Business description of HAWKEYE-SYSTEMS-INC from last 10-k form

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.

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.

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.

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.

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.

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.

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.

	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.

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 2^nd 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.

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 3^rd party influencers (riot instigators, crowd actions, etc.) that are not currently available in a traditional Field-of-View camera.