HLLK Swings to Profit on Derivative Gains, Assets Plummet Post-Demerger

TL;DR

**HLLK's 'profit' is a mirage from derivative accounting; the company is shrinking and highly unstable, avoid.**

AI Summary

HALLMARK VENTURE GROUP, INC. (HLLK) reported a net income of $637,595 for the three months ended June 30, 2025, a significant improvement from a net loss of $125,532 in the prior-year period. This turnaround was primarily driven by a substantial gain of $1,366,421 from the change in fair value of derivative liabilities, despite incurring a loss on conversion of debt of $469,164 and a loss on issuance of convertible debt of $442,464. Revenue for the three months ended June 30, 2025, was $20,872, up from $0 in the same period of 2024, with a gross margin of $18,192. However, total assets plummeted from $686,536 as of December 31, 2024, to $1,776 as of June 30, 2025, largely due to the deconsolidation of Jubilee Intel, LLC, which previously held assets of $577,581. Total liabilities also decreased significantly from $1,243,911 to $656,938 during the same period. The company's cash position decreased from $3,629 to $1,776, reflecting net cash used in financing activities of $36,146 for the six months ended June 30, 2025.

Why It Matters

This filing reveals a company in significant flux, with a dramatic shift in its financial structure and operations. The deconsolidation of Jubilee Intel, LLC, and the associated reduction in assets and liabilities, fundamentally alters HLLK's business profile, making it a much smaller entity. For investors, the reported net income is misleadingly positive, driven by non-cash derivative revaluations rather than core operational strength. The high level of related-party transactions and frequent changes in control suggest potential governance risks and instability, which could deter new investment and impact employee morale. Competitively, HLLK's reduced asset base and minimal cash may limit its ability to compete effectively or pursue new ventures.

Risk Assessment

Risk Level: high — The company's total assets decreased from $686,536 to $1,776, a 99.7% reduction, primarily due to the deconsolidation of Jubilee Intel, LLC. Cash on hand is only $1,776, indicating severe liquidity issues. The company also has a significant accumulated deficit of $(3,565,840) as of June 30, 2025, and a total stockholders' deficit of $(655,162), signaling ongoing financial distress and a precarious capital structure.

Analyst Insight

Investors should exercise extreme caution and consider divesting any holdings in HLLK. The company's financial health is highly questionable, with minimal assets, negative equity, and a history of frequent management changes and complex related-party transactions. Focus on companies with stable operations and clear growth strategies.

Financial Highlights

debt To Equity

N/A

revenue

$20,872

operating Margin

N/A

total Assets

$1,776

total Debt

N/A

net Income

$637,595

eps

N/A

gross Margin

$18,192

cash Position

$1,776

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $637,595 — Net Income (for the three months ended June 30, 2025, up from a $(125,532) loss in 2024)
• $1,366,421 — Change in fair value of derivative (significant gain for the three months ended June 30, 2025)
• $1,776 — Total Assets (as of June 30, 2025, a 99.7% decrease from $686,536 on December 31, 2024)
• $20,872 — Revenue (for the three months ended June 30, 2025, up from $0 in 2024)
• $1,776 — Cash (as of June 30, 2025, down from $3,629 on December 31, 2024)
• $656,938 — Total Current Liabilities (as of June 30, 2025, down from $1,243,911 on December 31, 2024)
• $(655,162) — Total Stockholders' Deficit (as of June 30, 2025, worsening from $(557,375) on December 31, 2024)
• 63,931,929 — Common Stock Outstanding (as of September 24, 2025)
• $469,164 — Loss on conversion of debt (for the three months ended June 30, 2025)
• $442,464 — Loss on issuance of convertible debt (for the three months ended June 30, 2025)

Key Players & Entities

• HALLMARK VENTURE GROUP, INC. (company) — registrant
• Jubilee Intel, LLC (company) — deconsolidated subsidiary
• Paul Strickland (person) — Company's Secretary, Director, and controlling party of Selkirk Global Holdings, LLC and Beartooth Asset Holdings, LLC
• John D. Murphy, Jr. (person) — Former President CEO and Director, controlling party of JMJ Associates, LLC
• Steven Arenal (person) — Former CEO, President, and Secretary, controlling party of Aurum International Ltd.
• Evan Bloomberg (person) — Former officer and director
• Selkirk Global Holdings, LLC (company) — entity controlled by Paul Strickland
• Aurum International Ltd. (company) — entity controlled by Steven Arenal
• Robert Cashman (person) — previous CEO and Director
• FINRA (regulator) — approved reverse stock split

FAQ

Risk Factors

• Significant Asset Deconsolidation [high — financial]: Total assets decreased from $686,536 as of December 31, 2024, to $1,776 as of June 30, 2025. This 99.7% reduction was primarily due to the deconsolidation of Jubilee Intel, LLC, which previously held $577,581 in assets.
• Dependence on Derivative Fair Value Gains [medium — financial]: The company reported a net income of $637,595 for the three months ended June 30, 2025, a significant turnaround from a net loss of $125,532 in the prior year. This was largely driven by a $1,366,421 gain from the change in fair value of derivative liabilities.
• Losses on Debt Transactions [medium — financial]: The company incurred substantial losses related to debt, including a loss on conversion of debt of $469,164 and a loss on issuance of convertible debt of $442,464 for the three months ended June 30, 2025.
• Deteriorating Stockholders' Deficit [medium — financial]: The total stockholders' deficit worsened from $(557,375) on December 31, 2024, to $(655,162) as of June 30, 2025, indicating a declining equity position.
• Reduced Cash Position [low — financial]: The company's cash position decreased from $3,629 as of December 31, 2024, to $1,776 as of June 30, 2025. This decline reflects net cash used in financing activities of $36,146 for the six months ended June 30, 2025.

