Hartford Creative (HFUS) Q2 2026 revenue falls amid going concern warning
Hartford Creative Group, Inc. reported sharply weaker results for the quarter and six months ended January 31, 2026 while remaining modestly profitable. Quarterly revenue fell to $194,092, down 49% year over year, as advertising placement activity slowed during contract renegotiations, partly offset by new mini-drama revenue of $71,600.
Net income for the quarter dropped to $6,957 from $144,015, and six‑month net income declined to $57,631 from $271,284. The company is shifting toward social media advertising and mini-drama content, but this business remains early stage. As of January 31, 2026, Hartford Creative had a working capital deficit of $43,536, an accumulated deficit of $4,754,102, and cash of $149,617, and its auditors and management highlighted substantial doubt about its ability to continue as a going concern.
Positive
- None.
Negative
- Substantial doubt about going concern: As of January 31, 2026, Hartford Creative had a working capital deficit of $43,536, an accumulated deficit of $4,754,102, and management explicitly disclosed substantial doubt about its ability to continue as a going concern.
- Sharp revenue and earnings declines: Six‑month revenue fell 38% to $524,359, while net income dropped 79% to $57,631 compared with the prior‑year period, reflecting weaker advertising activity and only modest contribution from new mini‑drama sales.
- Weak liquidity and reliance on related parties: The company ended the period with $149,617 in cash and continues to depend on related‑party loans and non‑interest‑bearing advances that are payable on demand to fund operations.
- Significant deficiency in internal controls: Management reported disclosure controls were not effective due to informal, largely verbal rebate arrangements with business partners, which increase the risk of misstatements until remediation is fully implemented and tested.
Insights
HFUS remains profitable but faces shrinking revenue, tight liquidity, and going concern pressure.
Hartford Creative generated six‑month revenue of $524,359, down 38% year over year, as advertising customers paused or delayed campaigns during contract renegotiations. Mini-drama licenses added only $71,600, so the new business line is not yet offsetting legacy weakness.
Six‑month net income fell to $57,631 from $271,284, indicating much thinner profitability. At the same time, the company ended the period with a working capital deficit of $43,536, cash of $149,617, and an accumulated deficit of $4,754,102, while depending heavily on related-party borrowings and advances.
Management and the financial statements explicitly flag substantial doubt about the company’s ability to continue as a going concern. Plans to uplist to Nasdaq and potentially raise capital are described, but no binding financing commitments are in place, so execution of the growth and mini-drama strategy depends on securing additional funding and restoring advertising volumes.
Material control weaknesses and informal rebate practices add operational and reporting risk.
Management concluded disclosure controls and procedures were not effective as of January 31, 2026. A significant deficiency was identified around rebate arrangements, where terms with business partners are often based on verbal agreements and monthly case‑by‑case confirmations instead of standardized written documentation.
This practice can create inconsistencies in recognizing and recording rebates, increasing the risk of errors or disputes. Management has begun a remediation plan to formalize agreements and implement standardized confirmations, but notes that these changes will take time to negotiate and must be monitored over future periods to verify effectiveness.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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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:
| Index | ||
| Page | ||
| Part I - FINANCIAL INFORMATION | ||
| Item 1. | Unaudited Consolidated Financial Statements | |
| Condensed Consolidated Balance Sheets as of January 31, 2026 (unaudited) and July 31, 2025 | 3 | |
| Condensed Consolidated Statements of Operations for the Three and Six months ended January 31, 2026 and 2025 (unaudited) | 4 | |
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six months ended January 31, 2026 and 2025 (unaudited) | 5 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) | 6 | |
| Condensed Consolidated Statements of Cash Flows for the Six months ended January 31, 2026 and 2025 (unaudited) | 7 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 8 | |
| Item 2. | Management’s Discussion and Analysis or Plan of Operation | 12 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4. | Controls and Procedures | 16 |
| Part II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 17 |
| Item 1A. | Risk Factors | 17 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 |
| Item 3. | Defaults Upon Senior Securities | 17 |
| Item 4. | Mine Safety Disclosures | 17 |
| Item 5. | Other Information | 17 |
| Item 6. | Exhibits | 17 |
| SIGNATURES | 18 | |
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HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| January 31, 2026 | 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 | ||||||||
| Preferred stock - $ | - | - | ||||||
| Common stock - $ | ||||||||
| 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.
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HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three Months ended January 31, | Six Months ended January 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue-advertising | $ | $ | $ | $ | ||||||||||||
| Revenue-minidrama | - | - | ||||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on disposal of subsidiary | ||||||||||||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Other (expense) income, 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.
