UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: April 30, 2026
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ________ to ________
Commission File Number: 001-42843
HARTFORD CREATIVE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or other jurisdiction of incorporation or organization)
51-0675116
(I.R.S. Employer Identification Number)
8832 Glendon Way, Rosemead, California 91770
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number including area code: (626)321-1915
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. Yes ☒ No ☐
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). Yes ☒ No ☐
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 ☐ |
| Non-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 | ||
| Common stock, par value $0.001 par value | HFUS | 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 June 12, 2026.
Index
| 2 |
HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| April 30, 2026 | July 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 160,421 | $ | 57,065 | ||||
| Accounts receivable | 281,189 | 53,867 | ||||||
| Advance to contractors | 3,095,768 | 6,288,411 | ||||||
| Licensed mini-drama content assets, net | 8,055 | |||||||
| Prepaid and other current receivables | 3,586 | 502 | ||||||
| Deferred offering costs | 214,594 | 108,550 | ||||||
| Total Current Assets | 3,763,613 | 6,508,395 | ||||||
| Non-current Assets | ||||||||
| Property and equipment, net | 871 | 910 | ||||||
| APP development in progress | 11,053 | |||||||
| ROU assets-operating lease | 3,527 | |||||||
| Deferred tax assets | 400,490 | 400,490 | ||||||
| Total Non-current Assets | 412,414 | 404,927 | ||||||
| TOTAL ASSETS | $ | 4,176,027 | $ | 6,913,322 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | 44,169 | |||||
| Related party loan and payables | 1,725,571 | 1,107,187 | ||||||
| Contract liabilities | 851,875 | 4,852,812 | ||||||
| Current operating Lease liabilities | 5,441 | |||||||
| Other current payable | 663,888 | 604,525 | ||||||
| Total Current Liabilities | 3,241,334 | 6,614,134 | ||||||
| TOTAL LIABILITIES | 3,241,334 | 6,614,134 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock - $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock - $ par value, shares authorized, shares issued and outstanding at both of April 30, 2026 and July 31, 2025 | 25,027 | 25,027 | ||||||
| Additional paid-in capital | 4,765,455 | 4,765,455 | ||||||
| Accumulated deficit | (4,196,998 | ) | (4,811,733 | ) | ||||
| Accumulated other comprehensive income | 341,209 | 320,439 | ||||||
| Total Stockholders’ Equity | 934,693 | 299,188 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 4,176,027 | $ | 6,913,322 | ||||
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 April 30, | Nine Months ended April 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue-advertising | $ | 1,051,217 | $ | 354,791 | $ | 1,503,976 | $ | 1,200,290 | ||||||||
| Revenue-minidrama | 71,600 | |||||||||||||||
| Total revenue | 1,051,217 | 354,791 | 1,575,576 | 1,200,290 | ||||||||||||
| Operating cost and expenses: | ||||||||||||||||
| Cost of revenue | 712 | 3,805 | 109,822 | |||||||||||||
| Selling, general and administrative expenses | 213,566 | 169,887 | 599,463 | 536,642 | ||||||||||||
| Total operating cost and expenses | 214,278 | 169,887 | 603,268 | 646,464 | ||||||||||||
| Operating income | 836,939 | 184,904 | 972,308 | 553,826 | ||||||||||||
| Other Expense | ||||||||||||||||
| Interest income (expense), net | (4,283 | ) | 1,801 | (9,321 | ) | 179 | ||||||||||
| Gain on disposal of subsidiary | 21,362 | |||||||||||||||
| Other (expense) income, net | 705 | 32 | (3,820 | ) | 21,235 | |||||||||||
| Other (expense) income, net | (3,578 | ) | 1,833 | (13,141 | ) | 42,776 | ||||||||||
| Income before income taxes | 833,361 | 186,737 | 959,167 | 596,602 | ||||||||||||
| Income Tax Expense | 276,257 | 95,780 | 344,432 | 234,361 | ||||||||||||
| Net income | 557,104 | 90,957 | 614,735 | 362,241 | ||||||||||||
| 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 | Nine months ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income | $ | 557,104 | $ | 90,957 | $ | 614,735 | $ | 362,241 | ||||||||
| Other Comprehensive income, net of income tax | ||||||||||||||||
| Foreign currency translation adjustments | 19,752 | 41,083 | 20,770 | 76,315 | ||||||||||||
| Total Other Comprehensive income | 19,752 | 41,083 | 20,770 | 76,315 | ||||||||||||
| Total Comprehensive income | $ | 576,856 | $ | 132,040 | $ | 635,505 | $ | 438,556 | ||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 5 |
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 | 25,027,004 | 25,027 | 4,765,455 | (4,811,733 | ) | 320,439 | 299,188 | |||||||||||||||||
| Net income | - | 50,674 | 50,674 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | (439 | ) | (439 | ) | |||||||||||||||||||
| Balance, October 31, 2025 (unaudited) | 25,027,004 | 25,027 | 4,765,455 | (4,761,059 | ) | 320,000 | 349,423 | |||||||||||||||||
