HFUS 10-Q
Hartford Creative Group, Inc. (HFUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period
ended:
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 Number)
(Address of Principal Executive Offices) (Zip Code)
Registrant’s
telephone number including area code:
Former name, former address, and former fiscal year, if changed since last report
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 checkmark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTC Markets Group | ||||
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: shares of common stock outstanding as of December 12, 2025.
Index
| 2 |
HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| October 31, 2025 | July 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Advance to contractors | ||||||||
| Prepaid and other current receivables | ||||||||
| Deferred offering costs | ||||||||
| Total Current Assets | ||||||||
| Non-current Assets | ||||||||
| Property and equipment, net | ||||||||
| ROU assets-operating lease | ||||||||
| Deferred tax assets | ||||||||
| Total Non-current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Related party loan and payables | ||||||||
| Contract liabilities | ||||||||
| Current operating Lease liabilities | ||||||||
| Other current payable | ||||||||
| Total Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock - $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock - $ par value, shares authorized, shares outstanding at both of October 31, 2025 and July 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 3 |
HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months ended October 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Operating cost and expenses: | ||||||||
| Cost of revenue | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total operating cost and expenses | ||||||||
| Operating income | ||||||||
| Other Expense | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other expense, net | ( | ) | ( | ) | ||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Income before income taxes | ||||||||
| Income Tax Expense | ||||||||
| Net income | ||||||||
| Net income per common share: | ||||||||
| Basic and diluted | $ | $ | ||||||
| Weighted average shares outstanding: | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 4 |
HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three months ended | ||||||||
| October 31, | ||||||||
| 2025 | 2024 | |||||||
| Net income | $ | $ | ||||||
| Other Comprehensive (loss) income, net of income tax | ||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Total Other Comprehensive loss | ( | ) | ( | ) | ||||
| Total Comprehensive income | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
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HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| Accumulated | Total | |||||||||||||||||||||||
| Additional | Other | Stockholders’ | ||||||||||||||||||||||
| Common Stock | Paid - in | Accumulated | Comprehensive | Equity | ||||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Income (loss) | (Deficit) | |||||||||||||||||||
| Balance, July 31, 2025 | ( | ) | ||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, October 31, 2025 (unaudited) | ( | ) | ||||||||||||||||||||||
| Accumulated | Total | |||||||||||||||||||||||
| Additional | Other | Stockholders’ | ||||||||||||||||||||||
| Common Stock | Paid - in | Accumulated | Comprehensive | Equity | ||||||||||||||||||||
| Shares* | Amount* | Capital* | (Deficit) | Income (loss) | (Deficit) | |||||||||||||||||||
| Balance, July 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, October 31, 2024 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 6 |
HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months ended | ||||||||
| October 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Prepaid and Other current receivables | ( | ) | ||||||
| Advance to contractor | ||||||||
| Related party receivables and payables | ||||||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Other current payable | ( | ) | ||||||
| Operating lease assets and liabilities | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Related party loan receivable* | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds of related party notes payable | ||||||||
| Repayment of related party notes payable | ( | ) | ( | ) | ||||
| Advances from related parties | ||||||||
| Repayment of related party advances* | ( | ) | ||||||
| Payment of offering expenses | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| Net change in Cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental Disclosure For Noncash Investing And Financing Activities: | ||||||||
| Related party paid offering expenses on behalf of the Company | ||||||||
| Unpaid offering expenses recorded as other current payables | ||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
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HARTFORD CREATIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. The financial statements and notes are the responsibility of the Company’s management. These accounting policies conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied in the preparation of the financial statements. This disclosure should be read in conjunction with our audited financial statements for the year ended July 31, 2025, including footnotes, contained in our Annual Report on Form 10-K.
Organization
Hartford Creative Group, Inc. (Formerly Hartford Great Health Corp.) (the “Company”), was incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. The Company changed its name to Hartford Great Health Corp. on August 22, 2018 and subsequently changed its name to Hartford Creative Group, Inc. on May 11, 2024.
