors are generally taken by written unanimous resolutions. The current Board comprises two members and is intending to hold regularly scheduled meetings. The entire board provides the functions of Audit, Compensation and Governance committees until such time as charters for these committees can be adopted and they can be populated by independent directors.

 

Code of Ethics

 

The Company has not yet adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Until recently we have had a sole officer and director conducting all operations. We have recently expanded operations, the Board of Directors and the executive team. We anticipate adopting a formal Code of Ethics soon.

 

Family Relationships

 

No family relationships exist between any of our present directors and officers.

 

 
40
 
Table of Contents

 

Compliance with Section 16(A) of The Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the SEC various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of copies of Section 16(a) reports and representations received by us from reporting persons, and without conducting any independent investigation of our own during the fiscal year ended June 30, 2019, all forms required, if any, were filed with the SEC by such reporting persons.

 

Changes in Nominating Procedures

 

None

 

Item 11. Executive Compensation

 

The following table sets forth information concerning the total compensation paid or accrued by us during the period inception to June 30, 2018 and the fiscal year ended June 30, 2019 to:

 

 

all individuals who served as our chief executive officer, chief financial officer or acted in a similar capacity for us at any time during such periods and

 

all individuals who served as executive officers of ours at any time during such periods and received annual compensation in excess of $100,000.

 

Summary Compensation Table

 

Position

 

Year

 

Salary

($)

 

 

Bonus

($)

 

 

Stock Awards

($)

 

 

Option Awards

($)

 

 

Total

($)

 

Corby Marshall, Chief Executive Officer,

 

2018

 

0

 

 

 

0

 

 

 

0

 

 

0

 

 

 

0

 

Chief Financial Officer and Director

 

2019

 

 

0

 

 

 

0

 

 

0

 

 

 

0

 

 

0

 

 

Employment Agreements and Benefits

 

We currently do not currently provide any employee benefit or retirement programs. Our officers’ salaries are determined by the Board of Directors. Officers and employees may receive bonuses from time to time in the form of cash or equity at the sole discretion of the Board of Directors.

 

We currently do not currently have any compensation agreements in place with our officers or directors.

 

We may also pay bonuses to our named executive officers and other employees at the discretion of the board of directors.

 

 
41
 
Table of Contents

 

Outstanding Equity Awards

 

Pursuant to the Company’s 2019 Officers, Directors, Employees and Consultants Stock Option Plan, effective January 31, 2019, the Company issued 150,000 options to purchase common stock to Corby Marshall at an exercise price of $0.55 per share. Other than such issuance, we did not have any outstanding equity awards with any of our executive officers named in the Summary Compensation Table, effective June 30, 2019.

 

Long-Term Incentive Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors pursuant to our 2019 Officers, Directors, Employees and Consultants Stock Option Plan. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

 

Compensation of Directors

 

We reimburse our directors for expenses incurred in connection with attending board meetings.

 

We did not pay director’s fees or other cash compensation for services rendered as a director in the period of inception to June 30, 2018 or the fiscal year ended June 30, 2019.

 

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.

 

 
42
 
Table of Contents

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth, as of October 18, 2019, the beneficial ownership of Hawkeye Systems, Inc. common stock by each of our directors and named executive officers, each person known to us to beneficially own more than 5% of our common stock, and by the officers and directors of the Company as a group. Except as otherwise indicated, all shares are owned directly. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power (subject to applicable community property laws) and that person’s address is care of the Company. Shares of Common Stock subject to options, warrants, or convertible notes currently exercisable or convertible or exercisable or convertible within 60 days after October 18, 2019 are deemed outstanding for computing the share ownership and percentage of the person holding such options, warrants, or convertible notes but are not deemed outstanding for computing the percentage of any other person.

 

Title of Class

 

Name and Address of

Beneficial Owner

 

Number of Shares Owned

Beneficially

 

 

Percent of

Class Owned

 

Common Stock

 

Corby Marshall (1)

 

3,000,000

 

 

 

27.7%

Common Stock

 

M. Richard Cutler (2)

 

 

356,000

 

 

 

3.4%

Common Stock

 

Lucas Foster (1)

 

600,000

 

 

5.8%

Common Stock

 

Nicholas Ayling (1)(3)

 

898,500

 

 

 

8.6%

Common Stock

 

Steve Hall(4)

 

 

668,666

 

 

6.4%

All Executive Officers and Directors as a Group (2 persons)

 

 

 

 

3,356,000

 

 

 

32.2%

 

(1)c/o Hawkeye Systems, Inc. 7119 W. Sunset Blvd, #468,Los Angeles, CA 90046.
(2)c/o Cutler Law Group, P.C., 6575 West Loop South, Suite 500, Bellaire, TX 77401
(3)Consists of 586,000 shares held directly by Mr. Ayling and 312,500 shares held by Nicholas Ayling Law Corporation. Nicholas Ayling Law Corporation also holds warrants exercisable for up to 1,250,000 shares of common stock but which are limited to exercise to no more than 4.99% of the Company’s common stock.
(4)Mr. Hall also holds warrants exercisable for up to 2,674,664 shares of common stock but which are limited to exercise to no more than 4.99% of the Company’s common stock.

 

Note: Beneficial Ownership of Securities: Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, involving the determination of beneficial owners of securities, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within sixty days through means including the exercise of any option, warrant or conversion of a security.

 

Item 13. Certain Relationships and Related Transaction, and Director Independence

 

In addition to the cash and equity compensation arrangements of our directors and executive officers discussed above under “Director Compensation” and “Executive Compensation,” the following is a description of transactions to which we have been a party in which the amount involved exceeded or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of more than 5% of our capital stock, or entities affiliated with them, had or will have a direct or indirect material interest.

 

 
43
 
Table of Contents

 

As of the date of this Annual Report, other than as disclosed below and in this Current report, none of our directors, officers or principal stockholders, nor any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, which has materially affected or will materially affect us.

 

M. Richard Cutler is President and sole shareholder of Cutler Law Group, P.C. Cutler Law Group, P.C. acts as our corporate and securities counsel.

 

Director Independence

 

Our directors are not “independent,” as defined by SEC rules adopted pursuant to the requirements of the Sarbanes-Oxley Act of 2002. Although our stock is not listed for trading on the Nasdaq Stock Market at this time, we are required to determine the independence of our directors by reference to the rules of a national securities exchange or of a national securities association (such as the Nasdaq Stock Market). In accordance with these requirements, we have determined that Corby Marshall and M. Richard Cutler are not “independent directors,” as determined in accordance with Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock Market, Inc.

 

Item 14. Principal Accounting Fees and Services

 

Audit Fees

 

The aggregate fees billed for the period of inception to June 30, 2018 and the fiscal year ended June 30, 2019 for professional services rendered by the principal accountants for the audit of the registrant’s annual financial statements and review of financial statements included in the registrant’s Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were: $8,500 and $37,060, respectively.

 

Audit-Related Fees

 

No aggregate fees were billed in either the period inception to June 30, 2018 and the fiscal year ended June 30, 2019 for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements.

 

Tax Fees

 

No aggregate fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

Other fees billed for professional services provided by the principal accountant, other than the services reported above, for the period inception to June 30, 2018 and the fiscal year ended June 30, 2019 were $0 and $0.

 

Audit Committee Pre-Approval Policies

 

Our Board of Directors performing as the Audit Committee by their Chair has approved the principal accountant’s performance of services for the audit of the registrant’s annual financial statements and review of financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year ending June 30, 2019. Audit-related fees, tax fees, and all other fees, if any, were approved by the Board of Directors.

 

 
44
 
Table of Contents

  

Item 15. Exhibits, Financial Statement Schedules

 

The following exhibits are filed as part of this registration statement.