| Net income | - | 6,957 | 6,957 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | 1,457 | 1,457 | |||||||||||||||||||||
| Balance, January 31, 2026 (unaudited) | 25,027,004 | 25,027 | 4,765,455 | (4,754,102 | ) | 321,457 | 357,837 | |||||||||||||||||
| Net income | - | 557,104 | 557,104 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | 19,752 | 19,752 | |||||||||||||||||||||
| Balance, April 30, 2026 (unaudited) | 25,027,004 | 25,027 | 4,765,455 | (4,196,998 | ) | 341,209 | 934,693 | |||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Stockholders’ | Total | |||||||||||||||||||||
| Common Stock* | Paid - in | Accumulated | Comprehensive | Equity | ||||||||||||||||||||
| Shares | Amount | Capital* | (Deficit) | Income (loss) | (Deficit) | |||||||||||||||||||
| Balance, July 31, 2024 | 25,027,004 | 25,027 | 2,248,602 | (5,910,843 | ) | 283,740 | (3,353,474 | ) | ||||||||||||||||
| Net income | - | 127,269 | 127,269 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | (43,641 | ) | (43,641 | ) | |||||||||||||||||||
| Balance, October 31, 2024 (unaudited) | 25,027,004 | 25,027 | 2,248,602 | (5,783,574 | ) | 240,099 | (3,269,846 | ) | ||||||||||||||||
| Net income | - | 144,015 | 144,015 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | 78,873 | 78,873 | |||||||||||||||||||||
| Balance, January 31, 2025 (unaudited) | 25,027,004 | 25,027 | 2,248,602 | (5,639,559 | ) | 318,972 | (3,046,958 | ) | ||||||||||||||||
| Net income | - | 90,957 | 90,957 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | 41,083 | 41,083 | |||||||||||||||||||||
| Balance, April 30, 2025 (unaudited) | 25,027,004 | 25,027 | 2,248,602 | (5,548,602 | ) | 360,055 | (2,914,918 | ) | ||||||||||||||||
| * | On March 31, 2025, the Company implemented a 1-for-4 reverse stock split (Note 1). All references to numbers of shares, common stock par value, additional paid-in capital and per-share data in the accompanying notes and condensed consolidated financial statements have been adjusted to reflect such reverse stock split on a retrospective basis. |
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)
| Nine Months ended | ||||||||
| April 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 614,735 | $ | 362,241 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 84 | |||||||
| Disposal of subsidiaries | (21,362 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (218,959 | ) | 214,932 | |||||
| Prepaid and Other current receivables | (2,975 | ) | 9,846 | |||||
| Licensed mini-drama content assets, net | (7,833 | ) | ||||||
| Advance to contractor | 3,417,020 | 1,504,496 | ||||||
| Related party receivables and payables | 9,333 | 16,302 | ||||||
| Contract liabilities | (4,131,742 | ) | (1,061,531 | ) | ||||
| Accounts payable | (45,146 | ) | (898,895 | ) | ||||
| Other current payable | 22,914 | (3,099 | ) | |||||
| Operating lease assets and liabilities | 3,605 | 1,746 | ||||||
| Net cash (used in) provided by operating activities | (338,964 | ) | 124,676 | |||||
| Cash flows from investing activities: | ||||||||
| Related party loan receivable* | (665,437 | ) | ||||||
| Repayment of Loan receivable | 138,633 | |||||||
| Payment of APP development cost | (10,749 | ) | ||||||
| Disposal of subsidiary | (243 | ) | ||||||
| Net cash used in investing activities | (10,749 | ) | (527,047 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds of related party notes payable | 325,000 | 201,200 | ||||||
| Repayment of related party notes payable | (50,000 | ) | (195,000 | ) | ||||
| Advances from related parties | 228,840 | 341,434 | ||||||
| Repayment of related party advances* | (108,411 | ) | ||||||
| Payment of offering expenses | (54,284 | ) | (99,968 | ) | ||||
| Net cash provided by financing activities | 449,556 | 139,255 | ||||||
| Effect of exchange rate changes on cash | 3,513 | 1,780 | ||||||
| Net change in Cash and cash equivalents | 103,356 | (261,336 | ) | |||||
| Cash and cash equivalents at beginning of period | 57,065 | 310,763 | ||||||
| Cash and cash equivalents at end of period | $ | 160,421 | $ | 49,427 | ||||
| Supplemental Cash Flow Information | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | 341,575 | $ | 328,190 | ||||
| Supplemental Disclosure For Noncash Investing And Financing Activities: | ||||||||
| Related party paid offering expenses on behalf of the Company | 50,000 | |||||||
| * | Balances reclassified due to related party relationship changes. See Note 3. |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 7 |
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”, “HFUS”), 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, the Company conducted hospitality and early childhood education businesses in China through its subsidiaries. Due to changes in industry regulations and operating conditions, the Company exited these legacy operations during fiscal years 2021 through 2023 through a series of subsidiary disposals.