Historically,
through its wholly owned subsidiary - Hangzhou Hartford Comprehensive Health Management, Ltd. (“HZHF) and HZHF’s
The
Company previously conducted early childhood education operations through Hartford International Education Technology Co., Ltd.
(“HF Int’l Education”) and its subsidiaries. Due to changes in government regulations affecting the education
industry and pandemic-related restrictions in China, the Company exited these operations to reduce continuing losses. On August 1,
2022, HFSH entered into a contract with a related party, Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), to
sell
Beginning
in January 2024, the Company embarked on the development of a new business within the media and marketing sector. As part of its
rebranding strategy, on January 1, 2024, HFSH changed its legal name to Shanghai Hartford ZY Culture Media Ltd.
(“HFZY”). HFZY primarily provides social media advertising services on platforms such as Tik
Tok, Toutiao, Kwai, RED, WeChat, Baidu and more. The
Company aims to provide customers with integrated services from advertising, creative development and production to placement operations and campaign management on social media platform. Further expanding its business operations, HFUS reacquired full ownership
of HZHF at no cost on April 1, 2024, and subsequently rebranded it as Hangzhou Hartford WP Culture Media Ltd. (“HZWP”).
On April 11, 2024, HFUS continued its growth trajectory by establishing a new subsidiary named Shanghai DZ Culture Media Ltd.
(“SHDZ”). However, due to prolonged inactivity, the Company entered agreements on December 9, 2024, and January 1, 2025,
to transfer
Reverse Stock Split
On
March 28, 2025, the Board of Directors approved by unanimous written consent a reverse stock split of the Company’s authorized
shares and issued and outstanding shares of common stock, par value $ per share, at a ratio of
Basis of Presentation
The consolidated financial statements include the accounts of Hartford Creative Group, Inc., its wholly-owned subsidiaries and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests of the consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the amounts of assets and liabilities, the identification and disclosure of impaired assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Reclassification
Certain prior period amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on the Company’s net income, net cash flows, or stockholders’ equity.
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Revenue Recognition
The Company follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the performance obligation is satisfied. Customer billings or collections in advance of payment performance are recorded as contract liabilities (deferred revenue). Payment terms are generally short-term and the Company has determined its contracts do not include significant financing components.
The Company provides traffic acquisition service to place advertisements produced by advertisers and provides advertisements account charging service to customers. The advertisements are published on the targeted media platforms as determined by the customers. Revenue is recognized at a point in time when the distribution of advertisements and charging of advertisement accounts are completed upon the completion confirmations by customers and suppliers, respectively. The Company is not the principal in this arrangement as the Company does not control the specified service (i.e., the traffic) before that service is delivered to the customer, because (i) it is the targeted media platform, rather than the Company, who is primarily responsible for providing the media publishing service; (ii) the media platforms are identified and determined by the customers, rather than the Company, and the Company does not commit to acquire the traffic before transferring to the customers. Therefore, the Company is not the principal in executing these transactions. Accordingly, the Company acts as an agent in these transactions and reports placement revenue on a net basis.
Additionally, beginning in June 2025, the Company commenced its mini-drama transaction, which involves acquiring non-exclusive license of mini-dramas, performing in-house editing, and licensing the completed content to customers. These activities are considered one single performance obligation. The Company controls the license rights prior to transfer, is responsible for fulfilling the arrangement, and independently establishes pricing. Accordingly, the Company is the principal in these transactions and recognizes revenue on a gross basis. Because the licenses convey a right-to-use intellectual property (i.e., static content without ongoing updates), revenue is recognized at a point in time—specifically, when the license rights are made available to the customer.
