SDCO 10-Q
SDR Drone, Inc. (SDCO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from _____________ to __________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices with Zip Code)
Registrant’s
telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
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
As of November 19, 2025, there were shares of the issuer’s common stock outstanding.
TABLE OF CONTENTS
| Page No. | ||
| PART I. - FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements. | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Plan of Operations. | 24 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 27 |
| Item 4 | Controls and Procedures. | 27 |
| PART II - OTHER INFORMATION | 28 | |
| Item 1. | Legal Proceedings. | 28 |
| Item 1A. | Risk Factors. | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 28 |
| Item 3. | Defaults Upon Senior Securities. | 28 |
| Item 4. | Mine Safety Disclosures | 28 |
| Item 5. | Other Information. | 28 |
| Item 6. | Exhibits. | 28 |
| Signatures | 29 | |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HALLMARK VENTURE GROUP, INC.
| 3 |
HALLMARK VENTURE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Note receivable, net | ||||||||
| Assets from discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued compensation | ||||||||
| Due to related parties | ||||||||
| Convertible notes payable
– related party, net of discount of $ | ||||||||
| Convertible notes payable – net of debt discount of $ and $, respectively | ||||||||
| Accrued interest – related party | ||||||||
| Notes payable | ||||||||
| Accrued interest | ||||||||
| Derivative liability | ||||||||
| Liabilities from discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Series A Preferred stock, shares authorized, $ par value; and issued and outstanding, respectively | ||||||||
| Common stock, shares authorized, $ par value; and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Stock payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
HALLMARK VENTURE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ||||||||||||||
| Gross margin | ||||||||||||||||
| Expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Compensation expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Bad debt expense | ( | ) | ||||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on conversion of debt | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative | ( | ) | ||||||||||||||
| Loss on issuance of convertible debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net (loss) income before income taxes | ( | ) | ( | ) | ||||||||||||
| Provision for income tax | ||||||||||||||||
| Net (loss) income from continued operations | ( | ) | ( | ) | ||||||||||||
| Net (loss) income from discontinued operations | ||||||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| (Loss) Income per share – basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| (Loss) Income per share –diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average shares outstanding – basic | ||||||||||||||||
| Weighted average shares outstanding diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
HALLMARK VENTURE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited)
Series A Preferred Stock | Common Stock | Stock | Additional
Paid-in | Accumulated | Total Stockholder’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | payable | Capital | Deficit | Deficit | |||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock issued for corporate restructuring | — | ( | ) | |||||||||||||||||||||||||||||
| Stock issued for services | — | ( | ) | |||||||||||||||||||||||||||||
| Stock issued for conversion of debt | — | |||||||||||||||||||||||||||||||
| Contributed capital | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Deconsolidate Jubilee | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock issued for conversion of debt | — | |||||||||||||||||||||||||||||||
| Stock issued for conversion of debt – related party | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
Series A Preferred Stock | Common Stock | Stock | Additional
Paid-in | Accumulated | Total Stockholder’ | |||||||||||||||||||||||||||
| Shares | Amount | payable | Amount | Payable | Capital | Deficit | Deficit | |||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Common stock issued for payment on settlement liability | — | |||||||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Forgiveness of debt related party | — | — | ||||||||||||||||||||||||||||||
| Cancellation of shares | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
HALLMARK VENTURE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For
the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss from continued operations | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Bad debt expense | ||||||||
| Change in fair value of derivative | ( | ) | ( | ) | ||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Loss on issuance of convertible debt | ||||||||
| Loss on conversion of debt | ||||||||
| Interest expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Interest receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued compensation | ( | ) | ||||||
| Accrued interest | ||||||||
| Due from jubilee | ||||||||
| Accrued interest - a related party | ||||||||
| Due to a related party | ||||||||
| Net cash used by operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Issuance of note receivable | ( | ) | ||||||
| Net cash used by investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Repayments of note payable (including interest) | ( | ) | ||||||
| Proceeds from convertible note payable - related party | ||||||||
| Proceeds from convertible note payable | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ||||||||
| Cash beginning of period | ||||||||
| Cash end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| NON-CASH TRANSACTIONS: | ||||||||
| Forgiveness of debt – related party | $ | $ | ||||||
| Common stock issued for payment of debt | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
HALLMARK VENTURE GROUP, INC.
Notes to Condensed Unaudited Financial Statements
September 30, 2025
NOTE 1 — ORGANIZATION AND OPERATIONS
Hallmark Venture Group, Inc., was originally incorporated in the state of Colorado on July 14, 1995, with the name CPC Office Systems, Inc. On July 12, 1999, the Company changed its name to Homesmart USA, Inc. On March 6, 2008, the Company changed its name to Speech Phone, Inc. On March 3, 2006, the Company moved its domicile to Nevada. On March 8, 2006, the Company changed its name to Smart Truck Systems, Inc. On July 16, 2008, the Company changed its name to Hallmark Venture Group, Inc.
On May 4, 2020, Living Waters, LLC (“LWLLC”) obtained management control of the Company from its previous CEO and Director, Robert Cashman (“Cashman”), pursuant to a contingent Share Purchase Agreement (the “SPA”), dated as of May 4, 2020, by and among LWLLC and Cashman, whereby certain preferred shares (the “Preferred Shares”) that represent the voting control interest in the Company were to be issued to LWLLC (the “Transaction”).