Beginning in 2024, the Company shifted its business focus to media and marketing services in China. The Company currently provides social media advertising, creative content production, campaign management, and related marketing services through its subsidiaries, primarily on social media platforms including TikTok, Toutiao, Kwai, RED, WeChat, Baidu and more. In connection with this business transition, the Company’s wholly owned subsidiary, Shanghai Hartford Health Management, Ltd., changed its name to Shanghai Hartford ZY Culture Media Ltd. (“HFZY”) on January 1, 2024. To support the expansion of its media and marketing operations, the Company acquired ShaoXing HuoMao Network Technology Ltd. (“SXHM”) on June 18, 2024 and established Nanjing HaoYiPeng Information Technology Ltd. (“NJHY”) on May 12, 2025. Certain inactive subsidiaries were subsequently disposed of during fiscal 2025.
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 1-for-4. On March 31, 2025, the Company filed a certificate of amendment with the Secretary of State of the State of Nevada to effect the 1-for-4 Reverse Stock Split, which became effective as of March 31, 2025. As a result of the Reverse Split, every four shares of the Company’s pre-Reverse Split Common Stock has been combined into one share of the Company’s post-Reverse Split Common Stock, without any change in par value per share. Prior to the reverse stock rplit, the Company was authorized to issue (i) shares of Common Stock and (ii) shares of preferred stock, par value $ per share (the “Preferred Stock”). As a result of the Reverse Split, the Company is authorized to issue shares of Common Stock. The par value per share of the Common Stock will remain unchanged at $ per share. The total number of shares of Preferred Stock authorized for issuance will not be impacted by the Reverse Stock Split.
Basis of Presentation
The consolidated financial statements include the accounts of HFUS, 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.
| 8 |
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.
In April 2026, the Company launched a mini-drama application named “YYYS,” which was initially made available for testing on April 28, 2026 and formally launched through Google Play in the United States on May 6, 2026. The application was subsequently launched and made available on the Apple App Store in the United States on June 2, 2026. The Company aims to generate revenue from the YYYS application through membership subscription services and advertising-related services. Membership revenue will be derived from one-time lifetime membership fees that provide users with access to premium platform content. The related performance obligation is to provide continuous access to the application content over the estimated service period. Accordingly, membership revenue is recognized ratably over the estimated user benefit period. Advertising revenue will be generated from advertisements displayed to non-paying users, including reward-based video advertisements, and is recognized at the point in time when the advertisements are displayed or user engagement requirements are satisfied, based on usage data provided by the advertising platforms. There can be no assurance that these monetization strategies will generate sufficient user conversion or advertising revenue.
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 April 30, 2026 and July 31, 2025, the Company had $ 281,189 and $53,867, respectively, of accounts receivable. The Company generally does not require collateral and did not record an allowance for doubtful accounts as of those dates.
Capitalized APP Development Costs
The Company capitalizes qualifying costs incurred during the application development stage of internally developed software in accordance with ASC 350-40, Internal-Use Software. Capitalized costs primarily consist of payments to third-party developers and other direct costs incurred in developing the Company’s proprietary short drama mobile application. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred. The development costs are recorded as APP development in progress until the application is substantially complete and ready for its intended use, at which time the costs will be reclassified to capitalized software development costs and amortized on a straight-line basis over the estimated useful life of the application, which management currently estimates to be three years. As of April 30, 2026, the Company had capitalized software development costs in progress of $11,053 related to the development of its proprietary short drama mobile application. The application remained under testing. Accordingly, no amortization expense was recognized during the three and nine months ended April 30, 2026.
