10-Q: Hallmark Venture Group Q3 2025: Shell Status & Losses Deepen

Hallmark Venture Group reported a significant net loss and increased operating expenses in Q3 2025, operating as a shell company after demerging its only revenue-generating subsidiary.

Summary

• The company is currently a shell company, with its sole purpose being to locate and consummate a merger or acquisition with a private entity.
• Jubilee Intel, LLC, the company's only operating segment and revenue generator, was demerged on May 12, 2025, and is now presented as a discontinued operation.
• For the nine months ended September 30, 2025, the company incurred a net loss of $760,649, a substantial increase from the $17,680 net income reported in the same period of 2024.
• Operating expenses significantly increased to $193,981 for the nine months ended September 30, 2025, compared to $35,437 in the prior year period.
• Cash used in operating activities increased to $45,145 for the nine months ended September 30, 2025, up from $32,437 in the prior year.
• The company had a cash balance of only $4,602 as of September 30, 2025, with current liabilities of $217,242, resulting in a working capital deficit of $212,640.
• A 1-for-500 reverse stock split of common stock was effected on April 24, 2025, and has been retrospectively reflected in the financial statements.
• Numerous convertible notes were converted into common stock, leading to a significant increase in weighted average shares outstanding to 30,691,748 for the nine months ended September 30, 2025, from 1,241,076 in the prior year.
• Management has identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient written policies and procedures, which remain unremediated.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the company's shell status, significant net losses, increased cash burn, demerger of its only operating segment, substantial doubt about its going concern ability, and unremediated material weaknesses in internal controls. The future is highly uncertain and dependent on external factors like successful acquisitions and capital raises.

Positives

• Total liabilities decreased significantly to $217,242 as of September 30, 2025, from $1,243,911 as of December 31, 2024, primarily due to debt conversions and deconsolidation of Jubilee.
• The stockholders deficit improved to $(212,640) as of September 30, 2025, from $(557,375) as of December 31, 2024, also largely influenced by debt conversions and non-cash adjustments.

Negatives

• The company is operating as a shell company with no current revenue-generating operations after the demerger of Jubilee Intel, LLC.
• Reported a net loss of $760,649 for the nine months ended September 30, 2025, a significant deterioration from the prior year's net income.
• Operating expenses increased substantially to $193,981 for the nine months ended September 30, 2025.
• Cash used in operating activities increased, indicating a higher cash burn rate.
• The company has a very low cash balance of $4,602 and a significant working capital deficit of $212,640.
• Substantial doubt exists about the company's ability to continue as a going concern.
• Material weaknesses in internal control over financial reporting have been identified and remain unremediated, posing risks to financial reporting reliability.
• Significant dilution of common stock occurred due to numerous debt conversions, with weighted average shares outstanding increasing dramatically.

Risks

• The company's status as a shell company means it has no ongoing operations or revenue streams, relying entirely on finding and completing a merger or acquisition.
• There is no assurance that the company will be successful in identifying or consummating a suitable business combination.
• The company requires additional funds to support its operations and achieve business development goals, and there is no assurance these funds will be available on satisfactory terms.
• Material weaknesses in internal control over financial reporting could adversely affect the company's ability to record, process, summarize, and report financial information accurately.
• The company's net operating loss carryforwards may be subject to annual limitations, which could reduce or defer their utilization.
• Shareholders face significant dilution risk from future equity offerings or convertible debt conversions needed to fund operations or acquisitions.

Future Outlook

The company is currently a shell company, actively seeking to locate and consummate a merger or acquisition with a private entity, but has not identified a specific target or entered into negotiations. Management anticipates participating in only one potential business venture due to nominal assets and limited financial resources. The company intends to seek additional capital through new equity securities offerings, debt financing, and debt restructuring to fund operations and growth. Remediation of identified material weaknesses in internal controls is planned for the fiscal year ending December 31, 2025, contingent on securing additional financing.

Management Comments

• "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."
• "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."
• "Management is implementing cost-saving measures and exploring opportunities to diversify through acquisitions or entering into new markets."
• "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."