On May 27, 2020, in connection with the Transaction and in accordance with provisions of the SPA, LWLLC assigned the SPA to Medical Southern, LLC (“MSLLC”). On August 13, 2020, all issued and outstanding Preferred Shares were issued to a designee of MSLLC, Top Knot, Inc. USA (“TKIU”).
On August 17, 2020, in connection with the Transaction and in accordance with provisions of the SPA, MSLLC assigned the SPA to Stonecrest Acquisition, LLC (“SALLC”). As a consequence of the Transaction, a change of control of the Company occurred. As a result of the Transaction TKIU obtained voting control of the Company. Subsequently, on October 19, 2020, TKIU assigned % of the Preferred Shares it held to Endicott Holdings Group, LLC (“Endicott”).
On June 20, 2022, Endicott transferred % of the preferred shares, and of the shares of common stock it held, to Beartooth Asset Holdings, LLC, an entity controlled by the Company’s Secretary, Paul Strickland, resulting in a change of control of the Company.
On July 7, 2022, Beartooth Asset Holdings, LLC (an entity controlled by Paul Strickland, the Company’s secretary and a member of its board of directors) transferred Series A Preferred Shares to JMJ Associates, LLC, an entity controlled by John D. Murphy, Jr., President CEO of the Company and a Member of the Board of Directors, resulting in a change of control of the Company.
On July 12, 2022, Paul Strickland, the Company’s Principal Financial Officer, became a director of the Company.
On
January 11, 2024, the Company entered into a Change of Control Agreement (the “CoC Agreement”) by and between John D. Murphy,
Jr., the Company’s Director and CEO and JMJ Associates, LLC, an entity controlled by John D. Murphy, Jr. (“Murphy”),
and Paul Strickland, the Company’s Director and Secretary, and Selkirk Global Holdings, LLC, and Beartooth Asset Holdings, LLC,
both entities controlled by Paul Stirckland (“Strickland”), and Steven Arenal and Aurum International Ltd., an entity controlled
by Steven Arenal (“Aurum”) and, pursuant to which Murphy, Strickland, and their respective control entities assigned the
Series A preferred shares controlled by each to Aurum. Strickland transferred in restricted common shares to Aurum. In exchange,
Murphy and Strickland retained
On January 11, 2024, John D. Murphy, Jr. resigned as Director and Officer of the Company and all other positions he held with the Company.
| 8 |
On January 11, 2024, Paul Strickland resigned as Director and Officer of the Company and all other positions he held with the Company.
On January 11, 2024, Steven Arenal was elected as Director of the Company and appointed Chief Executive Officer, President, and Secretary of the Company.
On February 27, 2024, Steve Arenal and Aurum International Ltd. were given notice of default and failure to perform on the agreements they had signed, and Strickland and Murphy also gave notice of cancellation of all the foregoing agreements.
On February 28, 2024, a special meeting of shareholders was held removing Arenal and reinstating Murphy and Strickland and reversing and canceling all of the foregoing Aurum International Ltd / Arenal agreements.
On February 28, 2024, the Company filed an 8-K disclosing the cancellation, termination, and failure to perform on the aforementioned Arenal / Aurum agreements.
On
March 4, 2024, The Company and its Board of Directors approved a
On
March 7, 2024, The Company filed the Amended and Restated Articles of Incorporation with Florida Secretary of State reflecting the
On September 26, 2024, the Company and its Board of Directors approved the following; i) Agreement and Plan of Reorganization; ii) Change of Control Agreement; iii) Escrow Agreement, iv) Anti-Dilution Agreement; v) Cancellation of the October 6, 2022 Selkirk Global Holdings, LLC Note; vi) Cancellation of the April 6, 2023 Selkirk Global Holdings, LLC Note, vii) Cancellation of the December 12, 2023 Strickland Convertible Exchange Note; viii); and the Company authorized its Secretary to open a bank account in the name of the Company.
On
September 26, 2024, the Company and Jubilee Intel, LLC (“Jubilee”) entered into an Agreement and Plan of Reorganization (the
“Merger”) whereby the Company acquired
On
May 12, 2025, the Company executed a Membership Interest Assignment Agreement with Evan Bloomberg, its former officer and director. Under
this agreement, the Company transferred
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States if America of (“US. GAAP”) as found in the Accounting Standards Codification (“ASC”), and the Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and are expressed in US Dollars. The unaudited condensed interim consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company’s Quarterly Report in its Form 10-Q filing under the Securities Exchange Commission.
| 9 |
Use of Estimates
The preparation of consolidated financial statements in conformity with 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. Actual results could differ from these estimates and these differences could be material.
The most significant estimates made by management in the preparation of the financial statements relate to the estimates used to calculate the fair value of certain liabilities, the derivative liability, present value of note payable and the valuation of notes receivable. Management bases its estimates on historical experience and on other various assumptions 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 that are not readily apparent from other sources. Actual results could differ materially from such estimates under different assumptions and conditions.
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Jubilee Intel, LLC, through May 12, 2025. On this date, the Company transferred its entire membership interest in Jubilee Intel, LLC, relinquished its control and as a result, Jubilee Intel, LLC ceased to be a wholly owned subsidiary and was deconsolidated. All significant intercompany transactions and balances have been eliminated in consolidation up to that date.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity date of three months or less at the time of purchase to be
cash equivalents. The Company has cash of $
Reclassifications
Certain reclassifications have been made to prior periods to conform with current reporting. These reclassifications did not affect net income, total assets, liabilities or equity reported.