Industry Context

Hallmark Venture Group operates in a dynamic financial landscape where companies often utilize complex financial instruments like derivatives. The industry is characterized by evolving regulatory environments and the need for robust risk management. Companies in this sector can experience significant volatility due to market fluctuations and the impact of financial engineering.

Regulatory Implications

The company's reliance on gains from derivative fair value changes and its significant debt-related losses may attract scrutiny from regulators regarding financial reporting and risk management practices. Compliance with accounting standards for derivatives and debt instruments is crucial.

What Investors Should Do

1. Investigate the nature and terms of the derivative liabilities to understand the sustainability of fair value gains.
2. Analyze the reasons behind the losses on debt conversion and issuance to assess future financial risks.
3. Understand the strategic implications of the Jubilee Intel, LLC deconsolidation and its impact on the company's long-term operational strategy.
4. Monitor the company's cash burn rate and financing activities given the reduced cash position and net cash used in financing.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q, showing a significant net income turnaround driven by derivative fair value gains, despite losses on debt transactions and a drastic reduction in total assets.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for comparison of asset and liability changes, showing significantly higher total assets ($686,536) and liabilities ($1,243,911) compared to the current period.

Glossary

Derivative Liabilities

Financial instruments whose value is derived from an underlying asset, index, or rate. Changes in their fair value can significantly impact a company's net income. (A substantial gain from the change in fair value of derivative liabilities ($1,366,421) was the primary driver of the company's net income in the current period.)

Deconsolidation

The process of removing a subsidiary's financial results from the parent company's consolidated financial statements, typically when control is lost. (The deconsolidation of Jubilee Intel, LLC led to a dramatic decrease in Hallmark Venture Group's total assets.)

Convertible Debt

Debt that can be converted into a predetermined amount of equity in the issuing company. (The company incurred a loss on the issuance of convertible debt, indicating unfavorable terms or market conditions at the time of issuance.)

Stockholders' Deficit

Occurs when a company's total liabilities exceed its total assets, resulting in a negative equity position. (Hallmark Venture Group has a stockholders' deficit, which worsened in the current period, indicating a negative net worth.)

Year-Over-Year Comparison

Compared to the prior-year period, Hallmark Venture Group has shown a dramatic turnaround in net income, shifting from a loss of $125,532 to a profit of $637,595, primarily due to derivative fair value gains. However, this is juxtaposed with a severe reduction in total assets (99.7%) due to deconsolidation and significant losses on debt transactions. Revenue has emerged from zero to $20,872, but the overall financial picture is complex, marked by a deteriorating stockholders' deficit and a shrinking cash position.

Key Financial Figures

• $0.001 — ction 12(g) of the Act: Common Stock, $0.001 par value Title of Class Indicate b

Filing Documents

• form10-q.htm (10-Q) — 849KB
• ex31-1.htm (EX-31.1) — 12KB
• ex31-2.htm (EX-31.2) — 11KB
• ex32-1.htm (EX-32.1) — 15KB
• 0001493152-25-014788.txt ( ) — 5849KB
• hllk-20250630.xsd (EX-101.SCH) — 52KB
• hllk-20250630_cal.xml (EX-101.CAL) — 67KB
• hllk-20250630_def.xml (EX-101.DEF) — 204KB
• hllk-20250630_lab.xml (EX-101.LAB) — 408KB
• hllk-20250630_pre.xml (EX-101.PRE) — 344KB
• form10-q_htm.xml (XML) — 835KB

- FINANCIAL INFORMATION

PART I. - FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements. 3 Item 2.

Management's Discussion and Analysis of Financial Condition and Plan of Operations

Management's Discussion and Analysis of Financial Condition and Plan of Operations. 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 25 Item 4

Controls and Procedures

Controls and Procedures. 26

- OTHER INFORMATION

PART II - OTHER INFORMATION 26 Item 1. Legal Proceedings. 26 Item 1A. Risk Factors. 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 26 Item 3. Defaults Upon Senior Securities. 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information. 26 Item 6. Exhibits. 26

Signatures

Signatures 27 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements HALLMARK VENTURE GROUP, INC. Condensed Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 4 Condensed Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 5 Condensed Statements of Stockholders' Equity (Deficit) for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 6 Condensed Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited) 7 Notes to the Condensed Financial Statements (unaudited) 8 3 HALLMARK VENTURE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2025 December 31, 2024 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash $ 1,776 $ 3,629 Note receivable, net — 105,326 Assets from discontinued operations — 577,581 Total Assets $ 1,776 $ 686,536 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 36,456 $ 26,381 Accrued compensation — 56,666 Due to related parties 6,500 826 Convertible notes payable – related party 153,457 74,501 Convertible notes payable – net of debt discount of $ 90,339 and $ 33,333 , respectively 164,130 317,452 Convertible notes payable 164,130 317,452 Accrued interest – related party 32,576 Notes payable — 216,960 Accrued interest 1,149 14,810 Derivative liability 262,670 510,154 Liabilities from discontinued operations — 26,161 Total Current Liabilities 656,938 1,243,911 Total Liabilities 656,938 1,243,911 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' DEFICIT: Series A Preferred stock, 200,000 shares authorized, $ 0.001 par value; 100,000 and 100,000 issued and outstanding, respectively 100 100 Common stock, 2,499,900,000 shares authorized, $ 0.001 par value; 59,009,113 and 1,049,794 issued and outstanding, respectively 59,009 1,048 Additional paid-in capital 2,831,280 2,5

View Full Filing

View this 10-Q filing on SEC EDGAR