Generally,
the Company pays media suppliers upfront for media resources and collects prepayments from customers. Under certain circumstances,
credit terms of up to 90 days may be granted. As of October 31, 2025 and July 31, 2025, the Company had $
Segment Reporting
Operating segments are defined as components of an enterprise for which separate financial information is available and regularly evaluated by the chief operating decision maker (“CODM”) in allocating resources and assessing performance. The Company has identified its Chief Executive Officer as the CODM. The CODM manages the business, allocates resources, and evaluates performance on a consolidated basis; accordingly, the Company operates as a single operating and reportable segment.
Reportable Segment and Measure of Profit or Loss
The CODM evaluates segment performance and allocates resources based on consolidated operating results, which represent the measure of profit or loss used by the CODM. This measure is consistent with income from operations as presented in the Company’s consolidated statements of income. The CODM also monitors consolidated total assets when assessing performance and making resource allocation decisions.
Significant Segment Expenses
In reviewing operating performance, the CODM considers consolidated revenues, gross margin, and operating expenses, including selling, general and administrative expenses. No additional categories of expense are regularly provided to or reviewed by the CODM.
| 9 |
Recent Accounting Pronouncements.
Recently not yet adopted accounting pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The new guidance requires enhanced disclosures about income tax expenses. The Company is required to adopt this guidance in the first quarter of the fiscal year 2026. Early adoption is permitted on a prospective basis. We are currently evaluating the impact of this ASU on our annual income tax disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
NOTE 2. GOING CONCERN
The
accompanying consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of obligations in the normal course of business. As of October 31, 2025, The Company had a working capital deficit of
$
In view of these matters, continuation as a going concern is dependent upon several factors, including the availability of debt or equity funding upon terms and conditions acceptable to the Company, and ultimately achieving profitable operations. Management believes that the Company’s business plan provides it with an opportunity to continue as a going concern. However, management cannot provide assurance that the Company will meet its objectives and be able to continue in operation.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
NOTE 3. RELATED PARTY TRANSACTIONS
Related Party Payables
Shanghai
Oversea Chinese Culture Media Ltd., and its subsidiary, Shanghai Konglu ZeYi Brands Management Ltd. (collectively, “SH Oversea”),
are substantially owned by one of the Company’s major shareholders. The Company’s related party relationship with Shanghai
Qiaohong Assets Ltd. (“SH Qiaohong”) and SH Oversea, previously based on shared management with HFSH, ceased on August 15,
2024. However, on November 26, 2024, Ms. Erin SongWang acquired a
During
the year ended July 31, 2025, SH Oversea forgave $
Related Party loans
HFUS
borrowed in the form of a short-term loan at
Since February 2024, the Company borrowed a total of $ in short-term loans at an annual interest rate of % from a relative of one of its current major shareholders (the former primary shareholder). On April 22, 2024, $ of the principal was used to offset profits that the former shareholder allegedly earned in violation of Section 16(b) of the Securities Exchange Act. During the three months ended October 31, 2025 and 2024, the Company recorded interest expense of and $, respectively. On December 10, 2024, the outstanding loan balance of $ (principal and interest) was converted to a non-interest-bearing advance from the former shareholder. This advance, combined with other related party payables, resulted in a total of $ and $ in outstanding operating advances from the former primary shareholder as of October 31, 2025 and July 31, 2025, respectively. These advances are non-interest-bearing and due on demand.
Other Related Party Transactions
The
Company has leased approximately
The
Company’s office space, located 8832 Glendon Way, Rosemead, CA 91770, is leased from a related party, a former primary shareholder
and relative of a current major shareholder.