Related Party Transactions
Under ASC 850 “Related Party Transactions” an entity or person is considered to be a “related party” if it has control, significant influence or is a key member of management personnel or affiliate. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company, in accordance with ASC 850 presents disclosures about related party transactions and outstanding balances with related parties.
| 10 |
Derivative Financial Instruments
The Company evaluates whether embedded conversion features in its financial instruments meet the criteria for separate accounting under ASC 815, “Derivatives and Hedging.” If the conversion feature is not clearly and closely related to the host debt instrument and does not meet the scope exception for equity classification, it is bifurcated and accounted for as a derivative liability. 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-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Fair Value of Financial Instruments
The fair value is an exit price representing the amount that would be received to sell an asset or required to transfer a liability in an orderly transaction between market participants. As such, fair value of a financial instrument is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or a liability.
A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
| ● | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
| ● | Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participants assumptions that are reasonably available. |
The
Company’s financial instruments consist of note receivable, derivative liabilities and notes payable. The
Company’s note receivable was indirectly written down to zero due to potential non-collections. The Company’s derivative
liabilities have a fair value of $
When determining fair value, whenever possible, the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. As of September 30, 2025 and December 31, 2024, the Company did not have any level 1 or 2 financial instruments. On September 30, 2025 and December 31, 2024 the Company’s level 3 financial instruments were derivative liabilities on convertible notes, notes payable and note receivable valued at their present value.
The following table presents the Company’s assets and liabilities that are measured at fair value on a non-recurring basis.
At September 30, 2025
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant
Other Observable Inputs (Level 2) | Significant
Unobservable Inputs (Level 3) | ||||||||||
| Assets | ||||||||||||
| Note Receivable, Net | $ | |||||||||||
| Liabilities | ||||||||||||
| Convertible Notes, related party, net of discount | $ | |||||||||||
| Convertible Note, net, net of discount | $ | |||||||||||
| Derivative Liability | $ | |||||||||||
| 11 |
At December 31, 2024
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant
Other Observable Inputs (Level 2) | Significant
Unobservable Inputs (Level 3) | ||||||||||
| Assets | ||||||||||||
| Note Receivable, Net | $ | |||||||||||
| Liabilities | ||||||||||||
| Convertible Note, related party | $ | |||||||||||
| Convertible Note, net | $ | |||||||||||
| Note Payable | $ | |||||||||||
| Derivative Liability | $ | |||||||||||
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted EPS on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all diluted potential common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of warrants or stock or conversion of stock. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
For
the nine months ending September 30, 2025, the Company had potential dilutive shares of common stock from convertible preferred
stock, approximately shares from convertible debt, and
Revenue Recognition
The Company follows ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The company generates revenues primarily from search engine marketing.
In May 2025, the management of Jubilee Intel and of Hallmark Venture Group decided to cancel the merger agreement resulting in the transfer of Hallmark’s control of the entity (Note 17). Hallmark is evaluating various business opportunities to determine new lines of business to pursue. The continued operations of the Company have no revenue generation streams.
Jubilee,
a previous subsidiary, generated revenue in two ways. The first and more substantial consists of Jubilee launching and managing Yahoo
partner advertisements on its own behalf. The second is a SAAS model in which Jubilee allows third party companies to use the platform
to run Yahoo partner ads. The fee for this service is
| 12 |
Accounts Receivable
The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.
Discontinued Operations
The Company accounts for discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations. The disposal of a component or group of components is classified as a discontinued operation if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. This includes the sale, abandonment, or other disposal of legal entities, business segments, or significant components.
Upon meeting the criteria for discontinued operations, the results of operations, including any gain or loss on disposal, are presented separately in the consolidated statements of operations for all periods presented. Assets and liabilities of discontinued operations are presented separately in the consolidated balance sheets. The results of operations of the discontinued component are still reported separately in the consolidated statement of operations.
Management evaluates and updates the classification of operations as discontinued when relevant events occur, such as the approval of a sale plan, abandonment, or completion of disposal.
Segment Reporting
The Company uses the “management approach”
to identify its reportable segments. This approach is based on the internal organizational structure used by management for making operational
decisions and assessing the performance of the business. Under this approach, the Company has determined that it operates through
The Holding Segment includes corporate functions such as finance, legal, human resources, and executive management. This segment supports the operations of the other business units. The Holding Segment represents the parent-level activities of the Company, including the identification and pursuit of new business opportunities. This segment also provides financing support to other operating units, and corporate-level expenses are recorded within this segment. Advertising segment comprises activities from launching and managing Yahoo partner advertisements on the Company’s behalf and providing a SaaS platform for third parties to run such advertisements. Operations that no longer meet the criteria for continuing operations are reported within Discontinued Operations.