 

Exhibit

 

Description

 

3.1

 

Articles of Incorporation of Registrant*

3.2

 

Bylaws of Registrant*

10.1

 

Joint Venture Agreement dated May 9, 2018*

10.2

 

Joint Venture Operating Agreement for Optical Flow, LLC dated August 1, 2018*

10.3

 

Exclusive License Agreement between Insight Engineering LLC and Optical Flow, LLC dated as of August 1, 2018*

10.4

 

Form of Subscription Agreement*

10.5

 

Form of Series A Warrant for $.15 stock issuance*

10.6

 

Form of Series B Warrant for $.15 stock issuance*

10.7

 

Form of Series C Warrant for $.15 stock issuance*

10.8

 

Form of Series D Warrant for $.15 stock issuance*

10.9

 

Form of Series A Warrant for $.50 stock issuance*

10.10

 

Form of Series B Warrant for $.50 stock issuance*

21

 

List of Subsidiaries.

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934

32.1

 

Certification of Chief Executive Officer pursuant to Section 1350

32.2

 

Certification of Chief Financial Officer pursuant to Section 1350

 

* Previously filed with Form S-1 on August 27, 2018.

 

 
45
 
Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Hawkeye Systems, Inc.

 

Date: December 6, 2019

By:

/s/ Corby Marshall

 

Corby Marshall

 

Chief Executive Officer and Chief Financial Officer

 

(Principal Executive, Accounting and Financial Officer)

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: December 6, 2019

 

/s/ Corby Marshall

 

 

Corby Marshall, Director

 

 

and Principal Executive Officer

 

Date: December 6, 2019

 

/s/ M. Richard Cutler

 

 

M. Richard Cutler, Director

 

 
46

 

EX-21 2 hwke_ex21.htm LIST OF SUBSIDIARIES hwke_ex21.htm

EXHIBIT 21

 

Subsidiaries of Hawkeye Systems, Inc.:

 

None

EX-31.1 3 hwke_ex311.htm CERTIFICATION hwke_ex311.htm

EXHIBIT 31.1

 

CERTIFICATION

 

I, Corby Marshall, certify that:

 

1.I have reviewed this annual report on Form 10-K of Hawkeye Systems, Inc. (the "Registrant");

 

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

 

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

  

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

 

 

 

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

  

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial; and

 

 

 

 

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

  

December 6, 2019 

 

 

/s/ Corby Marshall 
Corby Marshall, Chief Executive Officer (Principal Executive Officer) 

EX-31.2 4 hwke_ex312.htm CERTIFICATION hwke_ex312.htm

EXHIBIT 31.2

 

CERTIFICATION

 

I, Corby Marshall, certify that:

 

1.I have reviewed this annual report on Form 10-K of Hawkeye Systems, Inc. (the "Registrant");

 

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

 

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

 

 

 

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

  

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

 

 

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

December 6, 2019 

 

 

/s/ Corby Marshall 
Corby Marshall, Chief Financial Officer (Principal Financial Officer)  

EX-32.1 5 hwke_ex321.htm CERTIFICATION hwke_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Hawkeye Systems, Inc. (the "Company") on Form 10-K for the year ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Corby Marshall, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

  

December 6, 2019 

 

 

/s/ Corby Marshall 
Corby Marshall 
Chief Executive Officer 

(Principal Executive Officer)

 

EX-32.2 6 hwke_ex322.htm CERTIFICATION hwke_ex322.htm

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Hawkeye Systems, Inc. (the "Company") on Form 10-K for the year ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Corby Marshall, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

December 6, 2019 

 

 

/s/ Corby Marshall 
Corby Marshall 
Chief Financial Officer 

(Principal Financial Officer)

 