Licensed mini-drama content assets, net
The Company acquires licensed mini-drama content for distribution through its platforms. Licensed content costs are capitalized upon obtaining the contractual distribution rights and acceptance of the content and are recognized as cost of revenue over the contractual license period, which generally approximates the period of expected benefit. The Company evaluates licensed content assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As of April 30, 2026, the Company had licensed content assets, net of $8,055. During the three and nine months ended April 30, 2026, the Company acquired certain licensed mini-drama content with a contractual license term of twelve months for $8,787, and recognized amortization expense of $712, which was included in cost of revenue for the three and nine months ended April 30, 2026.
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 fiscal year ended July 31, 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 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the ordinary course of business. As of April 30, 2026, the Company had a working capital of $522,279 and an accumulated deficit of $4,196,998. Although the Company’s working capital position and operating results have improved, the Company is in the early stage of transitioning to its new business model, and there can be no assurance regarding the successful execution or profitability of these new operations. The Company’s accumulated deficit, limited operating history under its new business model, and dependence on future operating performance and financing activities raise substantial doubt about its ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued.
Management has developed plans intended to mitigate the conditions that raise substantial doubt. Based on the Company’s current operating plan, management expects continued revenue growth and projects the generation of operating income during the next twelve months, which is expected to improve operating cash flows and support ongoing operations.
In addition, management plans to fund any short-term working capital needs through a combination of operating cash flows, potential equity or debt financing, and continued financial support from related parties if necessary. Historically, related parties have provided financial support to the Company in the form of advances to fund operations. As of the date of this filing, no formal written loan agreements, standby financing arrangements, guarantees, or other binding commitments from related parties have been executed.
While management believes its plans are reasonable and that the company may be able to generate sufficient cash flows to support operations, such plans are dependent upon future events and circumstances, including achieving projected operating results and obtaining additional financing, if necessary, neither of which can be assured. Accordingly, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.
The accompanying consolidated 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 HFZY, ceased on August 15, 2024. However, on November 26, 2024, Ms. Erin SongWang acquired a 39% ownership interest in the Company. As Ms. SongWang holds a 90% beneficial ownership in SH Qiaohong, and SH Oversea is a 95%-owned subsidiary of SH Qiaohong, both entities again became related parties of the Company. As of April 30, 2026 and July 31, 2025, amounts payable to SH Qiaohong were $183,907 and , respectively. These balances primarily represented funding support for operations, were non-interest bearing, and were payable on demand.
During the year ended July 31, 2025, SH Oversea forgave $2,516,853 of outstanding balances. This forgiveness was accounted for as a capital contribution and recorded as an increase to additional paid-in capital within shareholders’ deficit.
Related Party loans
HFUS borrowed in the form of a short-term loan at 5% per annum from a related party, Hartford Hotel Investment Inc., an entity managed by the same management team. $4,291 and $9,332 of interest expenses were recorded during the three and nine months ended April 30, 2026, respectively. $3,144 and $11,375 of interest expenses were recorded during the three and nine months ended April 30, 2025, respectively. As of April 30, 2026 and July 31, 2025, the unpaid principal and interest amount of $509,730 and $225,398, respectively, will be due on demand.
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. Interest expense of $ and $ was recorded for the three and nine months ended April 30, 2025, respectively. interest expense was recorded for the three and nine months ended April 30, 2026. 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 April 30, 2026 and July 31, 2025, respectively. These advances are non-interest-bearing and due on demand.
Other Related Party Transactions
The Company has leased approximately 543 square feet (50.4 square meters) of office space in Shanghai from SH Dubian, a company managed by a relative of a major shareholder. The lease term commenced from February 18, 2024 and expired on February 17, 2026, at a fixed monthly rent of USD 638 (RMB 4,600). Upon expiration of the lease term, the Company entered into a new lease agreement with an unrelated third-party landlord in February 2026.
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. The original lease term was from January 1, 2025 through December 31, 2025. Beginning January 1, 2026, the lease has continued on a month-to-month basis at a fixed monthly rent of $1,000.
| 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 April 30, 2026 and July 31, 2025, the Company’s balance sheets reflect $3,095,768 and $6,288,411, respectively, in prepayments to contractors, categorized as “Advance to contractor” and $851,875 and $4,852,812, respectively, in customer advance payments, recorded under “Contract Liabilities”.