| 13 |
| Segmented Information- Statements of Operations | ||||||||||||||||
| 2025 | Holding Segment | Advertising Segment | Discontinued Operations | Total | ||||||||||||
| Revenue and other income: | ||||||||||||||||
| Advertising revenue | $ | $ | $ | $ | ||||||||||||
| Expenses: | ||||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Payroll expenses | ||||||||||||||||
| Interest expense and charges - note payable | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Bad debt | ||||||||||||||||
| Amortization of debt discount | ||||||||||||||||
| Loss on issuance of debt | ||||||||||||||||
| Loss on conversion of debt | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Net Income (loss) before income taxes | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Segmented Information- Balance Sheets | ||||||||||||||||
| 2025 | Holding Segment | Advertising Segment | Discontinued Operations | Total | ||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Less: intersegment eliminations | ||||||||||||||||
| Net assets | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
| Segmented Information- Statements of Operations | ||||||||||||||||
| 2024 | Holding Segment | Advertising Segment | Discontinued Operations | Total | ||||||||||||
| Revenue and other income: | ||||||||||||||||
| Advertising revenue | $ | $ | $ | $ | ||||||||||||
| - | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Payroll expenses | ||||||||||||||||
| Interest expense and charges - note payable | ||||||||||||||||
| Gain on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Bad debt | ||||||||||||||||
| Amortization of debt discount | ||||||||||||||||
| Loss on issuance of debt | ||||||||||||||||
| Loss on conversion of debt | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Net Income (loss) before income taxes | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Segmented Information- Balance Sheets | ||||||||||||||||
| 2024 | Holding Segment | Advertising Segment | Discontinued Operations | Total | ||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Less: intersegment eliminations | ||||||||||||||||
| Net assets | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| - | ||||||||||||||||
| Less: intersegment eliminations | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
Reverse Stock Split
On
April 24, 2025,
In accordance with Staff Accounting Bulletin (“SAB”) Topic 4C and relevant U.S. GAAP guidance, the reverse stock split has been retrospectively reflected in these condensed consolidated financial statements for all periods presented in the accompanying financial statements, including the balance sheets, statements of stockholders’ equity, including all share and per-share amounts (such as earnings per share and weighted-average shares outstanding).
No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the split were rounded up to the next whole share, consistent with the Company’s corporate charter. This accounting policy ensures the comparability of share-related information across all periods presented.
The reverse stock split did not affect the total dollar amount of common stock or total stockholders’ equity.
Allowance for Credit Losses
The Company applies the CECL model under ASC 326 to estimate expected credit losses on financial assets, including trade receivables, notes receivable, and held-to-maturity debt securities. CECL requires consideration of historical loss experience, current conditions, and reasonable forecasts over the asset’s contractual life.
As of the reporting date, a material allowance for credit losses was recorded for an outstanding note receivable; however, management determined that the nature of the underlying balances did not require a CECL-based assessment. Instead, the allowance was estimated using alternative methods consistent with U.S. GAAP, based on the specific characteristics of the assets.
The allowance is reassessed at each reporting period, and changes are recognized in the income statement as credit loss expense. The Company has considered the recent guidance and does not have receivables that would require this level of analysis in determining the net realizable balance of accounts receivable.
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
| 14 |
FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2024, and prior. Based on the evaluation of the 2025 transactions and events, the Company does not believe it has any material uncertain tax positions that require measurement.
The IRS requires all domestic corporations in existence for any part of the tax year to file an income tax return whether or not they have taxable income. The Company incurred a loss for the fiscal years ended December 31, 2024, and 2023 and has not filed tax returns for either year. The Company has not received any notifications from the IRS. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.
Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at September 30, 2025 or December 31, 2024, and have not recognized interest and/or penalties in the consolidated statement of operations for the period ended September 30, 2025 or year ended December 31, 2024.
The Company is subject to taxation in the United States and the State of Nevada. The Company’s federal and applicable state income tax returns for the past three years remain subject to examination by the respective tax authorities
Concentration And Credit Risk
Financial
instruments which potentially subject the Company to credit risk consist of cash. Cash is maintained with a major financial institution
in the USA that is creditworthy. The Company maintains cash in bank accounts insured up to $
During
the period ended September 30, 2025 the company made up
Recently Issued Accounting Pronouncements
Environmental Credits (Proposed Topic 818) - New guidance on how to account for environmental credits like carbon offsets and renewable energy certificates. Focus on consistent recognition, measurement, and disclosure. Still in proposal stage (comment period through April 2025).
Disaggregation of Income Statement Expenses (ASU 2024-03) - Companies must break out major expense categories (e.g., labor, depreciation) in the notes to financial statements. Aimed at improving transparency. Effective for annual periods after Dec 15, 2026 (early adoption allowed).
Income Tax Disclosure Improvements (ASU 2023-09) - Requires clearer details on income taxes paid (by federal, state, and foreign) and better breakdowns of rate reconciliations. Helps investors better understand a company's tax situation.
| 15 |
The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may apply to the Company, the Company has not identified any new standards that it believes merit further discussion or change to adopted policies, and the Company expects that none would have a significant impact on its financial statements.
NOTE 3 - GOING CONCERN
The Company’s financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets, and liquidation of liabilities in the normal course of business.
As
of September 30, 2025, the Company had an accumulated deficit of $
These factors and uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might incur in the event the Company cannot continue in existence. Management intends to seek additional capital from new equity securities offerings, debt financing and debt restructuring to provide funds needed to increase liquidity, fund internal growth and fully implement its business plan. However, management can give no assurance that these funds will be available in adequate amounts, or if available, on terms that would be satisfactory to the Company.
The timing and amount of the Company’s capital requirements will depend on a number of factors, including maintaining its status as a public company and supporting shareholder and investor relations.