EX-101.INS 7 hwke-20190630.xml XBRL INSTANCE DOCUMENT 0001750777 2018-07-01 2019-06-30 0001750777 2019-12-05 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure hwke:integer 0001750777 2019-06-30 0001750777 2018-06-30 0001750777 2018-05-15 2018-06-30 0001750777 us-gaap:CommonStockMember 2018-05-15 0001750777 us-gaap:CommonStockMember 2018-05-16 2018-06-30 0001750777 us-gaap:CommonStockMember 2018-07-01 2019-06-30 0001750777 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2019-06-30 0001750777 us-gaap:AdditionalPaidInCapitalMember 2018-05-16 2018-06-30 0001750777 us-gaap:ReceivablesFromStockholderMember 2018-05-16 2018-06-30 0001750777 us-gaap:RetainedEarningsMember 2018-05-16 2018-06-30 0001750777 2018-05-16 2018-06-30 0001750777 us-gaap:CommonStockMember 2018-06-30 0001750777 us-gaap:AdditionalPaidInCapitalMember 2018-05-15 0001750777 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001750777 us-gaap:ReceivablesFromStockholderMember 2018-05-15 0001750777 us-gaap:ReceivablesFromStockholderMember 2018-06-30 0001750777 us-gaap:RetainedEarningsMember 2018-05-15 0001750777 us-gaap:RetainedEarningsMember 2018-06-30 0001750777 2018-05-15 0001750777 us-gaap:CommonStockMember 2019-06-30 0001750777 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001750777 us-gaap:ReceivablesFromStockholderMember 2018-07-01 2019-06-30 0001750777 us-gaap:ReceivablesFromStockholderMember 2019-06-30 0001750777 us-gaap:RetainedEarningsMember 2018-07-01 2019-06-30 0001750777 us-gaap:RetainedEarningsMember 2019-06-30 0001750777 2017-07-01 2018-06-30 0001750777 2017-06-30 0001750777 hwke:LevelThreeMember 2018-07-01 2019-06-30 0001750777 hwke:LevelTwoMember 2018-07-01 2019-06-30 0001750777 hwke:LevelOneMember 2018-07-01 2019-06-30 0001750777 hwke:JointVenturesAndAcquisitionsMember 2018-07-01 2019-06-30 0001750777 hwke:HawkeysMember 2018-07-01 2019-06-30 0001750777 hwke:StockPurchaseAgreementMember 2019-06-30 0001750777 hwke:WolfeMember 2018-07-01 2019-06-30 0001750777 hwke:MansouriMember 2018-07-01 2019-06-30 0001750777 hwke:StockPurchaseAgreementMember 2019-09-01 2019-09-19 0001750777 hwke:StockPurchaseAgreementMember 2018-07-01 2019-06-30 0001750777 hwke:NotesPayableOneMember 2019-06-30 0001750777 hwke:NotesPayableMember 2019-06-30 0001750777 us-gaap:WarrantMember 2018-07-01 2019-06-30 0001750777 us-gaap:StockOptionMember 2018-07-01 2019-06-30 0001750777 hwke:RelatedPartyNote2Member us-gaap:WarrantMember 2018-07-01 2019-06-30 0001750777 hwke:SecuritiesPurchaseAgreementMember hwke:OnJuneThirteenTwoThousandNineteenMember 2019-06-30 0001750777 hwke:SecuritiesPurchaseAgreementMember hwke:OnJuneThirteenTwoThousandNineteenMember 2018-07-01 2019-06-30 0001750777 hwke:OnJanuaryTwentyTwoTwoThousandNineteenMember 2019-06-30 0001750777 hwke:OnJanuaryTwentyTwoTwoThousandNineteenMember 2018-07-01 2019-06-30 0001750777 us-gaap:WarrantMember 2018-06-30 0001750777 us-gaap:WarrantMember 2018-05-14 0001750777 us-gaap:WarrantMember 2018-05-15 2018-06-30 0001750777 us-gaap:WarrantMember 2019-06-30 0001750777 us-gaap:WarrantMember srt:MaximumMember 2018-07-01 2019-06-30 0001750777 us-gaap:WarrantMember srt:MinimumMember 2018-07-01 2019-06-30 0001750777 us-gaap:EmployeeStockOptionMember 2018-07-01 2019-06-30 0001750777 us-gaap:EmployeeStockOptionMember 2019-06-30 0001750777 us-gaap:EmployeeStockOptionMember 2018-06-30 0001750777 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2018-07-01 2019-06-30 0001750777 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveMayTwentyTwoTwoThousandEighteenMember srt:DirectorMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveJanuaryThirtyTwoThousandNineteenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveAprilEighteenTwoThousandNineteenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveJuneTwentyNineTwoThousandEighteenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveJuneFifteenTwoThousandEighteenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveJuneOneTwoThousandEightenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveMayTwentyTwoTwoThousandEighteenMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveMayFifteenTwoThousandEighteenMember srt:DirectorMember 2018-07-01 2019-06-30 0001750777 hwke:EffectiveJanuaryThirtyTwoThousandNineteenMember 2019-06-30 0001750777 hwke:EffectiveAprilEighteenTwoThousandNineteenMember 2019-06-30 0001750777 hwke:EffectiveJuneTwentyNineTwoThousandEighteenMember 2019-06-30 0001750777 hwke:EffectiveJuneFifteenTwoThousandEighteenMember 2019-06-30 0001750777 hwke:EffectiveJuneFifteenTwoThousandEighteenMember srt:MaximumMember 2019-06-30 0001750777 hwke:EffectiveJanuaryThirtyTwoThousandNineteenMember srt:MaximumMember 2019-06-30 0001750777 hwke:EffectiveAprilEighteenTwoThousandNineteenMember srt:MaximumMember 2019-06-30 0001750777 hwke:EffectiveAprilEighteenTwoThousandNineteenMember srt:MinimumMember 2019-06-30 0001750777 hwke:EffectiveJanuaryThirtyTwoThousandNineteenMember srt:MinimumMember 2019-06-30 0001750777 hwke:EffectiveJuneTwentyNineTwoThousandEighteenMember srt:MaximumMember 2019-06-30 0001750777 hwke:EffectiveJuneTwentyNineTwoThousandEighteenMember srt:MinimumMember 2019-06-30 0001750777 hwke:EffectiveJuneFifteenTwoThousandEighteenMember srt:MinimumMember 2019-06-30 0001750777 hwke:EffectiveJuneOneTwoThousandEightenMember 2019-06-30 0001750777 hwke:EffectiveMayTwentyTwoTwoThousandEighteenMember 2019-06-30 0001750777 hwke:EffectiveMayFifteenTwoThousandEighteenMember srt:DirectorMember 2019-06-30 0001750777 us-gaap:InvestorMember 2019-07-03 0001750777 hwke:JointVenturesMember 2019-07-03 0001750777 hwke:AccreditedInvestorMember us-gaap:WarrantMember 2019-07-03 0001750777 hwke:GiannaWolfeMember hwke:RadiantImagesIncMember 2019-07-01 2019-07-19 0001750777 hwke:JointVenturesMember 2019-07-01 2019-07-28 0001750777 hwke:MichaelMansouriMember hwke:RadiantImagesIncMember 2019-07-01 2019-07-19 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-07-03 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-10-01 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-09-10 0001750777 hwke:AccreditedInvestorMember us-gaap:OptionMember 2019-06-20 2019-07-03 0001750777 hwke:AccreditedInvestorMember us-gaap:OptionMember 2019-07-03 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-06-20 2019-07-03 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-09-02 2019-09-10 0001750777 hwke:AccreditedInvestorMember hwke:WarrantOneMember 2019-09-20 2019-10-01 0001750777 hwke:AccreditedInvestorMember us-gaap:WarrantMember 2019-10-17 0001750777 hwke:AccreditedInvestorMember us-gaap:WarrantMember 2019-10-01 0001750777 hwke:AccreditedInvestorMember us-gaap:WarrantMember 2019-09-10 0001750777 hwke:JointVenturesMember 2019-07-28 0001750777 us-gaap:InvestorMember 2019-07-28 0001750777 us-gaap:InvestorMember 2019-10-02 2019-10-17 0001750777 us-gaap:InvestorMember 2019-08-23 0001750777 hwke:AccreditedInvestorMember 2019-07-28 0001750777 srt:DirectorMember 2019-10-02 2019-10-09 0001750777 hwke:AccreditedInvestorMember 2019-07-01 2019-07-28 0001750777 hwke:AccreditedInvestorMember 2019-09-10 0001750777 hwke:AccreditedInvestorMember 2019-10-17 0001750777 hwke:AccreditedInvestorMember 2019-10-01 0001750777 hwke:AccreditedInvestorMember 2019-10-02 2019-10-09 0001750777 hwke:AccreditedInvestorMember 2019-10-02 2019-10-11 0001750777 hwke:AccreditedInvestorMember 2019-10-02 2019-10-17 0001750777 srt:DirectorMember 2019-10-09 0001750777 2019-07-25 2019-08-02 Hawkeye Systems, Inc. 0001750777 10-K false No --06-30 No true false true Yes 2019-06-30 Non-accelerated Filer FY 2019 false 10417116 3150308 18372 334650 4855 23227 334650 150000 920800 3145 947172 484650 86664 12800 400000 486664 12800 486664 12800 990 889 2198891 655836 170000 -142500 -1909373 -42375 460508 471850 947172 484650 0.0001 0.0001 50000000 50000000 0 0 0 0 0.0001 0.0001 400000000 400000000 8886416 9897116 8886416 9897116 114058 1075 193054 183370 41300 59282 11893 54438 340425 399820 1356340 42375 -1356340 -42375 -510658 -1673944 -42375 -1866998 -42375 -0.20 -0.01 9253980 4443208 252858 252858 422326 422326 95 184926 184926 59100 889 350662 -142500 209051 8886416 889 655836 -142500 -42375 -42375 -42375 9897116 990 2198891 170000 -1866998 -1909373 -1866998 260347 142500 402942 951600 8886416 305174 305174 6 29544 29550 193054 193054 170000 170000 200000 200000 -42375 1673 932 50000 347526 29550 193054 200000 184926 74800 -4856 72933 12800 -716460 -29575 -150000 -770800 -4818 -775618 -150000 775800 514225 400000 1175800 514225 -316278 334650 18372 334650 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Organization and Business</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Hawkeye Systems, Inc., a Nevada corporation incorporated on May 15, 2018, is a technology company developing optical imaging products for military and law enforcement markets to assist with intelligence, surveillance and reconnaissance (&#8220;ISR&#8221;). Other potential markets include commercial entertainment and outdoor sportsmanship activities.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Basis of presentation</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The accompanying financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;).</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Use of Estimates</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">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&#8217;s estimates. Significant estimates in the accompanying financial statements include useful lives of property and equipment, useful lives of intangible assets, debt discounts, valuation of derivatives, fair value assumptions used for stock based compensation arrangements, and the valuation allowance on deferred tax assets.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Principles of Consolidation</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">These financials statements include the results of the Company and the results of the prior reported joint venture, Optical Flow. See Note 4 Investment in Joint Ventures and Acquisitions, for further discussion of the change in accounting for the joint venture from the equity method in prior year and quarters to being considered a consolidated subsidiary as of June 30, 2019.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Cash</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company maintains a cash balance in a non-interest-bearing account. The Company considers short-term, highly liquid investments that are readily convertible to known amounts of cash and that are so near their maturity that they present insignificant risk of changes in value because of changes in interest rate to be cash equivalents. There were no cash equivalents as of June 30, 2019 and 2018.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Investment in Joint Venture</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The investment in the Joint Venture was accounted for by the Company using the equity method in 2018 in accordance with FASB ASC 323. The Company currently owns fifty percent (50%) of the Joint Venture, pursuant to the terms and conditions of the Joint Venture and has made contributions of $150,000 as of June 30, 3018 to the Joint Venture. There was no operating activity of the Joint Venture during 2018.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Derivative Financial Instruments</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company evaluates all of its agreements to determine if such instruments have derivatives or contain embedded features that qualify as derivatives. Certain debt agreements have warrants and conversion features that have been evaluated as derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes option pricing model to value the derivative instruments at the grant date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Fair Value of Financial Instruments</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">For certain of the Company&#8217;s financial instruments, including cash, accrued interest, accounts payable and accrued liabilities, the carrying amounts approximate their fair values due to their short maturities.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="4%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.</p></td></tr><tr><td>&nbsp;</td><td></td><td></td></tr><tr><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.</p></td></tr><tr><td>&nbsp;</td><td></td><td></td></tr><tr><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including notes due on demand, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company has no assets required to carried at fair value on a recurring basis. The Company has certain liabilities, primarily the beneficial conversion feature of certain debt agreements that are considered financial liabilities and would be measured at fair value under level 3 of the Fair value hierarchy.&nbsp;The disclosures related to the fair value of this item are in Note 5.&nbsp; The Company has no level 1 or level 2 instruments.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>&nbsp;&nbsp; Level 1</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 2</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 3</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Total</b></p></td><td valign="bottom"></td></tr><tr><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Beneficial conversion feature</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#ffffff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>Beneficial Conversion Feature</u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (&#8220;BCF&#8221;). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20,&nbsp;Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt. The Company had a $200,000 debt discount related to the warrants issued in connection with the debt. The $200,000 was amortized during 2019 over the life of the debt prior to becoming due on demand.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>Income Taxes </u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company uses the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">A tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the &#8220;more likely than not&#8221; test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Revenue Recognition</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company has not yet recorded revenue, however, revenue when recorded will be recorded in accordance with Accounting Standards Update (&#8220;ASU&#8221;) No. 2014-09, <i>Revenue from Contracts with Customers </i>(&#8220;<i>Topic 606</i>&#8221;). As sales are expected to be primarily from sales of equipment, installation of equipment and technical support services. The Company does not expect significant post-delivery obligations. Revenue from sales of equipment will be recorded upon shipment of the product and acceptance by the customer, assuming collection is reasonably assured. Revenue from installation services and technical services will be recorded over the period earned and are recognized under <i>Topic 606</i> in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">executed contracts with the Company&#8217;s customers that it believes are legally enforceable;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">identification of performance obligations in the respective contract;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">determination of the transaction price for each performance obligation in the respective contract;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">allocation the transaction price to each performance obligation; and</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">recognition of revenue only when the Company satisfies each performance obligation.</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Basic and Diluted Earnings Per Share</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Basic earnings per share (&#8220;EPS&#8221;) is based on the weighted average number of common shares outstanding. Diluted EPS includes the effect of all potentially dilutive securities as if such are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net loss incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30, </b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Warrants</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">14,655,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Options</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">672,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Convertible notes </p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">400,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">15,727,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Share-based Compensation</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Stock-based compensation to employees consist of stock options grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant. The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for employee awards is generally recognized on a straight- line basis over the requisite service period of the award.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Recent Accounting Pronouncements</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">In June 2018, the FASB issued Accounting Standards Update (&#8220;ASU&#8221;) ASU 2018-07, <i>Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,</i> which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company&#8217;s financial statements.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">In February 2016, the FASB issued ASU 2016-02, <i>Leases (Topic 842)</i>. ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company&#8217;s financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement. </p></div></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company&#8217;s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had an accumulated deficit of $(1,909,373) as of June 30, 2019. 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. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The Company is currently seeking additional investment through equity financings and/or debt offerings, including without limitation the exercise of warrants previously issued to shareholders as part of the prior private placements. While the Company has received some financing subsequent to the period from such sources, there are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On June 7, 2018, the Company entered into a joint-venture partnership with Insight Engineering, LLC (&#8220;Insight&#8221;). On August 1, 2018, the Company and Insight incorporated Optical Flow, LLC and entered into an operating agreement (the &#8220;Joint Venture&#8221; or &#8220;Optical Flow&#8221;) which superseded the previous joint-venture partnership. Pursuant to the Joint Venture, the Company and Insight will co-develop high resolution imaging systems. The Company and Insight each own fifty (50%) percent of the Joint Venture.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The investment in the Joint Venture is accounted for by the Company using the equity method in 2018 in accordance with FASB ASC 323. The Company made a contribution of $150,000 as of June 30, 3018 to the Joint Venture. There was no operating activity of the Joint Venture during the period from inception to June 30, 2018.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year ending June 30, 2019, the company invested an additional $1,225,000 in cash into the Joint venture and Optical Flow had activity during the year ended June 30, 2019 including the following operations activity:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Joint Venture Income Statement</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>For the year ended June 30, 2019</b></p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Operating revenue</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>-</b></p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#ffffff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expenses:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Management fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">228,500</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Consulting fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">45,000</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Legal and professional fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">24,781</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Marketing expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">23,888</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Meals, entertainment and travel expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">71,410</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Project management expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">13,413</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">General and administrative expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">24,126</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Depreciation</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,673</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 22.5pt;Font:10pt Times New Roman;padding:0px" align="justify">Total operating expenses</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">432,791</p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#cceeff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Loss from operations</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(432,791</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year ended June 30, 2019, the Joint Venture advanced $920,800 to Radiant Images, Inc.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On September 19, 2019, the Company entered into a Stock Purchase Agreement with Radiant Images, Inc., a California corporation (&#8220;Radiant&#8221;), as well as Radiant&#8217;s shareholder Gianna Wolfe (&#8220;Wolfe&#8221;) and key employee, Michael Mansouri (&#8220;Mansouri&#8221;), pursuant to which the Company will acquire 100% of the shares of common stock (the &#8220;Shares&#8221;) of Radiant from Wolfe, effectuating the acquisition of Radiant. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">As a result of the Radiant acquisition agreement, the Company and Insight agreed to contribute no further amounts to the Joint Venture, to cease operations of the Joint Venture and the $920,800 previously advanced by the Joint Venture to Radiant is to be considered a deposit on the purchase price and is reported on the accompanying balance sheet as &#8220;Investment in Radiant&#8221;. Management&#8217;s decision to cease operations of the Joint Venture, the Company&#8217;s risk of loss for all activities of the Joint Venture to date, and the executed purchase agreement for Radiant, which was executed subsequent to year end but prior to issuance of these financial statements, have led the Company to conclude the Joint venture should be consolidated as of June 30, 2019.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Radiant purchase price is equal to $1,810,905 plus the cash and cash equivalents of Radiant as of the close of business on the closing date. The purchase price is payable (i) at closing by paying the amount of funds required to be paid pursuant to payoff letters payable to various creditors of Radiant (not to exceed $836,104.72), as well as an amount equal to the purchase price, less the payoff amounts and less amounts previously delivered prior to closing to Radiant pursuant to a Revolving Note with Optical Flow, LLC, a subsidiary of Hawkeye. The closing is anticipated to occur before December 31, 2019. Prior to closing, Hawkeye is required to have received at least $1,500,000 from the sale of equity securities.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Also at the closing, the Company will enter into employment agreements with each of Mansouri and Wolfe, with an annual salary of $225,000 and $175,000 annually, respectively. In addition, pursuant to the Company&#8217;s 2019 Directors, Officers, Employees and Consultants Stock Option Plan, each of Mansouri and Wolfe will be granted an option to purchase up to 375,000 shares of Company common stock at an exercise price equal to the fair market value of the Company&#8217;s common stock as of the closing date, which vest one-third on the first anniversary of the closing date and monthly thereafter.</p></div></div></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Related party notes payable to shareholders are comprised of the following:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Related Party Note 1 - </p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">200,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Related Party Note 2 - </p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">200,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">400,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>Related Party Note 1</u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On January 22, 2019, the Company obtained a $200,000 note from a shareholder of the Company that was used to fund the Joint Venture. The note terms provide the note was due on demand after 60 days at which point the lender could request repayment at any time. The Company had the ability to repay the note (in full or in instalments) at any time without notice or penalty. In lieu of interest payments, the Company granted stock options to purchase 150,000 shares of common stock as discussed below. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">At the option of the lender, the note was convertible at any time from the date of issuance for one year subsequent at a conversion price of $0.50 per share. Upon conversion the lender will also be issued (i) two times the number of shares converted in Series A warrants each exercisable for one year for one share of the Company&#8217;s common stock at an exercise price of $1.00 per share, and (ii) two times the number of shares converted in Series B warrants each exercisable for one year for one share of the Company&#8217;s common stock at an exercise price of $2.00 per share. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The conversion feature with additional warrants to be issued was recorded as a debt discount up to the face amount of the note and was amortized to interest expense over the 60 day term of the note.&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the warrants was approximately $200,000 and was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0.75 years&nbsp;</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">233</p></td><td valign="bottom" width="5%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.00</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***&nbsp;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">* The volatility is based on the average volatility rate of similar publicly traded companies</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">** The Company has no history or expectation of paying cash dividends on its common stock</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Subsequent to the year end this note was converted into 400,000 shares of common stock (see subsequent event footnote).