| 10 |
NOTE 4. ADVANCE TO CONTRACTORS AND CONTRACT LIABILITIES
In
the advertisement placement services, the Company makes prepayments to the downstream agents or the media platforms (“contractor”)
and receives advance payments from the customers. As of October 31, 2025 and July 31, 2025, the Company’s balance sheets reflect
$
NOTE 5. OTHER CURRENT LIABILITIES
Other current payable consist of as the following:
| October 31, 2025 | July 31, 2025 | |||||||
| Taxes payable | $ | $ | ||||||
| Payable to service providers | ||||||||
| Accrued payroll | ||||||||
| Payable to former owners | ||||||||
| Other Current Liabilities | $ | $ | ||||||
NOTE 6. CONCENTRATION RISK
For
the three months ended October 31, 2025 and 2024, two and four customers accounted for
For
the three months ended October 31, 2025 and 2024, three and two contractors accounted for
NOTE 7. COMMITMENTS AND CONTINGENCIES
There have been no material contractual obligations and commitments as of October 31, 2025.
NOTE 8. SUBSEQUENT EVENTS
In accordance with ASC 855, “Subsequent Events”, the Company has evaluated subsequent events through the date of issuance of these unaudited financial statements and no material subsequent events were noted.
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Forward-Looking Statements
This Form 10-Q contains or incorporates by reference “forward-looking statements,” as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others:
| - | statements concerning the benefits that we expect will result from our business activities and results of business development that we contemplate or have completed, such as increased revenues; and statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions used in this report or incorporated by reference in this report. |
These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions.
Item 2. Management’s Discussion and Analysis or Plan of Operation Overview
This discussion updates our business plan for the three-month period ending October 31, 2025. It also analyzes our financial condition on October 31, 2025 and compares it to our financial condition at July 31, 2025. This discussion and analysis should be read in conjunction with our audited financial statements for the year ended July 31, 2025, including footnotes, contained in our Annual Report on Form 10-K, and with the unaudited financial statements for the interim period ended October 31, 2025, including footnotes, which are included in this quarterly report.
Overview of the Business
Hartford Creative Group, Inc. (formly Hartford Great Health Corp.) was incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. The Company changed its name to Hartford Great Health Corp. on August 22, 2018 and subsequently changed its name to Hartford Creative Group, Inc. on May 11, 2024.
Ability to continue as a “going concern”.
The reports of our independent registered public accounting firm on our consolidated financial statements as of and for the year ended July 31, 2025 include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Management’s plans to address the conditions giving rise to that uncertainty are described in our consolidated financial statements and the related notes.
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Plan of Operation
After years of experience in education and hospitality, the Company shifted its focus in January 2024 to social media advertising and related marketing services in China. On January 10, 2024, Shanghai Hartford Health Management, Ltd. changed its legal name to Hartford ZY Culture Media (Shanghai) Co., Ltd. (“HFZY”). On June 18, 2024, the Company completed the acquisition of ShaoXing HuoMao Network Technology Ltd. (“SXHM”). HFZY and SXHM provide media and advertising services on mainstream social media platforms, including TikTok, Toutiao, Kwai, RED, WeChat, and Baidu. On May 12, 2025, HFZY established Nanjing HaoYiPeng Information Technology Ltd. (“NJHY”) to further expand the Company’s social media advertising business. The Company intends to provide vertical integration services, including advertising creative development, video production, editing, and advertising operations and campaign management. The Company also plans to develop overseas TikTok advertising campaigns for domestic Chinese customers seeking to reach international markets.
During the three months ended October 31, 2025, the Company recognized USD 0.3 million net revenue from the advertisement placement services. The Company provides service to place advertisements. The advertisements are published on the targeted media platforms as determined by the customers. Revenue is recognized at a point in time when the placement of advertisements is completed. As disclosed in Note 1 under category “Revenue Recognition”, the Company is not the principal in executing these transactions. The Company reports the amount received from the customers and the amounts paid to the media platforms or upstream agent related to these transactions on a net basis.
Based on market research and discussions between the Board and various third-party suppliers and industry experts, the Company has further developed its strategic plan for the mini-drama business. Management believes the Company is well positioned to capture growing market interest and expand its revenue streams through this initiative. To date, only preliminary activities have been undertaken, and there can be no assurance that the business plan will ultimately be successful. In July 2025, the Company completed its first mini-drama transaction, generating $36,000 in revenue. In October 2025, the Company received customer deposits of $71,600 related to a mini-drama service agreement, which remain pending delivery to the customer and recorded as contract liabilities as of October 31, 2025.