NOTE 4 – ACCOUNTS RECEIVABLE
As
of September 30, 2025, the Company had accounts receivables of $
compared to $
| Description | September 30, 2025 | December 31, 2024 | ||||||
| Accounts receivable beginning balance | $ | $ | ||||||
| Billings | ||||||||
| Collections | ||||||||
| Direct write offs | ||||||||
| Deconsolidated | ( | ) | ||||||
| Accounts Receivable ending balance | $ | $ | ||||||
| Allowance for doubtful accounts | ||||||||
| Accounts Receivable, net | $ | $ | ||||||
| 16 |
NOTE 5 – NOTE RECEIVABLE
On
May 2, 2024, the Company made a strategic loan to an independent privately-held non-affiliated third party by entering into a $
| Description | September 30, 2025 | December 31, 2024 | ||||||
| Notes receivable - current portion | $ | $ | ||||||
| Allowance for doubtful accounts | ( | ) | ||||||
| Notes receivable, net | $ | $ | ||||||
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company had an accounts payable balance of $
| Description September | September 30, 2025 | December 31, 2024 | ||||||
| Legal fees | $ | $ | ||||||
| Credit card | ||||||||
| Total | $ | $ | ||||||
NOTE 7 – CONVERTIBLE NOTE PAYABLE – RELATED PARTY
On
December 5, 2023, the Company issued a Convertible Exchange Note to John Murphy, for $
On December 12, 2023, the company issued convertible
exchange note to Paul Strickland. The Note was unsecured, non-interest bearing and matures on December 12, 2023. On August 07, 2025, Paul
converted this debt into shares of common stock. As of September 30, 2025 the outstanding balance of note is $
In
connection with the acquisition of Jubilee Intel, LLC in the prior year, debt obligations totalling $
As
a result, the Company recognized the reinstated debt of $
On
July 17, 2025, the Company issued a 6% Convertible Exchange Note to Selkirk, for up to $
| 17 |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
Settlement Liability
On
September 17, 2020, the Company entered into a settlement agreement with Green Horseshoe, LLC., Inc. on its past due notes payable with
a principal balance of $
The
agreement calls for the Company’s transfer agent to issue free-trading common shares to Green Horseshoe, LLC. at a conversion rate
of
On
March 28, 2024, Green Horseshoe, LLC assigned the Settlement Agreement, Court Order, and balance of debt of $
On May 6, 2024, this liability was assigned from Alpha strategies Trading software, Inc to Nicosel, LLC, a non-affiliate of the Company, when the parties agreed to convert the balance into a convertible note payable.
Other Convertible Notes Payable
On
March 1, 2024, the Company issued a $
On
May 1, 2024, the Company issued a $
On
March 7, 2025, the Company issued a convertible promissory note to Nicosel, LLC for $
On
July 8, 2025, the Company issued a
On
May 15, 2025, the Company issued six convertible promissory notes to GMF Ventures with an aggregate principal amount of $
| 18 |
The notes were convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price determined pursuant to the terms of the notes. In accordance with ASC 815, Derivatives and Hedging, the Company evaluated the conversion features and determined that they met the criteria for derivative accounting. Accordingly, a derivative liability was recorded at fair value on the issuance date, with subsequent changes in fair value recognized in the condensed statement of operations through the conversion date.
On June 3, 2025, prior to maturity, all six notes, including accrued interest, were fully converted into shares of the Company’s common stock. No cash interest was paid. Following the conversion, there was no remaining principal, accrued interest, or derivative liability outstanding as of September 30, 2025.
On
May 14, 2025, the Company issued a 6% Convertible Exchange Note (the “Exchange Note”) to Nicosel, LLC in the principal amount
of $
The
Exchange Note bears interest at a guaranteed rate of
On
June 3, 2025, $
On
May 30, 2025, the Company issued a 6% Convertible Exchange Note (the “Note”) to Nicosel, LLC in the principal amount of $
As
of September 30, 2025, the total amount due to Nicosel, LLC is $
As
of December 31, 2024, the total amount due to Nicosel, LLC is $
NOTE 9 – NOTES PAYABLE
On
October 9, 2024, the Company authorized the issuance of up to $
On
October 15, 2024, the Company issued a $
On
October 28, 2024, the Company issued a $
On
November 4, 2024, the Company issued a $
On
November 15, 2024 the Company issued a $
On
November 19, 2024 the Company issued a $
On
December 20, 2024 the Company issued a $
As
of September 30, 2025, the total principal owed was $
Refer Note 6 for the convertible note issued to an unrelated party for settlement of debt.