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HARTFORD CREATIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Other Comprehensive 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)
| Shares | Amount | Capital | (Deficit) | Income (loss) | (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) | ( | ) | ||||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | ||||||||||||||||||||
| Balance, January 31, 2026 (unaudited) | ( | ) | ||||||||||||||||||||||
| Shares* | Amount* | Capital* | (Deficit) | Income (loss) | (Deficit) | |||||||||||||||||||
| 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) | ( | ) | ( | ) | ||||||||||||||||||||
| Balance | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | ||||||||||||||||||||
| Balance, January 31, 2025 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||
| Balance | ( | ) | ( | ) | ||||||||||||||||||||
| * |
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)
| 2026 | 2025 | |||||||
| Six Months ended | ||||||||
| January 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Disposal of subsidiaries | ( | ) | ||||||
| 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* | - | ( | ) | |||||
| Repayment of Loan receivable | ||||||||
| Disposal of subsidiary | ( | ) | ||||||
| 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 (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash | ||||||||
| Net change in Cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash 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 | - | |||||||
| * |
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”, “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,
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 $
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.
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 January 31, 2026 and July 31, 2025, the Company had $ - and $
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.
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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 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 January 31, 2026, The Company had a working capital deficit of
$
Management has evaluated the significance of these conditions, and has developed plans intended to mitigate the conditions that raise substantial doubt. Based on the Company’s current operating plan and revenue growth expectations, management projects that the Company will generate 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.
Management believes that the combination of anticipated operating income, improved operating cash flows, and access to external or related-party financing, if needed, will provide sufficient liquidity to support the Company’s operations for at least the next twelve months from the date of issuance of these consolidated financial statements. 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 HFZY, 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 $
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. The Company also makes prepayments to mini-drama
production companies for mini-drama projects. As of January 31, 2026 and July 31, 2025, the Company’s balance sheets reflect
$
NOTE 5. OTHER CURRENT LIABILITIES
Other current payables consist as follows:
SCHEDULE OF OTHER CURRENT PAYABLE
| January 31, 2026 | July 31, 2025 | |||||||
| Taxes payable | $ | $ | ||||||
| Accrued payroll | ||||||||
| Payable to former owners | ||||||||
| Other payables | - | |||||||
| Other Current Liabilities | $ | $ | ||||||
NOTE 6. CONCENTRATION RISK
For
the three and six months ended January 31, 2026, three customers accounted for
For
the three and six months ended January 31, 2026, three contractors accounted for
NOTE 7. COMMITMENTS AND CONTINGENCIES
There have been no material contractual obligations and commitments as of January 31, 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 no material subsequent events were noted.
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.
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Item 2. Management’s Discussion and Analysis or Plan of Operation Overview
This discussion updates our business plan for the three- and six- month period ending January 31, 2026. It also analyzes our financial condition on January 31, 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 January 31, 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 six months ended January 31, 2026, the Company recognized USD 0.1 million and USD 0.5 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 acts as an agent in these transactions and reports placement revenue on a net basis.
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. Foundational initiatives are currently in progress, including the development of a proprietary minidrama application (the “App”) and the negotiation and formalization of agreements with customers, as well as filming and production suppliers. The App is currently targeted for launch in the United States on Google Play and Apple App Store in April 2026, with potential expansion into the European and Southeast Asian markets by the end of July 2026. Such launch timelines remain subject to development progress and platform approval processes. To date, the initiative has generated limited revenue. 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.
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Results of Operations – Three months ended January 31, 2026 Compared to Three months ended January 31, 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 January 31, | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Net revenue-advertising | $ | 122,492 | $ | 378,037 | -68 | % | ||||||
| Revenue-minidrama | 71,600 | - | 100 | % | ||||||||
| Total Revenues | 194,092 | 378,037 | -49 | % | ||||||||
| Operating cost and expenses: | ||||||||||||
| Cost of revenue | 3,093 | - | 100 | % | ||||||||
| Selling, general and administrative | 169,522 | 201,187 | -16 | % | ||||||||
| Total operating cost and expenses | 172,615 | 201,187 | -14 | % | ||||||||
| Operating income | 21,477 | 176,850 | -88 | % | ||||||||
| Other (expenses) income | (2,916 | ) | 42,785 | -107 | % | |||||||
| Income before income taxes | 18,561 | 219,635 | -92 | % | ||||||||
| Income tax expense | 11,604 | 75,620 | -85 | % | ||||||||
| Net income | 6,957 | 144,015 | -95 | % | ||||||||
Revenue: Net revenue from advertising placement services totaled USD 0.12 million for the three months ended January 31, 2026, compared to USD 0.38 million in the same period of 2025. This decrease was primarily driven by the Company’s strategic initiative to renegotiate contract terms with the majority of its customer base to achieve higher margins; as a result, certain advertising activities were temporarily paused or postponed. Management anticipates these negotiations will conclude shortly, and advertising placement operations are expected to be fully restored within the next two months. Partially offsetting this decline, the Company generated USD 0.07 million in revenue from minidrama transactions during the three months ended January 31, 2026, compared to nil in the prior-year period.
Operating Cost and Expenses: For the three months ended January 31, 2026, the Company recorded cost of revenue of USD 3,093, compared to nil in the same period of 2025. This cost was primarily attributable to the acquisition of minidramas from an overseas filming supplier. Selling, general, and administrative (SG&A) expenses decreased to USD 0.17 million for the three months ended January 31, 2026, from USD 0.20 million in the prior-year period. This decrease was primarily driven by the absence of a one-time, USD 0.02 million promotional expense that occurred in 2025.