NOTE 5. OTHER CURRENT LIABILITIES
Other current payable consist as follows:
| April 30, 2026 | July 31, 2025 | |||||||
| Taxes payable | $ | 357,285 | $ | 297,604 | ||||
| Accrued payroll | 40,934 | 26,544 | ||||||
| Payable to former owners | 257,871 | 280,377 | ||||||
| Other payables | 7,798 | |||||||
| Other Current Liabilities | $ | 663,888 | $ | 604,525 | ||||
NOTE 6. CONCENTRATION RISK
For the three and nine months ended April 30, 2026, two customers accounted for 26% and 32% of the Company’s total gross billing, respectively. For the three and nine months ended April 30, 2025, two customers accounted for 85% and three customers accounted for 84% of the Company’s total gross billing, respectively. As of April 30, 2026 and July 31, 2025, the Company had $281,189 and $53,867 in outstanding receivables due from one and two customers, respectively. As of April 30, 2026 and July 31, 2025, prepayments received from four and two customers, recorded as contract liabilities, accounted for 87% and 69%, respectively, of total contract liabilities.
For the three and nine months ended April 30, 2026, three contractors accounted for 36% and 37%, respectively, of the Company’s total services acquisition. For the three and nine months ended April 30, 2025, three contractors accounted for 71% and two contractors accounted for 52% of the Company’s total services acquisition. As of April 30, 2026, the Company has of outstanding payable to contractors. As of July 31, 2025, the Company had $44,169 outstanding payables to one contractor. As of April 30, 2026 and July 31, 2025, advances to four and three contractors accounted for 89% and 64%, respectively, of the Company’s total advance payments.
NOTE 7. COMMITMENTS AND CONTINGENCIES
There have been no material contractual obligations and commitments as of April 30, 2026.
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 noted no material subsequent events requiring disclosure or adjustment.
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.
| 11 |
Item 2. Management’s Discussion and Analysis or Plan of Operation Overview
This discussion updates our business plan for the three- and nine- month period ending April 30, 2026. It also analyzes our financial condition on April 30, 2026 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 period ended April 30, 2026, including footnotes, which are included in this quarterly report.
Overview of the Business
Hartford Creative Group, Inc. (formerly 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.
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 and nine months ended April 30, 2026, the Company recognized USD 1.1 million and USD 1.5 million net revenue, respectively 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 upside agent related to these transactions on a net basis.
In response to the continued growth of its advertising business, the Company commenced a strategic optimization of its advertising client portfolio in the latter part of calendar year 2025. As part of this initiative, the Company focused on consolidating high-quality key accounts and enhancing its engagement with major advertisers. In April 2026, the Company entered into annual non-binding framework agreements with several large customers, with an aggregate contract gross value of approximately RMB 500 million. These initiatives are expected to strengthen the Company’s advertising business pipeline and improve customer quality. The Company anticipates that its advertising gross billings and net revenues will increase in the remaining quarter of fiscal year 2026 and next fiscal years. However, the realization and timing of revenue from these agreements remain subject to execution, customer spending patterns, and other market conditions.
Based on market research and discussions between the board and third-party suppliers and experts, the Company has further developed a plan of mini-drama business. The Company is strategically positioned to capture considerable market interest and enhance revenue streams from our innovative mini-drama business.
In April 2026, the Company introduced “YYYS,” a new mini-drama application. Initial testing began on April 28, 2026, followed by an official launch on Google Play in the United States on May 6, 2026. The application was subsequently launched and made available on the Apple App Store in the United States on June 2, 2026. Upon launch, the platform offers over 160 short dramas with an aggregate runtime of more than 10,000 minutes. The Company intends to expand its content library to approximately 1,200 short dramas by the end of calendar year 2026 and approximately 5,000 short dramas by the end of calendar year 2027. However, these targets are forward-looking in nature and may not be achieved on the anticipated timeline, or at all.
| 12 |
YYYS is positioned as a short-form drama platform targeting primarily female users aged 25–45 in the United States. The platform currently focuses on romance and emotionally driven content, with additional genres such as suspense and science fiction under evaluation. The Company’s user acquisition strategy includes a combination of organic traffic generation through social media platforms (including YouTube, Facebook, and TikTok) and paid user acquisition campaigns through third-party advertising platforms. The Company’s monetization model consists of a one-time lifetime membership fee of approximately USD 35, which provides users access to platform content, as well as an advertising-supported model for non-paying users, including reward-based video advertisements. There can be no assurance that these monetization strategies will generate sufficient user conversion or advertising revenue.
|
|
|
The Company leverages production resources in Los Angeles, a hub for short-form drama content production, and utilizes a combination of internally produced content and third-party licensed content to support initial platform offerings. The Company also intends to evaluate the use of artificial intelligence-enabled tools to assist in content production and post-production processes. Such technologies remain in early stages of development, and there can be no assurance that they will result in anticipated cost efficiencies or production scalability.