| 19 |
NOTE 10 – DERIVATIVE LIABILITY
The
Company has various convertible notes outstanding that require derivative liability considerations for its conversion features. Total
derivative liability on September 30, 2025 was $
| Balance at December 31, 2023 | $ | |||
| Decrease to derivative due to repayments | ( | ) | ||
| Increase to derivative due to new issuances | ||||
| Derivative gain due to mark to market adjustment | ( | ) | ||
| Balance at December 31, 2024 | ||||
| Decrease to derivative due to repayment | ( | ) | ||
| Increase to derivative due to new issuances | ||||
| Derivative loss due to mark to market adjustment | ( | ) | ||
| Balance at September 30, 2025 | $ |
The following table summarizes the weighted average key inputs used in the Black-Scholes model for all outstanding conversion feature derivative liabilities as of the measurement dates:
| September 30, 2025 | December 31, 2024 | |||||||||||||||
| Input | Weighted Avg. | Range | Weighted Avg. | Range | ||||||||||||
| Stock price | $ | $ | $ | $ | ||||||||||||
| Exercise price (conversion price) | $ | $ | $ | $ | - | |||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
| Expected term (years) | ||||||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Dividend yield | ||||||||||||||||
NOTE 11 – STOCK PAYABLE
The
Company’s related party settlement liability (Note 7) included the requirement to issue shares of the Company’s
common stock in order to cover litigation and legal expenses associated with the settlement agreement. The value of the shares at the
settlement date was $ resulting in a total value of $. The Company issued shares of common stock on November 5, 2020,
at a value of $
NOTE 12 – WARRANTS
On
May 1, 2024, the Company issued a Warrant Subscription Agreement is for
The assumptions used to determine the fair value of the Warrants as follows:
| Expected life (years) | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Dividend yield | % |
| 20 |
On
October 9, 2024, the Company authorized the issuance of up to $
The assumptions used to determine the fair value of the Warrants as follows:
| Expected life (years) | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Dividend yield | % |
Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | Intrinsic Value | |||||||||||||
| Outstanding, December 31, 2023 | $ | — | $ | |||||||||||||
| Issued | $ | — | ||||||||||||||
| Expired | $ | — | — | |||||||||||||
| Exercised | $ | — | — | |||||||||||||
| Outstanding, December 31, 2024 | $ | $ | ||||||||||||||
| Issued | $ | — | — | |||||||||||||
| Expired | ( | ) | $ | — | — | |||||||||||
| Exercised | $ | — | — | |||||||||||||
| Outstanding, September 30, 2025 | $ | $ | ||||||||||||||
NOTE 13 – COMMON STOCK
On January 5, 2024, the Company issued shares of its common stock to Phase I Operations, Inc.
for conversion of $
On September 26, 2024, Beartooth Asset Holding, LLC, an entity controlled by Paul Strickland, agreed to cancel shares of common stock as part of the merger agreement.
On May 20, 2025, the Company issued shares of common stock for legal fees associated with the settlement liability (Note 11).
On
June 2, 2025, GMF converted $
On May 16, 2025, the Company issued million shares of common stock to Beartooth Asset Holdings, Inc. (“Beartooth”) a related party as a corporate restructuring transaction in preparation for a potential merger. The Company had not entered into any agreement or obligation for a specific merger transaction.
On
July 8, 2025, the Company entered into a
On
July 21, 2025, John D. Murphy, Jr. retired $
On
August 5, 2025, Nicosel, LLC retired $
On
August 5, 2025, Nicosel, LLC retired $
| 21 |
On
August 5, 2025, Nicosel, LLC retired $
On
August 7, 2025, Paul Strickland, the Company’s sole director and officer, retired $
On
August 12, 2025, Selkirk retired $
On
August 12, 2025, Selkirk retired $
The shares were measured at the fair value of the common stock issued on the date of issuance and recorded to common stock and additional paid in capital.
During
the nine months ending September 30, 2025, Nicosel converted $
NOTE 14 – PREFERRED STOCK
The
Company is authorized to issue shares of $ par value Series A preferred stock. The Company increased the number of authorized
shares of the Series A preferred stock from to on January 19, 2021. Each share of the Series A Preferred Stock is convertible
at the option of the holder into shares of common stock.
The Company has shares of Series A Preferred Stock issued and outstanding as of September 30, 2025 and December 31, 2024, respectively. At September 30, 2025, Selkirk Global holding was the holder of all of the outstanding shares of Series A Preferred Stock and at December 31, 2024 Evan Bloomberg was the holder of all of the outstanding shares of Series A Preferred Stock, acquired from John D. Murphy, Jr. and Paul Strickland in conjunction with the Jubilee Intel, LLC transaction.
NOTE 15 – OTHER RELATED PARTY TRANSACTIONS
| Name of Related Party | Related Relationship | |
| Evan Bloomberg | (1) | |
| John D. Murphy Jr. | ||
| Paul Strickland | ||
| Selkirk Global Holdings, LLC | ||
| Green Horseshoe, LLC | ||
| Bruce Bent | ||
| OC Sparkle Inc. |
| (1) |
Loans and Cash Advances
John
D. Murphy, Jr., has at times directly paid for various company expenses. The amount was unsecured, non-interest bearing, and due on demand.
On December 5, 2023, the Company issued a Convertible Exchange Note to John Murphy, for the amount due of $
Refer to Note 13 for shares issued to a related party.
| 22 |
NOTE 16 – INCOME TAX
For the nine months ended September 30, 2025 and fiscal year ending December 31, 2024, there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.
As
of September 30, 2025 and December 31, 2024, the Company had net operating loss carry forwards of approximately $
The tax computations are as follows:
September 30, 2025 | December 31, 2024 | |||||||
| Net losses (gains) before taxes | $ | ( | ) | $ | ||||
| Adjustments to arrive at taxable income/loss | ||||||||
| Permanent differences: | ||||||||
| Temporary differences: | ||||||||
| Taxable income (loss) | ( | ) | ||||||
| Current Year Taxable (loss) income | ( | ) | ||||||
| NOL carried forward prior year (tax return) | ( | ) | ( | ) | ||||
| NOL carried forward at period end | $ | ( | ) | $ | ( | ) | ||
| Deferred Tax Asset - Federal Rate ( | ( | ) | ( | ) | ||||
| Deferred Tax Asset - State Rate | ||||||||
| Total Deferred Tax Asset | ( | ) | ( | ) | ||||
| Valuation Allowance | ||||||||
| Deferred tax per books | $ | $ | ||||||
NOTE 17 – DISCONTINUED OPERATIONS AND DECONSOLIDATION
As of September 30, 2025, Jubilee is no longer a wholly-owned subsidiary of the Company and has been deconsolidated as of September 30, 2025 (Note 17). The assets and liabilities associated with this business were displayed as assets and liabilities from discontinued operations as of December 31, 2024. Additionally, the revenues and costs associated with this business are displayed as losses from discontinued operations.