Industry Context

The company's current status as a shell company places it in a unique position within the market, primarily focused on a reverse merger or acquisition strategy. This approach is often utilized by private entities seeking to become publicly traded without undergoing a traditional IPO. However, without an identified target or active operations, the company faces significant challenges in attracting investment and demonstrating value, contrasting sharply with established operating companies in any specific industry sector.

Comparison to Industry Standards

• As a shell company with no active operations or revenue streams from continued operations, direct comparison to industry-specific financial benchmarks or operational performance of established companies is not applicable.
• The company's financial position, characterized by minimal cash ($4,602), a significant accumulated deficit ($4,235,157), and ongoing net losses, falls far below typical solvency and profitability standards for operating companies in any industry.
• The identified material weaknesses in internal control over financial reporting are a significant governance concern, contrasting with the robust control environments expected of publicly traded companies, regardless of size or industry.

Management Changes

Corporate Governance

Related Party Transactions

• John D. Murphy, Jr. (former CEO/Director): Issued a Convertible Exchange Note for $144,501 on December 5, 2023; $70,000 repaid on March 8, 2024; converted $74,501 of debt into 1,275,702 shares of common stock on July 21, 2025.
• Paul Strickland (Secretary/Director): Issued a convertible exchange note on December 12, 2023; converted $7,119 of debt into 83,753 shares of common stock on August 7, 2025.
• Selkirk Global Holdings, LLC (controlled by Paul Strickland): Debt obligations totaling $97,424 (including accrued interest) were cancelled in connection with the Jubilee acquisition in the prior year, then reinstated in May 2025 following the demerger; converted $107,472 of principal and accrued interest into 1,343,403 shares of common stock in August 2025; issued a 6% Convertible Exchange Note for up to $50,000 on July 17, 2025, with $20,177 principal and $279 interest due as of September 30, 2025.
• Beartooth Asset Holdings, Inc. (related party): Issued 50 million shares of common stock on May 16, 2025, as a corporate restructuring transaction.
• Nicosel, LLC (non-affiliate, but involved in multiple debt conversions): Received assignment of promissory notes from Alpha Strategies and Green Horseshoe; issued multiple convertible promissory notes and exchange notes; converted significant debt amounts into common stock during the nine months ended September 30, 2025, including $103,986 into 611,682 shares, $3,684 into 21,671 shares, and $146,799 into 1,346,780 shares. Total amount due to Nicosel, LLC as of September 30, 2025, is $35,800 principal and $494 interest.
• GMF Ventures: Issued six convertible promissory notes for $232,187 on May 15, 2025; fully converted into 2,449,227 shares of common stock on June 3, 2025.

Stakeholder Impact

• Shareholders face significant dilution from past and potential future debt conversions and equity offerings, coupled with substantial uncertainty regarding the company's future business direction and profitability.
• Investors are exposed to high risk due to the company's shell status, lack of operating revenue, ongoing losses, and substantial doubt about its ability to continue as a going concern.
• Creditors face elevated risk given the company's precarious financial position and reliance on future capital raises or a successful acquisition.
• Management and employees (if any beyond the sole officer) face job insecurity and the challenge of operating a company with minimal resources and significant financial and operational hurdles.

Next Steps

• Locate and consummate a merger or acquisition with a private entity.
• Seek additional capital from new equity securities offerings, debt financing, and debt restructuring.
• Implement cost-saving measures and explore opportunities to diversify through acquisitions or entering new markets.
• Appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management.
• Adopt sufficient written policies and procedures for accounting and financial reporting to remediate internal control weaknesses.

Key Dates

Recommendation

The company is a shell with no current revenue-generating operations, having demerged its only subsidiary. It reported a significant net loss and increased cash burn, leading to substantial doubt about its ability to continue as a going concern. The stock has experienced massive dilution, and material weaknesses in internal controls persist. The future is entirely speculative, dependent on an unidentifiable acquisition and successful, yet uncertain, capital raises. This presents an extremely high-risk profile with no clear path to profitability or sustainable operations, making it an unfavorable investment.

Keywords

Hallmark Venture Group, HLLK, 10-Q, Quarterly Report, Shell Company, Net Loss, Going Concern, Discontinued Operations, Jubilee Intel, Convertible Debt, Stock Dilution, Internal Controls, SEC Filing, Merger Acquisition