Note 9 – Stockholders’ equity

Authorized capital

As of June 30, 2026, the Company was authorized to issue 400,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of preferred stock, $0.0001 par value. Issued and outstanding common shares were 266,052,926 and 8,706,772 as of June 30, 2026 and 2025, respectively. No preferred stock was outstanding as of either date.

On June 17, 2026, the majority stockholder approved an increase in authorized capital to 10,000,000,000 shares of common stock and 50,000,000 shares of preferred stock, a classified board and a reverse stock split in a ratio of not less than 1-for-2 nor greater than 1-for-20, to be effected at the Board’s discretion at any time prior to June 17, 2027. The increase in authorized common stock became effective on August 20, 2026.

Common stock

2026 stock issuances

2025 stock issuances

Common stock to be issued

During the year ended June 30, 2026, the Company granted a fully vested award of 200,000 common shares to Checkmate Government Relations, LLC (“CGR”) in exchange for government-relations services. The award had a grant-date fair value of $144,000, based on the June 3, 2026 closing price of $0.72 per share. Because the award was fully vested on the grant date, the entire fair value was recognized in professional fees during fiscal 2026. The shares had not been issued by the transfer agent as of June 30, 2026 and are presented as common stock to be issued. There was no unrecognized compensation cost related to this award as of June 30, 2026, and no related income tax benefit was recognized. As of June 30, 2025, stock to be issued of $50,000 represented the Rift IP consideration shares, which were posted on December 12, 2025.

Shares issued to settle existing accounts payable or debt balances are excluded from the ASC 718 activity disclosure unless the shares represented compensation for goods or services.

Conversion of convertible promissory note

On June 1, 2026, HH converted the entire $2,767,756 principal amount of the Convertible Note into 23,064,634 shares of common stock at the contractual conversion price of $0.12 per share. The $1,461,966 net carrying amount of the Convertible Note immediately before conversion was reclassified to common stock of $2,306 and additional paid-in capital of $1,459,660. No gain or loss was recognized on conversion. See Note 7, Debt, and Note 10, Fair value measurements.

Supplemental disclosure of noncash financing activities

The issuance of the Convertible Note in exchange for the Existing Hall Note and the subsequent conversion of the Convertible Note into common stock were noncash financing activities. ASC 230 identifies conversion of debt to equity as a noncash financing transaction and requires noncash investing and financing activities to be disclosed.

The Company’s noncash financing activities related to the Convertible Note were as follows:

Related-party cross-reference

HH was a related party of the Company when the Convertible Note was issued and converted and continues to be a related party. Martin Sumichrast, the Chairman of the Company’s Board of Directors, is the manager of MCIMAC, LLC, which is the manager of HH, and the Company’s President and Chief Financial Officer are members of HH. The nature of the relationship, the Note Purchase Agreement, the issuance and conversion of the Convertible Note, and the related amounts are disclosed in Note 7, Debt, and Note 9, Stockholders’ equity. Related-party guidance requires disclosure of the nature of the relationship, a description and amount of the transaction, and amounts due at each balance-sheet date. No amount related to the Convertible Note was due to HH as of June 30, 2026.

Series A convertible preferred stock

On April 1, 2026, the Company entered into a Subscription Agreement with Steve Hall, pursuant to which Mr. Hall subscribed for 2,000 shares of Series A Convertible Preferred Stock at a total purchase price of $200,000. On the same day, the Company filed a Certificate of Designation for Series A Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of Nevada, designating a class of preferred stock as Series A Convertible Preferred Stock with a par value of $0.0001 per share (the “Preferred Stock”).

Pursuant to the terms and conditions set forth in the Certificate of Designation, shares of Preferred Stock may be convertible into shares of common stock at any time following the issuance of the Preferred Stock at the option of the holder. If an optional conversion has not occurred, then on the earliest to occur of (A) the 12 month anniversary of the date of issuance, (B) the date on which the Company first completes an offering of equity or debt securities for the primary purpose of raising capital with aggregate gross proceeds equal to or greater than $1,500,000, and (C) the Market Capitalization (as such term is defined in the Certificate of Designation) of the Company exceeds $50,000,000 for any 20 out of 30 consecutive trading days, then all of the then-outstanding shares of Preferred Stock will automatically be converted into shares of common stock.