</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the stock options issued in lieu of interest payments on the note was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom" width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">5.00 years </p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">267</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.57</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">* The volatility is based on the average volatility rate of similar publicly traded companies</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">** The Company has no history or expectation of paying cash dividends on its common stock</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Stock compensation expense (recorded as interest expense on the accompanying statement of operations) of $74,800 was recorded during 2019, which is the amount of the option expense vested and earned during the period.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>Related Party Note 2</u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On June 13, 2019, the Company entered into a Securities Purchase Agreement pursuant to which it issued a Promissory Note for $200,000 due on the second anniversary of issuance that was used to fund the joint venture. In connection with the Securities Purchase Agreement the Company issued 100,000 origination shares, and a warrant to purchase 400,000 shares at $1.50 per share exercisable for two years from issuance.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The origination shares were valued at $0.50 per share and the $50,000 was recorded to interest expense. The 400,000 warrants were valued at $184,926 and recorded to interest expense. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.00 years</p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">269</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.00</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">* The volatility is based on the average volatility rate of similar publicly traded companies</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">** The Company has no history or expectation of paying cash dividends on its common stock</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Common Stock</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>2018 Stock Issuances</u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective May 15, 2018, 3,000,000 shares of common stock were issued to Corby Marshall, Director, CFO and CEO, at a purchase price of $0.0001 per share for total cash proceeds of $300. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective May 22, 2018, 2,362,500 shares of common stock were issued to 14 investors at a purchase price of $0.01 per share for total cash proceeds of $23,652. This included 1,250,000 shares to directors of the Company. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective June 1, 2018, 612,500 shares of common stock were issued to 9 investors at a purchase price of $0.05 per share for total cash proceeds of $30,625.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective June 15, 2018, 2,438,666 shares of common stock were issued to 12 investors at a purchase price of $0.15 per share for total cash proceeds of $365,800. The investors for this purchase also received options to purchase up to 9,754,644 shares via warrants at various exercise prices between $0.30 and $2.00, refer to stock purchase warrants table. See stock warrants table below.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective June 29, 2018, 472,750 shares of common stock were issued to 29 investors at a purchase price of $0.50 per share for total cash proceeds of $236,375. The investors for this purchase also received options to purchase up to 1,891,000 shares via warrants at exercise prices of $1.00 and $2.00 refer to stock purchase warrants table. See stock warrants table below.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i><u>2019 Stock Issuances</u></i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective January 30, 2019, 715,000 shares of common stock were issued to five investors at a purchase price of $0.50 per share for total cash proceeds of $357,500. The investors for this purchase also received options to purchase up to 2,860,000 shares via warrants at exercise prices of $1.00 and $2.00 refer to stock purchase warrants table. See stock warrants table below.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective January 30, 2019, 59,100 shares were issued at a value of $0.50 per share to four consultants as compensation for $29,550 in website, advertising, legal and advisory services provided to the Company during the period.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective April 18, 2019, 236,600 shares of common stock were issued for cash to two investors at a purchase price of $0.50 and $1.00 per share for total cash proceeds of $155,800. The investors for this purchase also received options to purchase up to 150,000 shares via warrants at exercise prices of $1.50 and $2.00 refer to stock purchase warrants table. See stock warrants table below.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Stock Subscription Receivable</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company issued capital stock during Fiscal 2018 for which payment was not received by the Company as of June 30, 2018, resulting in a stock subscription receivable of $142,500 as of June 30, 2018. The payment of $142,500 was received during 2019. During Q4 of the fiscal year ended June 30, 2019, the Company received payment for unissued capital stock as of June 30, 2019, resulting in a stock subscription received of $170,000 as of June 30, 2019.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Stock Purchase Warrants</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year the company issued warrants in connection with the sales of shares as referenced above. Warrants outstanding are as follows:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Warrant</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Shares</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average Exercise Price</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at May 15, 2018 (inception)</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,654</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.04</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Forfeit or cancelled</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at June 30, 2018</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,654</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.04</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">3,010,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.51</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Forfeit or cancelled</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at June 30, 2019</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">14,655,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.14</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="top" width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="11%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">1 to 2 years</p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">267% to 269</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.57 to 2.44</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">* The volatility is based on the average volatility rate of three similar publicly traded companies</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">** The Company has no history or expectation of paying cash dividends on its common stock</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">8,661,498 of the warrants issued during the year ended June 30, 2018 had a 1 year to maturity and were due to expire on June 30, 2019. On June 28, 2019, a board resolution was passed to extend the expiry of the warrants for one year and these warrants are set to expire on June 30, 2020.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><i>Stock Options</i></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year, pursuant to the Company&#8217;s 2019 Directors, Officers, Employees and Consultants Stock Option Plan the Company granted stock options as remuneration for work performed. The holders of the options rights to acquire shares shall vest 20% immediately upon issuance of this option, and an additional 20% every three months thereafter.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company also issued 150,000 stock options with a strike price of $0.50 for a 5 year term in lieu of interest payments for the note due on demand which vested upon issuance.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Refer to tables below for summary of options issued and vested during the year:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td style="BORDER-BOTTOM: 1px solid" valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px"><b>Options Granted</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b># of Options</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average strike price</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average Grant date fair value</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average remaining life (in years)</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Outstanding as of 7/1/2018</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,455,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">725,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Forfeited</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Expired</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Outstanding as of 6/30/2019</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,455,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">725,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#cceeff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Vested as of 6/30/2019</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">672,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">335,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year the fair value of the options granted was $725,517, of which $422,326 has vested. The fair value of the options was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="11%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">5 years</p></td><td valign="top" width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">267</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.43 to 2.57</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">* The volatility is based on the average volatility rate of three similar publicly traded companies</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">** The Company has no history or expectation of paying cash dividends on its common stock</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">*** The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">There were no options issued during the period ending June 30, 2018.</p></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Our effective tax rate differs from the statutory federal income tax rate, primarily as a result of the changes in valuation allowance, nondeductible permanent differences.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">A reconciliation of the federal statutory income tax to our effective income tax is as follows:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Federal statutory rates</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(392,070</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Permanent difference</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">72,981</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Valuation allowance against net deferred tax assets</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">319,089</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective rate</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The tax effect of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities at June 30, 2019 and June 30, 2018 is presented below:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Deferred income tax asset</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Net operating loss carryforwards</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">310,808</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">6,211</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Accruals</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">17,180</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2,688</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total deferred income tax asset</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">327,988</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Valuation allowance</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(327,988</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total deferred income tax asset</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Due to the uncertainty surrounding the realization of the benefits of our deferred tax assets in future tax periods, we have placed a valuation allowance against our deferred tax assets at June 30, 2019 and 2018. The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company&#8217;s net deferred income tax asset is not more likely than not to be realized due to the lack of sufficient sources of future taxable income and cumulative losses that have resulted over the years. During the year ended June 30, 2019, the valuation allowance increased by $319,089.