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Results of Operations – Three months ended October 31, 2025 Compared to Three months ended October 31, 2024.
The following table presents certain consolidated statement-of-operations information and presentation of that data as a percentage of change from year to year.
| For the Three Months ended October 31, | ||||||||||||
| 2025 | 2024 | Variance | ||||||||||
| Revenues | $ | 330,267 | $ | 467,462 | -29 | % | ||||||
| Operating cost and expenses: | ||||||||||||
| Cost of revenue | - | 109,822 | -100 | % | ||||||||
| Selling, general and administrative | 216,375 | 165,568 | 31 | % | ||||||||
| Total operating cost and expenses | 216,375 | 275,390 | -21 | % | ||||||||
| Operating income | 113,892 | 192,072 | -41 | % | ||||||||
| Other expenses | (6,647 | ) | (1,842 | ) | 261 | % | ||||||
| Income before income taxes | 107,245 | 190,230 | -44 | % | ||||||||
| Income tax expense | 56,571 | 62,961 | -10 | % | ||||||||
| Net income | 50,674 | 127,269 | -60 | % | ||||||||
Revenue: Net revenue recognized from advertising placement services was USD 0.33 million in 2025 and USD 0.47 million in 2024. The decrease in net placement revenue for the period was primarily due to the Company’s ongoing negotiation efforts with the majority of its customers to revise contract terms in order to achieve higher margins. As a result of these negotiations, certain advertising activities were temporarily paused and postponed.
Operating Cost and Expenses: For the three months ended October 31, 2025, the Company recorded no cost of revenue, compared to $0.11 million in the same period of 2024. The prior-year cost of revenue was primarily attributable to design fees and channel service expenses incurred in connection with project execution. Selling, general and administrative expenses increased to $0.22 million for the three months ended October 31, 2025, from $0.17 million in the same period of 2024. The increase was primarily driven by higher audit expenses and directors’ and officers’ (D&O) insurance premiums.
Other Expense: Other expense remained immaterial in both periods and primarily consisted of net interest expense on loans from related parties.
Income tax expense: The income tax recognized for the three months ended October 31, 2025 and 2024, resulted from the income tax from the operating income in China.
Net Income (Loss): We recorded a net income of $0.05 million or $0.00 per share for the three months ended October 31, 2025, compared to a net income of $0.13 million or $0.01 per share for the same period of 2024, due to the factors discussed above.
| 14 |
Liquidity and Capital Resources
As of October 31, 2025, we had a working capital deficit of $53,735 comprised of current assets of $2,971,566 and current liabilities of $3,025,301. This represents a decrease of $52,004 in the working capital deficit from the July 31, 2025 amount of $105,739. We had an accumulated deficit of $4,761,059 compared to $4,811,733 at the previous year end. To date, we have funded our operations through short-term borrowing from related parties and equity financing.
As of October 31, 2025, the Company has issued a total of 25,027,004 shares (reflecting the 1 for 4 Reverse Stock Split) of common stock. On December 11, 2018, 24,022,500 shares of common stock were issued at the price of $0.08 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 250,000 shares of common stock to a significant shareholder of the Company at $0.08 per share.
We will seek additional financing in the form of debt or equity. There is no assurance that we will be able to obtain any needed financing on favorable terms, or at all, or that we will find qualified purchasers for the sale of our stock. If we are unable to raise sufficient capital, we will be required to delay or forego some of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. Any sales of our securities would dilute the ownership of our existing investors.
Future Capital Expenditures
We believe that our funding requirements for the next twelve months will be in excess of $2,000,000. We are currently seeking further funding through related parties’ loan and finance.