The conversion rate for the Preferred Stock provides that, if all 2,000 shares of Preferred Stock are converted, the holder will receive a number of shares of common stock equal to 7% of the fully diluted shares of common stock outstanding immediately after giving effect to such conversion, subject to certain adjustments as set forth in the Certificate of Designation, which percentage will be reduced proportionally in the event that a portion of the 2,000 shares of Preferred Stock are converted. The Company evaluated the Series A Convertible Preferred Stock under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Contracts in Entity’s Own Equity. Although the number of shares of common stock issuable on conversion was not fixed, the monetary value of the Company’s obligation was based on a fixed percentage of the Company’s fully diluted equity and therefore varied directly with, rather than inversely to or independently of, the fair value of the Company’s common stock. Accordingly, the Preferred Stock did not represent an obligation to issue a variable number of shares with a monetary value based solely or predominantly on a fixed monetary amount within the meaning of ASC 480-10-25-14, and was not classified as a liability. The Preferred Stock contained no redemption feature exercisable at the option of the holder or upon an event not solely within the Company’s control and, accordingly, was not required to be classified in temporary equity under ASC 480-10-S99-3A. The conversion feature was indexed to the Company’s own stock and would have been classified in stockholders’ equity if freestanding, and therefore was not separated from the host contract.

The $200,000 of proceeds from the issuance of the Preferred Stock was accordingly recorded within permanent stockholders’ equity in additional paid-in capital. Upon the sale of the HH Warrant on June 3, 2026, Mr. Hall, as the holder of all 2,000 outstanding shares of Preferred Stock, became subject to a mandatory conversion of the Preferred Stock in accordance with Section 6(a)(ii)(B) of the Certificate of Designation. On June 3, 2026, all 2,000 shares of Preferred Stock were converted into 13,000,000 shares of common stock, and no shares of preferred stock were issued and outstanding as of June 30, 2026.

Stock purchase warrant

On June 3, 2026, the Company entered into a Subscription Agreement with HH for the sale of a Common Stock Purchase Warrant (the “HH Warrant”), dated June 3, 2026, granting HH the right to purchase 221,878,595 shares of the Company’s common stock at a purchase price of $0.01 per share. The Company received aggregate proceeds of $2,218,786 from the sale of the HH Warrant, which was recorded in additional paid-in capital.

Under the terms of the HH Warrant, HH may exercise the purchase rights in the HH Warrant, in whole or in part, at any time or times on or before March 31, 2027, at an exercise price of $0.01 per share. The Company evaluated the HH Warrant under ASC 480 and ASC 815-40 and concluded that it is not within the scope of ASC 480, that it is indexed to the Company’s own stock under ASC 815-40-15, and that it meets the conditions for equity classification in ASC 815-40-25. The HH Warrant had a fixed exercise price of $0.01 per share and a fixed number of underlying shares, contained no exercise contingency based on an observable market or index other than the Company’s own operations or share price, contained no provision requiring or permitting net cash settlement at the option of the holder, contained no reset or price protection provision, and the Company had a sufficient number of authorized and unissued shares of common stock available to settle the HH Warrant in full at all times during which it was outstanding.

Accordingly, the HH Warrant is classified within stockholders’ equity and was not subsequently remeasured. On June 11, 2026, HH exercised the HH Warrant in full on a cashless basis. Pursuant to the cashless exercise provisions of the HH Warrant, HH surrendered the right to purchase 2,925,933 of the 221,878,595 shares subject to the HH Warrant in payment of the $2,218,785.95 aggregate exercise price, and the Company issued 218,952,662 shares of common stock. The cashless exercise was a reclassification within stockholders’ equity; the Company received no cash upon exercise and recognized no gain or loss. Accordingly, the HH Warrant was exercised in full during the year ended June 30, 2026 and no shares of common stock were issuable thereunder as of June 30, 2026. No warrants were outstanding as of June 30, 2026 and June 30, 2025.