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">As of June 30, 2019, we had cumulative net operating loss carryforwards for federal income tax purposes of $1,480,038 which can be carried forward to offset future taxable income. </p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">During the year the Company issued shares and warrants to an investor with direct control over Insight in exchange for $200,000 which was used to fund the Joint Venture. The shares were issued at the prevailing share price and conditions on warrants available to arms length investors. The Company also received an additional $50,000 that was used to fund the Joint Venture from the same investor for which shares and warrants will be issued, but have not been issued as of the date of this filing.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Management has evaluated events that occurred subsequent to the end of the reporting period shown herein:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective July 3, 2019 the Company issued 333,333 shares to an accredited investor for $50,000. As part of the investment, the investor was also issued 333,333 warrants to purchase shares of common stock for two years at $.50 per share and 100,000 options to purchase shares of common stock for two years at $.25 per share.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On July 19, 2019 the Company issued 260,000 shares to Michael Mansouri and 260,000 shares to Gianna Wolfe as partial consideration pursuant to the terms sheet to acquire Radiant Images, Inc. (see discussion below).</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective July 28, 2019 the Company issued 200,000 shares to a related party in consideration for the payment of $50,000 to the Joint Venture, 80,000 shares to an accredited investor in consideration for $20,000 paid on behalf of the Joint Venture, and 22,000 shares to an accredited investor for legal services valued at $11,000.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On August 2, 2019 the investor who acquired a note on January 22, 2019 converted that note to 400,000 shares of common stock.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On August 23, 2019 the Company issued 40,000 shares to an existing investor to replace shares acquired in a previous private placement that were lost.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On September 10, 2019 the Company sold 56,000 shares to an accredited investor for $28,000. Included with the purchase was warrants to 112,000 shares at $1.00 per year for two years and warrants to purchase 112,000 shares at $2.00 per year for two years. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On September 11, 2019 M. Richard Cutler was appointed to the Board of Directors of the Company.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 1, 2019 the Company sold 20,000 shares to an accredited investor for $10,000. Included with the purchase was warrants to 20,000 shares at $1.00 per year for two years and warrants to purchase 20,000 shares at $2.50 per year for two years. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 9, 2019 the Company issued 18,400 shares for accounting services, 18,000 shares for computer services and 330,000 shares to a related party for legal services and services as a director of the Company. The shares were valued at $183,200.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 9, 2019 the Company issued 380,000 shares upon exercise of warrants to an accredited investor.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 11, 2019 the Company issued 6,000 shares upon exercise of warrants to an accredited investor.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 17, 2019 the Company sold 40,000 shares to an accredited investor for $20,000. Included with the purchase was warrants to purchase 40,000 shares at $1.00 per share for one year.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">On October 17, 2019 the Company issued 100,000 shares upon exercise of warrants to an accredited investor.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">On October 17, 2019 the Company issued 18,000 shares in consideration for investor relations services.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company is subject to various legal and governmental claims or proceedings, many involving routine litigation incidental to the business including product liability or employment related matters. While litigation of any type contains an element of uncertainty, the Company believes that its defense and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of the Company&#8217;s business and that resolution of these claims will not have a material effect on the Company&#8217;s business, results of operations or financial condition.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Purchase orders or contracts for the purchase of inventory and other goods and services are not included in our estimates. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current distribution needs and are fulfilled by our vendors within short time horizons. The Company does not have significant agreements for the purchase of inventory or other goods specifying minimum quantities or set prices that exceed our expected requirements.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Management of the Company is not aware any other commitments or contingencies that would have a material adverse effect on the Company&#8217;s financial condition, results of operations or cash flows.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The accompanying financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;).</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">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&#8217;s estimates. Significant estimates in the accompanying financial statements include useful lives of property and equipment, useful lives of intangible assets, debt discounts, valuation of derivatives, fair value assumptions used for stock based compensation arrangements, and the valuation allowance on deferred tax assets.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">These financials statements include the results of the Company and the results of the prior reported joint venture, Optical Flow. See Note 4 Investment in Joint Ventures and Acquisitions, for further discussion of the change in accounting for the joint venture from the equity method in prior year and quarters to being considered a consolidated subsidiary as of June 30, 2019.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company maintains a cash balance in a non-interest-bearing account. The Company considers short-term, highly liquid investments that are readily convertible to known amounts of cash and that are so near their maturity that they present insignificant risk of changes in value because of changes in interest rate to be cash equivalents. There were no cash equivalents as of June 30, 2019 and 2018.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The investment in the Joint Venture was accounted for by the Company using the equity method in 2018 in accordance with FASB ASC 323. The Company currently owns fifty percent (50%) of the Joint Venture, pursuant to the terms and conditions of the Joint Venture and has made contributions of $150,000 as of June 30, 3018 to the Joint Venture. There was no operating activity of the Joint Venture during 2018.</p></div></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company evaluates all of its agreements to determine if such instruments have derivatives or contain embedded features that qualify as derivatives. Certain debt agreements have warrants and conversion features that have been evaluated as derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes option pricing model to value the derivative instruments at the grant date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">For certain of the Company&#8217;s financial instruments, including cash, accrued interest, accounts payable and accrued liabilities, the carrying amounts approximate their fair values due to their short maturities.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="4%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.</p></td></tr><tr><td>&nbsp;</td><td></td><td></td></tr><tr><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.</p></td></tr><tr><td>&nbsp;</td><td></td><td></td></tr><tr><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including notes due on demand, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company has no assets required to carried at fair value on a recurring basis. The Company has certain liabilities, primarily the beneficial conversion feature of certain debt agreements that are considered financial liabilities and would be measured at fair value under level 3 of the Fair value hierarchy.&nbsp;The disclosures related to the fair value of this item are in Note 5.&nbsp; The Company has no level 1 or level 2 instruments.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>&nbsp;&nbsp; Level 1</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 2</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 3</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Total</b></p></td><td valign="bottom"></td></tr><tr><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Beneficial conversion feature</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#ffffff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (&#8220;BCF&#8221;). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20,&nbsp;Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the beneficial conversion feature and the Company amortizes the discount to interest expense over the life of the debt. The Company had a $200,000 debt discount related to the warrants issued in connection with the debt. The $200,000 was amortized during 2019 over the life of the debt prior to becoming due on demand.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company uses the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">A tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the &#8220;more likely than not&#8221; test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The Company has not yet recorded revenue, however, revenue when recorded will be recorded in accordance with Accounting Standards Update (&#8220;ASU&#8221;) No. 2014-09, <i>Revenue from Contracts with Customers </i>(&#8220;<i>Topic 606</i>&#8221;). As sales are expected to be primarily from sales of equipment, installation of equipment and technical support services. The Company does not expect significant post-delivery obligations. Revenue from sales of equipment will be recorded upon shipment of the product and acceptance by the customer, assuming collection is reasonably assured. Revenue from installation services and technical services will be recorded over the period earned and are recognized under <i>Topic 606</i> in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">executed contracts with the Company&#8217;s customers that it believes are legally enforceable;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp; </p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">identification of performance obligations in the respective contract;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp; </p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">determination of the transaction price for each performance obligation in the respective contract;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp; </p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">allocation the transaction price to each performance obligation; and</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp; </p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" width="4%"></td><td valign="top" width="4%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify"><font style="font: 10pt Symbol;">&#183;</font></p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">recognition of revenue only when the Company satisfies each performance obligation.</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Basic earnings per share (&#8220;EPS&#8221;) is based on the weighted average number of common shares outstanding. Diluted EPS includes the effect of all potentially dilutive securities as if such are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Due to the net loss incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented. The following potentially-dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30, </b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Warrants</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">14,655,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Options</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">672,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Convertible notes </p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">400,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">15,727,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Stock-based compensation to employees consist of stock options grants and restricted shares that are recognized in the statement of operations based on their fair values at the date of grant. The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for employee awards is generally recognized on a straight- line basis over the requisite service period of the award.