We are in the process of uplisting the Company’s stock from the OTC market to the Nasdaq exchange. Assuming all conditions are met in our favor, we plan to raise capital through either debt or equity financing. The proceeds from this financing will be used to cover the costs related to the uplisting procedure.
Cash Flows – Three months ended October 31, 2025 Compared to Three months ended October 31, 2024
Operating Activities
Cash used in operating activities was $195,800 for the three months ended October 31, 2025 as compared to $348,049 cash provided by the operations for the same period in 2024. During the three months ended October 31, 2025, we recorded net income of $50,674, a $3,725,493 decrease of advance to contractors, a $86,308 increase in accounts payable, and offset a $3,793,584 decrease of contract liabilities, a $196,929 decrease of other current payable (mainly tax payable), and a $69,251 increase of accounts receivable.
During the three months ended October 31, 2024, we recorded net income of $127,269, a $1,631,243 decrease of advance to contract, a $583,009 decrease of accounts receivable and $582 decrease of prepaid and other current receivable, offset by a $1,179,176 decrease of accounts payable and a $831,501 decrease of contract liabilities.
Investing activities
No investing activities occurred during the three months ended October 31, 2025. Cash used in investing activities was $675,826 during the three months ended October 31, 2024, primarily due to the short term related party loan receivables bearing interest at 3% interest rate, matured in July and August, 2025.
Financing activities
Net cash provided by financing activities increased to $202,112 for the three months ended October 31, 2025, from $64,949 in the comparable period of 2024. Cash provided by financing activities in the 2025 period was primarily attributable to $219,396 in non-interest-bearing advances received from related parties, and offset by $12,284 payment of offering expenses and $5,000 repayment of notes payable.
In the same period of 2024, net cash provided by financing activities of $64,949 resulted primarily from the proceeds of notes payable of $126,700 and offset by the repayment of notes payable $35,000 and repayment of related party advances of $26,751. The notes payable was borrowed from related parties with 5% annual interest rate. See Note 3 Related Party Transactions.
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Off-Balance Sheet Arrangements
As of and subsequent to October 31, 2025, we have no off-balance sheet arrangements.
Contractual Commitments
As of October 31, 2025, we don’t have material contractual commitments.
Critical Accounting Policies
There have been no other changes in our critical accounting policies since our most recent audit dated July 31, 2025.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Interim Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of October 31, 2025, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms due to significant deficiency in our internal controls described below.
Management’s Report on Internal Control over Financial Reporting
Management’s assessment identified following significant deficiency in our internal control over financial reporting:
For certain rebate arrangements with upstream and downstream business parties, the company relies on verbal agreements and case-by-case practices, with terms typically confirmed at the end of each month. While this approach provides flexibility and is partly mitigated by monthly confirmations, it still results in limited formalized documentation to ensure consistency and accuracy. This may lead to inconsistencies, errors, or disputes in recognizing and recording such arrangements.
Changes in Internal Control
During the three months ended October 31, 2025, there has been no change in internal control within the Company.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We were not subject to any other legal proceedings during the three months ended October 31, 2025, and are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our results of operation or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by 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 to our Company.
Item 5. Other Information
Not applicable to our Company.
Item 6. Exhibits.
The following exhibits are filed with or incorporated by referenced in this report:
Exhibit Index
| Exhibit No. | Description | |
| 3.1 | Certificate of Amendment to Articles of Incorporation filed with the Nevada Secretary of State on May 11, 2024 | |
| 31.1* | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Sheng-Yih Chang. | |
| 31.2* | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Lili Dai | |
| 32.1* | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Sheng-Yih Chang and Lili Dai | |
| 101 | Interactive Data Files | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HARTFORD CREATIVE GROUP, INC. | ||
| Date: December 15, 2025 | By: | /s/ Sheng-Yih Chang |
| Sheng-Yih Chang | ||
| Chief Executive Officer | ||
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