The HH Warrant was sold to the Company’s controlling stockholder for $2,218,786, or $0.01 per underlying share, and carried an exercise price of $0.01 per share. Applying the cashless-exercise formula in the HH Warrant to the 2,925,933 warrant shares surrendered on June 11, 2026 implies a price of the Company’s common stock of approximately $0.7583 per share on that date. MCIMAC, LLC, of which the Chairman of the Board is the manager, and each of the Company’s President and Chief Financial Officer, hold membership interests in HH. The Company evaluated whether any portion of the difference between the fair value of the securities issued and the consideration received constitutes compensation for services under ASC 718-10-15-4 and SEC Staff Accounting Bulletin Topic 5.T, and concluded that no compensation cost is required to be recognized because each officer contributed capital to HH in proportion to his membership interest. The sale of the HH Warrant was accounted for as a capital transaction with a stockholder, and no amount was recognized in the statements of operations.

Stock-option plans

During 2019, the Company’s board of directors approved the 2019 Directors, Officers, Employees and Consultants Stock Option Plan (“Option Plan”) which authorized the issuance of options to purchase up to 2,500,000 shares of common stock to its employees, directors, and consultants.

During the fiscal years ended June 30, 2026, and 2025, the Company had not granted any stock options. All stock options were vested at the end of the 1st quarter of fiscal year 2023.

Effective as of April 1, 2026, the Company entered into various Stock Option Cancellation Agreements (collectively, the “Cancellation Agreements”) with the holders (the “Holders”) of options to purchase, in the aggregate, 207,600 shares of common stock. Pursuant to the Cancellation Agreements, each Holder agreed to surrender and cancel all options held by such Holder for aggregate consideration of $1.00 for each Holder. The Company initially disclosed on a Form 8-K filed April 6, 2026 the cancellation of options to purchase an aggregate of 177,600 shares of common stock; subsequent to the filing of the Form 8-K, an additional 30,000 stock options were cancelled, bringing the total number of cancelled options to 207,600.

As of the date of this annual report, there were 115,000 stock options exercisable, of which all were granted as non-statutory stock options, outside of the Option Plan.

Transactions in stock options for the years ended June 30, 2026, and 2025, are as follows:

All 115,000 options outstanding as of June 30, 2026 were fully vested and exercisable as of that date; accordingly, the number, weighted-average exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options exercisable are the same as those disclosed for options outstanding. The aggregate intrinsic value of options outstanding and exercisable was nil as of both June 30, 2026 and June 30, 2025. The closing price of the Company’s common stock was $0.306 on June 29, 2026, the last trading day on or before June 30, 2026, and $0.114 on June 30, 2025. Each option outstanding at each of those dates had an exercise price above the closing price on that date. All outstanding options were granted as non-statutory stock options outside of the Option Plan and were fully vested prior to July 1, 2024; no compensation cost was recognized in respect of stock options for the years ended June 30, 2026 and 2025, and there was no unrecognized compensation cost related to stock options as of June 30, 2026.

At the fiscal years ended June 30, 2026, and 2025, the intrinsic value of the outstanding options was nil.

2026 equity incentive plan

On June 17, 2026, a majority of the stockholders of the Company approved the Hawkeye Digital, Inc. 2026 Equity Incentive Plan (the “Equity Incentive Plan”). The purpose of the Equity Incentive Plan is to attract and retain personnel for positions of responsibility with the Company, to provide incentives to them and align their interests with those of the Company’s stockholders, and thereby to promote the Company’s long-term business success. Eligible participants are the employees, consultants and directors of the Company and its affiliates, and such other individuals designated by the committee administering the Equity Incentive Plan who are reasonably expected to become employees, consultants or directors after the receipt of awards. A maximum of 50,000,000 shares of common stock may be issued under the Equity Incentive Plan.

No awards were granted under the Equity Incentive Plan during the year ended June 30, 2026, no awards were outstanding as of June 30, 2026, and no awards have been granted through the date of this Annual Report on Form 10-K. Accordingly, no stock-based compensation expense was recognized in respect of the Equity Incentive Plan for the year ended June 30, 2026. The Equity Incentive Plan did not become effective with respect to the increased authorized share capital until the Amended and Restated Articles of Incorporation became effective on August 20, 2026.

Stock-based compensation expense

Stock-based compensation expense was $144,000 and $0 for the years ended June 30, 2026 and 2025, respectively, and relates entirely to the CGR shares to be issued. Consistent with SAB Topic 14.F, the expense is presented in professional fees in the statements of operations, in the same caption as the cash fees payable to the same service provider, rather than as a separate operating expense line. No income-tax benefit was recognized because of the valuation allowance described in Note 12, Income taxes.