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">In June 2018, the FASB issued Accounting Standards Update (&#8220;ASU&#8221;) ASU 2018-07, <i>Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,</i> which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company&#8217;s financial statements.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">In February 2016, the FASB issued ASU 2016-02, <i>Leases (Topic 842)</i>. ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company&#8217;s financial statements as the Company did not have any lease arrangements that were subject to this new pronouncement.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>&nbsp;&nbsp; Level 1</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 2</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.9pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Level 3</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px 0px 0px 2.7pt;Font:10pt Times New Roman;padding:0px" align="center"><b>Total</b></p></td><td valign="bottom"></td></tr><tr><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Beneficial conversion feature</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#ffffff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify"><b>$</b></p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>200,000</b></p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30, </b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Warrants</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">14,655,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Options</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">672,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Convertible notes </p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">400,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">15,727,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,664</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Joint Venture Income Statement</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>For the year ended June 30, 2019</b></p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Operating revenue</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right"><b>-</b></p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#ffffff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expenses:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Management fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">228,500</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Consulting fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">45,000</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Legal and professional fees</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">24,781</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Marketing expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">23,888</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Meals, entertainment and travel expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">71,410</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Project management expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">13,413</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">General and administrative expenses</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">24,126</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Depreciation</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,673</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 22.5pt;Font:10pt Times New Roman;padding:0px" align="justify">Total operating expenses</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">432,791</p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#cceeff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Loss from operations</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(432,791</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Related Party Note 1 - </p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">200,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Related Party Note 2 - </p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">200,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">400,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the warrants was approximately $200,000 and was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0.75 years&nbsp;</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">233</p></td><td valign="bottom" width="5%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.00</p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***&nbsp;</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the stock options issued in lieu of interest payments on the note was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom" width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">5.00 years </p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">267</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.57</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.00 years</p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">269</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2.00</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Warrant</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Shares</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average Exercise Price</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at May 15, 2018 (inception)</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,654</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.04</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Forfeit or cancelled</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at June 30, 2018</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">11,645,654</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.04</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">3,010,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.51</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Forfeit or cancelled</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Balance at June 30, 2019</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">14,655,664</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1.14</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td valign="top" width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="11%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">1 to 2 years</p></td><td width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">267% to 269</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td valign="top"></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.57 to 2.44</p></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td style="BORDER-BOTTOM: 1px solid" valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px"><b>Options Granted</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b># of Options</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average strike price</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average Grant date fair value</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>Weighted Average remaining life (in years)</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Outstanding as of 7/1/2018</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Granted</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,455,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">725,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Exercised</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Forfeited</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Expired</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Outstanding as of 6/30/2019</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">1,455,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">725,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"></td></tr><tr bgcolor="#cceeff"><td></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Vested as of 6/30/2019</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">672,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">0.52</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">335,000</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">4.59</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Expected life:</p></td><td width="1%"></td><td width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top" width="11%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">5 years</p></td><td valign="top" width="5%"></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Volatility:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">267</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%*</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Dividend yield:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">0</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">%**</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Risk free interest rate:</p></td><td></td><td><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="right">2.43 to 2.57</p></td><td valign="top"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">%***</p></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Federal statutory rates</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(392,070</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Permanent difference</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">72,981</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Valuation allowance against net deferred tax assets</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">319,089</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Effective rate</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>June 30,</b></p><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="center"><b>2018</b></p></td><td valign="bottom"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Deferred income tax asset</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="9%" colspan="2"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Net operating loss carryforwards</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">310,808</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">6,211</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Accruals</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">17,180</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">2,688</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total deferred income tax asset</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">327,988</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px 0px 0px 11.25pt;Font:10pt Times New Roman;padding:0px" align="justify">Valuation allowance</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(327,988</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td><td valign="bottom" width="1%"></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">(8,899</p></td><td valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">)</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">Total deferred income tax asset</p></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td><td valign="bottom" width="1%"><p style="margin:0px;Font:10pt Times New Roman;padding:0px" align="justify">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="justify">$</p></td><td style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%"><p style="margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px" align="right">-</p></td><td valign="bottom" width="1%"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> Nevada 2018-05-15 200000 200000 200000 200000 14655664 672000 400000 15727664 11645664 11645664 0.5 200000 24126 45000 24781 23888 71410 13413 1673 228500 432791 -432791 1500000 920800 175000 225000 1 (i) at closing by paying the amount of funds required to be paid pursuant to payoff letters payable to various creditors of Radiant (not to exceed $836,104.72), as well as an amount equal to the purchase price, less the payoff amounts and less amounts previously delivered prior to closing to Radiant 200000 200000 P9M 2.33 The Company has no history or expectation of paying cash dividends on its common stock 0 The Company has no history or expectation of paying cash dividends on its common stock 0.02 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant. P5Y 2.67 The volatility is based on the average volatility rate of similar publicly traded companies 0 The Company has no history or expectation of paying cash dividends on its common stock 2.57 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant. P2Y 2.69 0 0.02 200000 100000 0.50 400000 1.50 50000 200000 150000 0.50 184926 200000 400000 74800 400000 At the option of the lender, the note was convertible at any time from the date of issuance for one year subsequent at a conversion price of $0.50 per share. Upon conversion the lender will also be issued (i) two times the number of shares converted in Series A warrants each exercisable for one year for one share of the Company&#8217;s common stock at an exercise price of $1.00 per share, and (ii) two times the number of shares converted in Series B warrants each exercisable for one year for one share of the Company&#8217;s common stock at an exercise price of $2.00 per share. 