The Company plans to pursue a phased international expansion strategy following initial launch in the United States, including potential expansion into Southeast Asia, Europe, and the Middle East, subject to regulatory, operational, and commercial considerations.
The Company completed its first transaction in July 2025, generating approximately $36,000, followed by a second transaction in December 2025 that contributed approximately $71,600 in revenue. These transactions represent early-stage commercial activities and should not be considered indicative of results in future periods.
| 13 |
Results of Operations – Three months ended April 30, 2026 Compared to Three months ended April 30, 2025
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 April 30, | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Net revenue-advertising | $ | 1,051,217 | $ | 354,791 | 196 | % | ||||||
| Total Revenues | 1,051,217 | 354,791 | 196 | % | ||||||||
| Operating cost and expenses: | ||||||||||||
| Cost of revenue | 712 | - | 100 | % | ||||||||
| Selling, general and administrative | 213,566 | 169,887 | 26 | % | ||||||||
| Total operating cost and expenses | 214,278 | 169,887 | 26 | % | ||||||||
| Operating income | 836,939 | 184,904 | 353 | % | ||||||||
| Other (expenses) income | (3,578 | ) | 1,833 | -295 | % | |||||||
| Income before income taxes | 833,361 | 186,737 | 346 | % | ||||||||
| Income tax expense | 276,257 | 95,780 | 188 | % | ||||||||
| Net income | 557,104 | 90,957 | 512 | % | ||||||||
Revenue: Net revenue from advertising placement services totaled USD 1.05 million for the three months ended April 30, 2026, compared to USD 0.35 million in the same period of 2025. The increase was primarily attributable to the Company’s efforts to optimize its customer portfolio and renegotiate commercial terms with key customers to improve service margins. Beginning in the latter part of calendar year of 2025, the Company initiated negotiations with a majority of its customers to revise contract terms and improve margins. As a result, certain advertising placement activities were temporarily reduced or postponed during the prior two quarters. During the current quarter, substantially all major contract negotiations were completed, and the Company’s advertising placement operations resumed normal business activities. During the period, the Company focused on expanding relationships with major higher-quality customers, which contributed to the growth in revenue. In April 2026, the Company entered into annual framework agreements with several major customers with an aggregate gross contract value of approximately RMB 500 million. Management believes these agreements will further strengthen the Company’s advertising service pipeline and customer base.
Operating Cost and Expenses: For the three months ended April 30, 2026, the Company recorded cost of revenue of USD 712, compared to nil in the same period of 2025. Cost of revenue primarily consisted of amortization expense related to licensed mini-drama content assets uploaded to the Company’s new mini-drama application, which was in the testing and launch stage during the period and was subsequently launched on Google Play and made available on the Apple App Store in the United States. Selling, general and administrative expenses increased to approximately $0.21 million for the three months ended April 30, 2026, compared to approximately $0.17 million for the corresponding period in 2025. The increase was primarily driven by higher audit fees and increased directors’ and officers’ (D&O) insurance premiums.
Other (Expense) Income: Other expenses for the 2026 period were immaterial and primarily consisted of net interest expense on loans from related parties. In contrast, other income for the three months ended April 30, 2025, primarily consisted of interest income from related party loan receivables net with interest expense on loans from related parties.
Income tax expense: The income tax recognized for the three months ended April 30, 2026 and 2025, resulted from the income tax from the operating income in China.
