SDR Drone, Inc. entered into a consulting agreement with SJT Capital LLC, effective October 19, 2026, for strategic and capital-markets advice and introductions. Compensation is 250,000 common shares earned as of that date, plus 50,000 shares if the company signs an engagement letter with a registered broker-dealer introduced by SJT and 200,000 shares if its common stock is approved for listing on the New York Stock Exchange, NYSE American or the Nasdaq Stock Market. Each milestone may occur during the agreement or within 12 months after it ends. SJT will not solicit investors, negotiate offering terms, handle investor funds or receive compensation based on a financing’s completion, size or success.
The Board adopted a stock plan reserving 12,000,000 shares and authorized a Form S-8 registration statement. Options on the approved form vest in three equal annual installments subject to continued service, have a maximum 10-year term, and cannot be repriced without shareholder approval. South Carolina’s Securities Division advised SEC staff that specified disqualification should not arise from the Consent Order and confirmed required payments were made; it also said the permanent securities-industry bar in or from South Carolina remains and the letter does not authorize offers or sales there. SDR Drone said it will continue pursuing qualification of its Regulation A offering.
SDR Drone, Inc. disclosed two state securities orders and their effect on its pending Regulation A offering. A South Carolina consent order entered July 27, 2018, under the Company’s former name, Hallmark Venture Group, Inc., permanently bars the Company from participating in any aspect of the securities industry in or from South Carolina. SDR Drone says it will not offer or sell securities there.
The Company has suspended activity in its Regulation A offering and will not sell under that exemption unless and until the South Carolina disqualification is resolved. It requested written advice from South Carolina and intends to seek a waiver from the SEC’s Division of Corporation Finance if needed; it says there is no assurance relief will permit the offering to proceed. The $25,000 investor payment and $5,000 civil penalty were paid in full, while the Company awaits confirmation from South Carolina’s Securities Division. The California order does not presently disqualify the Company under Rule 506 because its ten-year period expired November 25, 2024.
SDR Drone, Inc. (SDCO) disclosed that its previously issued consolidated financial statements for the years ended December 31, 2025 and 2024, and certain related interim periods, along with the associated audit reports, should no longer be relied upon. The company identified material errors primarily involving accounting for convertible notes payable, accrued interest and derivative liabilities, as well as revenue recognition, receivables, related-party cash, credit losses and various accruals for 2024.
The restatements increased net loss by $1,569,224 for 2025 and $826,206 for 2024, raising accumulated deficits to $5,315,165 and $3,922,221, respectively. SDR Drone reports that its disclosure controls and internal control over financial reporting were not effective as of December 31, 2025 due to material weaknesses, including lack of adequate accounting personnel and no independent audit committee. An Audit Committee was formed in June 2026 and is evaluating remediation measures.
SDR Drone, Inc. (SDCO) filed its June 30, 2026 quarterly report showing it remains a pre‑revenue company with a small balance sheet and significant financing risk. Cash was only $1,036 and total assets were $1,036, against $255,765 in current liabilities, leaving a stockholders’ deficit of $254,729. The company reported a net loss of $142,657 for the quarter and $416,153 for the first six months of 2026, with no revenue after discontinuing its former advertising subsidiary in 2025.
During the quarter a June 9, 2026 change of control transferred 100,000 Series A preferred shares and 50,000,000 common shares to EQUORIX LLC, which now holds voting control and about 75.55% of the common stock. Management determined the company ceased to be a shell at that date. In connection with this, SDR Drone acquired a portfolio of Korean drone‑related intellectual property from related parties, recorded at nil carrying value, and licensed it back for Korean use while planning U.S. and allied‑market commercialization.
The company relies heavily on convertible notes and derivative‑linked financing. A derivative liability of $71,228 and multiple deep‑discount conversion features reflect substantial potential dilution. A new related‑party EQUORIX note and a February 2026 third‑party note provide limited additional capacity, but management discloses substantial doubt about its ability to continue as a going concern and identifies material weaknesses in internal controls due to small staff and related‑party dominance.