1.00 11645654 3010000 11645654 14655664 1.04 1.14 1.51 1.04 P2Y P1Y 2.69 The volatility is based on the average volatility rate of three similar publicly traded companies 2.67 The volatility is based on the average volatility rate of three similar publicly traded companies 0 The Company has no history or expectation of paying cash dividends on its common stock 0.0257 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant 0.0244 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant 1455000 1455000 672000 0.52 0.52 725000 725000 335000 P4Y7M2D P4Y7M2D P4Y7M2D 0.52 P5Y 2.67 The volatility is based on the average volatility rate of three similar publicly traded companies 0 The Company has no history or expectation of paying cash dividends on its common stock 0.0243 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant 0.0257 The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant 1250000 715000 236600 472750 2438666 612500 2362500 3000000 357500 155800 236375 365800 30625 23652 300 0.50 0.50 1.00 0.50 0.15 2860000 150000 1891000 170000 8661498 P1Y On June 28, 2019, a board resolution was passed to extend the expiry of the warrants for one year and these warrants are set to expire on June 30, 2020. 150000 0.50 P5Y 725517 422326 142500 59100 29550 0.50 9754644 2.00 2.00 2.00 1.50 1.00 1.00 2.00 0.30 0.05 0.01 5 2 29 12 9 14 0.0001 -392070 72981 319089 -8899 8899 310808 2688 327988 8899 -8899 -327988 17180 6211 1480038 50000 200000 200000 333333 260000 50000 260000 50000 333333 20000 112000 P2Y 100000 P2Y P2Y P2Y 2.00 2.50 .25 .50 1.00 1.00 1.00 18000 40000 80000 20000 330000 22000 11000 56000 40000 20000 28000 20000 380000 6000 100000 183200 10000 400000 18400 18000 EX-101.SCH 8 hwke-20190630.xsd XBRL TAXONOMY EXTENSION SCHEMA 0000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 0000002 - Statement - Balance Sheets link:presentationLink link:calculationLink link:definitionLink 0000003 - Statement - Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 0000004 - Statement - Statements of Operations link:presentationLink link:calculationLink link:definitionLink 0000005 - Statement - Statement Of Stockholder's Equity link:presentationLink link:calculationLink link:definitionLink 0000006 - Statement - Statements of Cash Flows link:presentationLink link:calculationLink link:definitionLink 0000007 - Disclosure - Organization and Basis of Presentation link:presentationLink link:calculationLink link:definitionLink 0000008 - Disclosure - Summary of Significant Accounting Policies link:presentationLink link:calculationLink link:definitionLink 0000009 - Disclosure - Going Concern link:presentationLink link:calculationLink link:definitionLink 000010 - Disclosure - Joint Ventures and Acquisitions link:presentationLink link:calculationLink link:definitionLink 000011 - Disclosure - Notes Payable - Related Party link:presentationLink link:calculationLink link:definitionLink 000012 - Disclosure - Stockholders' Equity link:presentationLink link:calculationLink link:definitionLink 000013 - Disclosure - Income Taxes link:presentationLink link:calculationLink link:definitionLink 000014 - Disclosure - Related Party Transactions link:presentationLink link:calculationLink link:definitionLink 000015 - Disclosure - Subsequent Events link:presentationLink link:calculationLink link:definitionLink 000016 - Disclosure - Commitments and Contingencies link:presentationLink link:calculationLink link:definitionLink 000017 - Disclosure - Summary of Significant Accounting Policies (Policies) link:presentationLink link:calculationLink link:definitionLink 000018 - Disclosure - Summary of Significant Accounting Policies (Tables) link:presentationLink link:calculationLink link:definitionLink 000019 - Disclosure - Joint Ventures and Acquisitions (Tables) link:presentationLink link:calculationLink link:definitionLink 000020 - Disclosure - Notes Payable - Related Party (Tables) link:presentationLink link:calculationLink link:definitionLink 000021 - Disclosure - Stockholders' Equity (Tables) link:presentationLink link:calculationLink link:definitionLink 000022 - Disclosure - Income Taxes (Tables) link:presentationLink link:calculationLink link:definitionLink 000023 - Disclosure - Organization and Basis of Presentation (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000024 - Disclosure - Summary of Significant Accounting Policies (Details) link:presentationLink link:calculationLink link:definitionLink 000025 - Disclosure - Summary of Significant Accounting Policies (Details 1) link:presentationLink link:calculationLink link:definitionLink 000026 - Disclosure - Summary of Significant Accounting Policies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000027 - Disclosure - Going Concern (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000028 - Disclosure - Joint Ventures and Acquisitions (Details) link:presentationLink link:calculationLink link:definitionLink 000029 - Disclosure - Joint Ventures and Acquisitions (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000030 - Disclosure - Notes Payable - Related Party (Details) link:presentationLink link:calculationLink link:definitionLink 000031 - Disclosure - Notes Payable - Related Party (Details 1) link:presentationLink link:calculationLink link:definitionLink 000032 - Disclosure - Notes Payable - Related Party (Details 2) link:presentationLink link:calculationLink link:definitionLink 000033 - Disclosure - Notes Payable - Related Party (Details 3) link:presentationLink link:calculationLink link:definitionLink 000034 - Disclosure - Notes Payable - Related Party (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000035 - Disclosure - Stockholders' Equity (Details) link:presentationLink link:calculationLink link:definitionLink 000036 - Disclosure - Stockholders' Equity (Details 1) link:presentationLink link:calculationLink link:definitionLink 000037 - Disclosure - Stockholders' Equity (Details 2) link:presentationLink link:calculationLink link:definitionLink 000038 - Disclosure - Stockholders' Equity (Details 3) link:presentationLink link:calculationLink link:definitionLink 000039 - Disclosure - Stockholders' Equity (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000040 - Disclosure - Income Taxes (Details) link:presentationLink link:calculationLink link:definitionLink 000041 - Disclosure - Income Taxes (Details 1) link:presentationLink link:calculationLink link:definitionLink 000042 - Disclosure - Income Taxes (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000043 - Disclosure - Related Party Transactions (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 000044 - Disclosure - Subsequent Events (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.LAB 9 hwke-20190630_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Amendment Flag Entity Voluntary Filers Current Fiscal Year End Date Entity Well Known Seasoned Issuer Entity Small Business Entity Shell Company Entity Emerging Growth Company Entity Current Reporting Status Document Period End Date Entity Filer Category Document Fiscal Period Focus Document Fiscal Year Focus Entity Ex Transition Period Entity Common Stock Shares Outstanding Entity Public Float Balance Sheets Current assets Cash Prepaid and other assets Total current assets [Assets, Current] Investment in joint venture Investment in Radiant Images, Inc. Equipment, Net Total assets Current liabilities: Accounts payable and accrued liabilities Notes payable, related party Total current liabilities Total liabilities Contingencies (note 10) Stockholder's Equity: Preferred stock, $0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding Common stock, $0.0001 par value, 400,000,000 shares authorized, 9,897,116 and 8,886,416 shares issued and outstanding as of June 30, 2019 and June 30, 2018 Additional paid-in capital Stock subscription receivable Stock subscription received Accumulated deficit Total stockholders' equity Total liabilities and Stockholders' Equity Stockholder's Equity Preferred stock, shares authorized Preferred stock, shares par value Preferred stock, shares issued Preferred stock, shares outstanding Common stock, shares authorized Common stock, shares par value Common stock, shares issued Common stock, shares outstanding Statements of Operations Revenue Expenses: General and administrative expenses Stock compensation expense Legal and professional expenses Regulatory filing expenses and fees Escrow fees Marketing expenses Consulting expenses Management compensation Total expenses Operating loss Non-operating income (expense): Interest expense Total non-operating expense Net loss Net loss per share - basic and diluted Basic and diluted weighted average shares outstanding Statement Of Stockholder's Equity Statement [Table] Statement [Line Items] Equity Components [Axis] Common Stock [Member] Additional Paid-in Capital [Member] Stock Subscription Received/(Receivable) [Member] Accumulated Deficit [Member] Balance, shares [Shares, Issued] Balance, amount Net Income (Loss) Warrants issued Stock options issued as compensation Warrants issued (Stock based Compensation) Common stock issued for cash, amount Relative fair value of warrants issued with convertible debt Common stock issued as compensation, shares Common stock issued for cash, shares Common stock issued as compensation, amount Extension of warrants Stock subscription received [Stock subscription received] Fair value of conversion feature of note payable Balance, shares Balance, amount Statements of Cash Flows Cash flows from operating activities Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation Accrued interest Shares issued in lieu of interest payment Options issued for services Shares and warrants issued for services Stock compensation expense for warrant extensions Amortization of debt discount Warrants issued in lieu of interest payments Options issued in lieu of interest payments Changes in operating assets and liabilities: Prepaid expenses and other assets Accounts payable and accrued liabilities [Increase (Decrease) in Accounts Payable and Accrued Liabilities] Net cash used in operating activities Cash flows from investing activities: Investment in joint venture [Investment in joint venture] Investment in Radiant Images, Inc. [Investment in Radiant Images, Inc.] Equipment purchases Net cash used in investing activities Cash flows from financing activities: Issuance of common stock and receipt of paid-in capital Notes issued Net cash provided by financing activities Net increase(decrease) in cash Cash, beginning of period Cash, end of period [Cash] Cash paid during the year for: Interest Income taxes Organization and Basis of Presentation Note 1 - Organization and Basis of Presentation Summary of Significant Accounting Policies Note 2 - Summary of Significant Accounting Policies Going Concern Note 3 - Going Concern Joint Ventures and Acquisitions Note 4 - Joint Ventures and Acquisitions Notes Payable - Related Party Note 5 - Notes Payable - Related Party Stockholders' Equity Note 6 - Stockholders' Equity Income Taxes Note 7 - Income Taxes Related Party Transactions Note 8 - Related Party Transactions Subsequent Events Note 9 - Subsequent Events Commitments and Contingencies Note 10 - Commitments and Contingencies Basis of presentation Use of Estimates Principles of Consolidation Cash Cash and Cash Equivalents, Policy [Policy Text Block] Investment in Joint Venture Derivative Financial Instruments Fair Value of Financial Instruments Beneficial Conversion Feature Income Taxes Income Tax, Policy [Policy Text Block] Revenue Recognition Basic and Diluted Earnings Per Share Share-based Compensation Recent Accounting Pronouncements Schedule of Beneficial conversion feature Schedule Of Basic and Diluted Earnings Per Share Joint Ventures and Acquisitions (Tables) Schedule of operation Notes Payable - Related Party (Tables) Schedule of notes payable Schedule of Option pricing Stockholders' Equity (Tables) Schedule of stock warrant Schedule of fair value warrant Schedule of optoin issued Schedule of fair value option Income Taxes (Tables) Schedule of Federal statutory income tax Schedule of deferred tax assets and liabilities Organization and Basis of Presentation (Details Narrative) State of incorporation Date of incorporation Summary of Significant Accounting Policies (Details) Measurement Input Type [Axis] Level 3 [Member] Level 2[Member] Level 1[Member] Beneficial conversion feature Total [Total] Summary of Significant Accounting Policies (Details 1) Warrants Options Convertible notes Total [Total 1] Summary of Significant Accounting Policies (Details Narrative) Investment in joint venture ownership percentage Amortization of debt discount Debt discount Going Concern (Details Narrative) Accumulated deficit Joint Ventures and Acquisitions (Details) Jointly Owned Utility Plant [Axis] Joint Ventures And Acquisitions [Member] Operating revenue Expenses: Management fees Consulting fees Legal and professional fees Marketing expenses Meals, entertainment and travel expenses Project management expenses General and administrative expenses Depreciation Total operating expenses Loss from operations Joint Ventures and Acquisitions (Details Narrative) Business Acquisition [Axis] Segments [Axis] Title of Individual [Axis] Hawkeys [Member] Stock Purchase Agreement [Member] Wolfe [Member] Mansouri [Member] Investment in joint venture Proceed from sale of equity securities Salary Joint venture advanced Description of radiant purchase price Company will acquire shares percentage of radiant from wolfe Notes Payable - Related Party (Details) Related Party Transaction [Axis] Notes Payable One [Member] Notes Payable [Member]