Total assets and liabilities included in discontinued operations were as follows:
September 30, 2025 | December 31, 2024 | |||||||
| Assets from Discontinued Operations: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Total assets from discontinued operations | $ | $ | ||||||
| Liabilities from Discontinued Operations: | ||||||||
| Line of credit | $ | $ | ||||||
| Total liabilities from discontinued operations | $ | $ | ||||||
Deconsolidation of Jubilee as of September 30, 2025:
| Account | ||||
| Checking Account | $ | ( | ) | |
| Money Market | ( | ) | ||
| Accounts Receivable | ( | ) | ||
| Due from/to Jubilee | ||||
| Retained Earnings | ||||
| (Gain) on Deconsolidation | $ | ( | ) | |
On the statement of operations there is no reported gain on deconsolidated for the nine months September 30, 2025 due to the gain from deconsolidation netting against the previous loss incurred from discontinued operations resulting in zero financial impact on statement of operations.
NOTE 18 — SUBSEQUENT EVENTS
In accordance with ASC 855-10, Subsequent Events, management evaluated subsequent events through the date the financial statements were issued and no noted material subsequent events requiring disclosure in these unaudited financial statements.
| 23 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Unless the context indicates otherwise, as used in this Quarterly Report, the terms “HLLK,” “we,” “us,” “our,” “our company” and “our business” refer, to Hallmark Venture Group, Inc., including its subsidiaries named herein. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Cautionary Statement
The following discussion and analysis should be read in conjunction with our unaudited financial statements and related notes appearing elsewhere herein.
Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described under Forward-Looking Statements. We assume no obligation to update any of the forward-looking statements included herein.
Current Status – “Shell Company”
The Company can currently be defined as a “shell” company, whose sole purpose at this time is to locate and consummate a merger or acquisition with a private entity. The Company has not identified a specific acquisition target and has not entered into any negotiations regarding any such acquisition.
Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources.
The time and costs required to pursue new business opportunities, which includes negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws, cannot be ascertained with any degree of certainty.
Management intends to devote such time as it deems necessary to carry out our affairs. The exact length of time required for the pursuit of any new potential business opportunities is uncertain. No assurance can be made that we will be successful in our efforts. We cannot project the amount of time that management will devote to the Company’s plan of operation.
Prospective investors in the Company’s common stock will not have an opportunity to evaluate the specific merits or risks of any of the one or more business combinations that we may undertake. A business combination may involve the acquisition of, or merger with, a company that needs to raise substantial additional capital by means of being a publicly-traded company, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, voting control issues and compliance with various federal and state securities laws.
The Company intends to conduct its activities to avoid being classified as an “Investment Company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and therefore avoid application of the costly and restrictive registration and other provisions of the Investment Company Act and the regulations promulgated thereunder.
| 24 |
Management believes that being a reporting company under the Exchange Act will enhance the Company’s efforts to acquire or merge with an operating business, although there is no assurance that such will be the case.
The Company is obligated to file interim and periodic reports including an annual report with audited financial statements. The costs associated with this obligation will be borne by the Company.
The Company’s common stock is subject to quotation on the OTCID Basic Market of OTC Markets Group Inc. under the symbol HLLK. There is currently only a limited trading market in the Company’s common stock. There can be no assurance that there will be an active trading market for our common stock. If an active trading market commences, there can be no assurance as to the market price of our common stock, whether the trading market will provide liquidity to investors, or whether any trading market will be sustained.
Results of Operations
Three Months Ended September 30, 2025 (the “2025 Period”) and 2024 (the “2024 Period”).
Revenues. During the 2025 Period and the 2024 Period, the Company generated no revenues.
During the 2024 Period, the Company generated no revenue.
Operating Expenses. During the 2025 Period, the Company incurred total operating expenses of $58,541, which were comprised of $22,359 in general and administrative expenses and $36,800 in professional fees, resulting in a loss from operations of $59,159.
During the 2024 Period, the Company incurred operating expenses of $3,827, comprised entirely of general and administrative expense, resulting in a net loss from operations of $3,827.
Other Income (Expense). During the 2025 Period, the Company incurred a total of $610,158 in other expense, which was comprised of $773 in interest expense, $102,325 in amortization of debt discount, $267,425 in loss on conversion of debt and $67,714 in loss on issuance of convertible debt.
During the 2024 Period, the Company incurred a total of $333,870 in other expense, which was comprised of $7,109 in interest expense, $48,605 in amortization of debt discount and $278,156 in loss on issuance of convertible debt, which was offset by $462,904 in other income, comprised of $3,332 in interest income, $197,378 in change in fair value of derivative and $262,194 in gain on extinguishment of debt, resulting in other expense for the 2024 Period of $129,034.
Net Income (Loss). For the 2025 Period, the Company reported a net loss of $669,317, which is due primarily to an increase in other expense. For the 2024 Period, the Company reported net income of $125,207, which is attributable to other income. This period-to-period fluctuation in other income/expense can be expected for the foreseeable future.
Nine Months Ended September 30, 2025 (“Interim 2025”) and 2024 (“Interim 2024”).