Net Income: We recorded a net income of USD 0.56 million or USD 0.02 per share for the three months ended April 30, 2026, compared to a net income of USD 0.09 million or USD 0.00 per share for the same period of 2025, due to the factors discussed above.
| 14 |
Results of Operations – Nine months ended April 30, 2026 Compared to Nine months ended April 30, 2025
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 Nine Months ended April 30, | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Net revenue-advertising | $ | 1,503,976 | $ | 1,200,290 | 25 | % | ||||||
| Revenue-minidrama | 71,600 | - | 100 | % | ||||||||
| Total Revenues | 1,575,576 | 1,200,290 | 31 | % | ||||||||
| Operating cost and expenses: | ||||||||||||
| Cost of revenue | 3,805 | 109,822 | -97 | % | ||||||||
| Selling, general and administrative | 599,463 | 536,642 | 12 | % | ||||||||
| Total operating cost and expenses | 603,268 | 646,464 | -7 | % | ||||||||
| Operating income | 972,308 | 553,826 | 76 | % | ||||||||
| Other (expenses) income | (13,141 | ) | 42,776 | -131 | % | |||||||
| Income before income taxes | 959,167 | 596,602 | 61 | % | ||||||||
| Income tax expense | 344,432 | 234,361 | 47 | % | ||||||||
| Net income | 614,735 | 362,241 | 70 | % | ||||||||
Revenue: Advertising revenue was approximately $1.50 million for the nine months ended April 30, 2026, compared to approximately $1.20 million for the same period in 2025, representing a 25% increase. Total revenue, including mini-drama revenue of approximately $0.07 million, was approximately $1.58 million for the nine months ended April 30, 2026, representing a 31% increase from the same period in 2025. The increase was primarily attributable to the Company’s efforts to optimize its customer portfolio and renegotiate commercial terms with key customers to improve service margins. Beginning in the latter part of calendar year 2025, the Company initiated negotiations with a majority of its customers to revise contract terms and improve margins. As a result, certain advertising placement activities were temporarily reduced during the prior two quarters. During the current quarter, substantially all major contract negotiations were completed, and the Company’s advertising placement operations resumed normal business activities, contributing to the increase in revenue. The Company also continued to focus on expanding relationships with higher-quality customers, which further supported revenue growth during the period. In April 2026, the Company entered into annual framework agreements with several major customers with an aggregate gross contract value of approximately RMB 500 million. Management believes these agreements will further strengthen the Company’s advertising service pipeline and customer base.
Cost of revenue：For the first nine months of 2025, short drama copyright fees amortized $3,800, compared with $109,800 for the same period in 2024. The prior-year amount mainly related to outsourcing consulting services, while no such expenses were recorded in the current period.
Operating Cost and Expenses: For the nine months ended April 30, 2026, the Company recorded cost of revenue of $3,093, compared to USD 0.11 million in the same period of 2025. The current period cost of revenue was primarily attributable to the acquisition of minidramas from an overseas supplier as well as the amortization expense of licensed mini-drama content assets uploaded to the Company’s new mini-drama application, which was in the testing and launch stage during the period and was subsequently launched on Google Play and made available on the Apple App Store in the United States, whereas the prior-year cost was largely driven by one-time service associated with the advertising placement. Selling, general, and administrative expenses were USD 0.60 million for the nine months ended April 30, 2026, compared to USD 0.54 million in the same period of 2025. This slightly increase was primarily driven by higher audit fees and increased directors’ and officers’ (D&O) insurance premiums, partially offset by the absence of a one-time USD 0.02 million promotional expense incurred during the prior-year period.
Other (Expense) Income: Other expenses for the 2026 period were primarily consisted of net interest expense on loans from related parties.
In contrast, other income for the 2025 period was largely driven by gains from subsidiary disposals, government grants, and interest income from related party loan receivables net with interest expense on loans from related parties.
Income tax expense: The income tax recognized for the nine months ended April 30, 2026 and 2025, resulted from the income tax from the operating income in China.
Net Income: We recorded a net income of USD 0.61 million or USD 0.02 per share for the nine months ended April 30, 2026, compared to a net income of USD 0.36 million or USD 0.01 per share for the same period of 2025, due to the factors discussed above.
| 15 |
Liquidity and Capital Resources
Based on current operating plans, management expects total cash requirements of approximately $2.0 million over the next twelve months, primarily related to content production costs, marketing expenditures, and general corporate expenses. The Company intends to fund these requirements through a combination of projected operating income and operating cash flows, supplemented, if necessary, by related-party financing and potential equity issuances. As of the filing date, no binding financing commitments have been executed, and there can be no assurance that additional capital will be available on acceptable terms.
As of April 30, 2026, we had a working capital of $522,279 comprised of current assets of $3,763,613 and current liabilities of $3,241,334 . This represented an improvement of approximately $628,018 compared to the working capital deficit of approximately $105,739 as of July 31, 2025. As of April 30, 2026, the Company had an accumulated deficit of approximately $4,196,998, compared to approximately $4,811,733 as of July 31, 2025. Historically, the Company has funded its operations primarily through cash generated from operations, short-term borrowings from related parties, and equity financing.
As of April 30, 2026, 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 Funding Requirements
Management currently expects that the Company’s funding requirements for the next twelve months will exceed $2.0 million. The Company is currently pursuing the uplisting of its common stock from the OTC market to the Nasdaq Capital Market. If the uplisting is successfully completed and market conditions permit, the Company may seek to raise additional capital through equity financings. Any proceeds from such financings are expected to be used to support the Company’s working capital requirements, application development costs, content licensing costs, marketing and user acquisition expenses associated with the launch and promotion of the Company’s mini-drama application, expenses associated with the uplisting process, and other general corporate purposes.
If the Company is unable to obtain adequate additional financing when needed, it may be required to significantly reduce, delay, or discontinue its planned operations, scale back marketing and development activities, dispose of assets, seek protection under applicable bankruptcy laws, or pursue other strategic alternatives. There can be no assurance that any such alternatives would be available on commercially reasonable terms or at all.
Cash Flows – Nine months ended April 30, 2026 Compared to Nine months ended April 30, 2025
Operating Activities
Net cash used in operating activities was $338,964 for the nine months ended April 30, 2026 as compared to $124,676 net cash provided by the operations for the same period in 2025. During the nine months ended April 30, 2026, net cash used in operating activities was primarily attributable to a decrease in contract liabilities of $4,131,742, an increase in accounts receivable of $218,959 , and a decrease in accounts payable of $45,146, partially offset by net income of $614,735, a decrease in advances to contractors of $3,417,020 , and an increase in other current payables of $22,914.
During the nine months ended April 30, 2025, net cash provided by operating activities was primarily attributable to net income of approximately $362,241, a decrease in advances to contractors of $1,504,496, a decrease in accounts receivable of $214,932, an increase in related party payables of $16,302, and partially offset by a decrease in contract liabilities of $1,061,531 and a decrease in accounts payable of $898,895.
Investing activities
Net cash used in investing activities for the nine months ended April 30, 2026 was $10,749, primarily attributable to payments for application development costs related to the Company’s mini-drama application.
Net cash used in investing activities for the nine months ended April 30, 2025 was $527,047, primarily attributable to the issuance of short-term loan receivables bearing interest at 3% per annum, which matured in July and August 2025.
Financing activities
Net cash provided by financing activities was $449,556 for the nine months ended April 30, 2026, compared to net cash provided by financing activities of $139,255 for the same period in 2025. For the nine months ended April 30, 2026, net cash provided by financing activities primarily consisted of $325,000 in proceeds from related-party notes payable bearing interest at 5% per annum and $228,840 in non-interest-bearing advances from related parties. These cash inflows were partially offset by $54,284 in payments of deferred offering costs and $50,000 in repayments of related-party notes payable.
(Refer to Note 3, “Related Party Transactions,” for further details.)
For the nine months ended April 30, 2025, net cash provided by financing activities primarily consisted of $341,434 in advances from related parties, including advances from a relative of a current major shareholder, and $201,200 in proceeds from related party notes payable. These cash inflows were partially offset by repayments of notes payable of $195,000, repayments of non-interest-bearing related-party payables of $108,411, and payments of deferred offering costs of $99,968.
| 16 |
Off-Balance Sheet Arrangements
As of and subsequent to April 30, 2026, we have no off-balance sheet arrangements.
Contractual Commitments
As of April 30, 2026, 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 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 April 30, 2026, 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.
Remediation Plan
Management has begun implementing remediation to address this significant deficiency. The remediation efforts include the following:
● Formalization of rebate agreements: The Company is contacting and negotiating with its business counterparties to implement standardized written confirmations, rather than relying on verbal agreements or informal practices.
These remediation efforts are being led by the general manager of the Company’s advertisement business. Management expects that the negotiation and implementation of standardized confirmation procedures will be substantially completed during the next fiscal year, although the effectiveness of the newly implemented controls will need to be evaluated over time through ongoing monitoring and review procedures.
Changes in Internal Control
During the nine months ended April 30, 2026, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The remediation activity described above were initiated and are currently in the process of being implemented.
| 17 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We were not subject to any other legal proceedings during the nine months ended April 30, 2026, 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 reference in this report:
Exhibit Index
| Exhibit No. | Description | |
| 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) |
| 18 |
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: June 12, 2026 | By: | /s/ Sheng-Yih Chang |
| Sheng-Yih Chang | ||
| Chief Executive Officer | ||
| 19 |