Revenues. During Interim 2025, the Company generated $20,872 in revenues and incurred a cost of revenue of $2,680, resulting in a gross margin of $18,912.
During Interim 2024, the Company generated no revenue.
Operating Expenses. During Interim 2025, the Company incurred total operating expenses of $193,981, which were comprised of $80,283 in general and administrative expenses, $50,000 in compensation expense and $63,698 in professional fees, resulting in a loss from operations of $175,789.
| 25 |
During Interim 2024, the Company incurred operating expenses of $35,437, comprised entirely of general and administrative expenses, resulting in a net loss from operations of $35,437.
Other Income (Expense). During Interim 2025, the Company incurred a total of $1,763,481 in other expense, which was comprised of $126,755 in interest expense, $161,317 in bad debt expense, $228,641 in amortization of debt discount, $736,589 in loss on conversion of debt and $510,178 in loss on issuance of convertible debt, which was offset by $1,178,621 in other income, which was comprised entirely of $ in change in fair value of derivative, resulting in other expense for Interim 2025 of $585,860.
During Interim 2024, the Company incurred a total of $478,023 in other expense, which was comprised of $21,974 in interest expense, $177,893 in amortization of debt discount and $278,156 in loss on issuance of convertible debt, which was offset by $531,140 in other income, which was comprised of $3,332 in interest income, $261,984 in change in fair value of derivative and $265,824 in gain on extinguishment of debt, resulting in other expense for Interim 2024 of $53,117.
Net Income (Loss). For Interim 2025, the Company incurred a net loss of $760,649. For Interim 2024, the Company reported net income of $17,680.
Cash Flows
The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024.
Nine Months Ended 9/30/25 | Nine Months Ended 9/30/24 | |||||||
| Cash Used by Operating Activities | $ | (45,145 | ) | $ | (32,437 | ) | ||
| Cash Provided (Used) by Investing Activities | - | (100,000 | ) | |||||
| Cash Provided by Financing Activities | $ | 46,118 | $ | 132,437 | ||||
Cash Used by Operating Activities. During the nine months ended September 30, 2025, cash used by operating activities was $45,145. This use of cash reflects our net loss for the period, adjusted by non-cash charges non-cash gains. In comparison, during the nine months ended September 30, 2024, cash used by operating activities was $32,437. The decrease in cash usage during the nine months ended September 30, 2025, is attributable to an increase in operating expenses associated with the Company’s “shell company” status.
Cash Provided by Investing Activities. During the nine months ended September 30, 2025, we had no financing activities. During the nine months ended September 30, 2024, we used $100,000 for the issuance of a note receivable.
Cash Provided by Financing Activities. During the nine months ended September 30, 2025, cash provided by financing activities was $46,118. This provision of cash consisted of $20,176 in proceeds from proceeds from convertible note payable (third party) and $344,368 in proceeds from convertible note payable, which was offset by repayments of note payable (including interest). In comparison, during the nine months ended September 30, 2024, cash provided by financing activities was $132,437, which included $130,981 in proceeds from convertible note payable (third party) and $1,456 in proceeds from convertible note (related party).
| 26 |
Liquidity and Capital Resources
As of September 30, 2025, the Company had $4,602 in cash and $217,242 in current liabilities, resulting in a working capital deficit of $212,640. The Company’s capital position can be expected to remain in a negative state, until such time as it begins to generate significant revenues from future operations or until such time as it acquires a private company with ongoing operations. There is no assurance that either of such circumstances will occur.
Going Concern
The Company is currently a “shell company,” that is, the Company has nominal assets and nominal operations and seeks to acquire a private company with ongoing operations.
The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the nine months ended September 30, 2025, the Company incurred a net loss of $760,649 and used cash in operating activities of $45,145, and, on September 30, 2025, had a stockholders’ deficit of $212,640.
The foregoing factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and the classification of liabilities that might result from this uncertainty.
Management is actively seeking additional sources of capital through the sale of equity, including in this offering, advances from related parties, and exploring strategic partnerships. The Company is also focused on attracting suitable investors to support its business plan without relying heavily on existing cash reserves. Additionally, management is implementing cost-saving measures and exploring opportunities to diversify through acquisitions or entering into new markets. However, there can be no assurance that these efforts will result in sufficient funding, and the Company may continue to face substantial uncertainty regarding its ability to achieve profitable operations and sustain its business.
Off Balance Sheet Arrangements
There are no off-balance sheet arrangements with any party.
Critical Accounting Policies
Please refer to Note 2 to the Company’s financial Statements for the nine months ended September 30, 2025, appearing elsewhere herein, for a condensed discussion of our critical accounting policies and to the Company’s Form 10-K for the year ended December 31, 2024, for a full discussion of its critical accounting policies and procedures.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures. As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company’s management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2025, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Changes in Internal Control over Financial Reporting. Our management has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based on that evaluation, management concluded that there has been no change in our internal control over financial reporting during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 27 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Securities Trading Plans of Directors and Executive Officers
Our
sole director and officer has not
Item 6. Exhibits
(a) Documents furnished as exhibits hereto:
| Exhibit No. | Description | |
| 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*) | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101). |
| 28 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HALLMARK VENTURE GROUP, INC. | ||
| Date: November 19, 2025 | By: | /s/ PAUL STRICKLAND |
| Principal Executive Officer | ||
| By: | /s/ PAUL STRICKLAND | |
| Principal Financial Officer | ||
| 29 |