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 2025 period was largely driven by a $21,362 gain on the disposal of HZHF and SHDZ, along with $20,884 in local government grants.
Income tax expense: The income tax recognized for the three months ended January 31, 2026 and 2025, resulted from the income tax from the operating income in China.
Net Income (Loss): We recorded a net income of USD 6,957 or USD 0.00 per share for the three months ended January 31, 2026, compared to a net income of USD 0.14 million or USD 0.01 per share for the same period of 2025, due to the factors discussed above.
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Results of Operations – Six months ended January 31, 2026 Compared to Six months ended January 31, 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 Six Months ended January 31, | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Net revenue-advertising | $ | 452,759 | $ | 845,499 | -46 | % | ||||||
| Revenue-minidrama | 71,600 | - | 100 | % | ||||||||
| Total Revenues | 524,359 | 845,499 | -38 | % | ||||||||
| Operating cost and expenses: | ||||||||||||
| Cost of revenue | 3,093 | 109,822 | -97 | % | ||||||||
| Selling, general and administrative | 385,897 | 366,755 | 5 | % | ||||||||
| Total operating cost and expenses | 388,990 | 476,577 | -18 | % | ||||||||
| Operating income | 135,369 | 368,922 | -63 | % | ||||||||
| Other (expenses) income | (9,563 | ) | 40,943 | -123 | % | |||||||
| Income before income taxes | 125,806 | 409,865 | -69 | % | ||||||||
| Income tax expense | 68,175 | 138,581 | -51 | % | ||||||||
| Net income | 57,631 | 271,284 | -79 | % | ||||||||
Revenue: Total revenue for the six months ended January 31, 2026, was USD 0.52 million, a 38% decrease from USD 0.85 million for the same period in 2025. This decline was primarily attributable to a reduction in advertising placement revenue, which fell from USD 0.85 million in the prior-year period to USD 0.45 million in 2026. The decrease reflects the Company’s strategic effort to renegotiate contract terms with the majority of its customer base to achieve higher margins; as a result of these ongoing negotiations, certain advertising activities were temporarily paused or postponed. Management anticipates these negotiations will conclude shortly and expects advertising placement operations to be fully restored within the next two months. Partially offsetting this decline was the emergence of a new revenue stream from minidrama transactions, which contributed USD 0.07 million to total revenue during the six-month period ended January 31, 2026, compared to nil for the same period in 2025.
Operating Cost and Expenses: For the six months ended January 31, 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, whereas the prior-year cost was largely driven by one-time service associated with the advertising placement. Selling, general, and administrative expenses were USD 0.39 million for the six months ended January 31, 2026, compared to USD 0.37 million in the same period of 2025. This slight 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 immaterial and 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 current loan receivables net with interest expense on loans from related parties.
Income tax expense: The income tax recognized for the six months ended January 31, 2026 and 2025, resulted from the income tax from the operating income in China.
Net Income (Loss): We recorded a net income attributable to Hartford Creative Group, Inc. of USD 0.06 million or USD 0.00 per share for the six months ended January 31, 2026, compared to a net income of USD 0.27 million or USD 0.01 per share for the same period of 2025, due to the factors discussed above.
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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 January 31, 2026, the Company had a working capital deficit of $43,536 comprised of current assets of $3,193,284 and current liabilities of $3,236,820. This represents a decrease of $62,203 in the working capital deficit from the July 31, 2025 amount of $105,739. The Company had an accumulated deficit of $4,754,102 compared to $4,811,733 at the previous year end. To date, the Company have funded its operations through short-term borrowing from related parties and equity financing.
As of January 31, 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.
The Company may seek additional financing in the form of debt or equity to support its growth and working capital needs. 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 future issuance of equity securities would dilute the ownership of our existing stockholders.
Future Capital Expenditures
Management currently expects that the Company’s funding requirements for the next twelve months will be approximately of $2.0 million. The Company may obtain additional funding through related-party loans, operating cash flows, or external financing sources.
The Company is currently pursuing an uplisting 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 debt or equity financing, and the proceeds may be used to support working capital needs, growth initiatives, and expenses associated with the uplisting process.
Cash Flows – Six months ended January 31, 2026 Compared to Six months ended January 31, 2025
Operating Activities
Cash used in operating activities was $173,992 for the six months ended January 31, 2026 as compared to $232,456 cash provided by the operations for the same period in 2025. During the six months ended January 31, 2026, we recorded net income of $57,631, a $3,608,604 decrease of advance to contractors, a $54,208 decrease of accounts receivable, and offset by a $3,556,839 decrease of contract liabilities, a $287,078 decrease of other current payable (mainly tax payable) and a $41,617 decrease in accounts payable.
During the six months ended January 31, 2025, we recorded net income of $271,284, adjusted for a gain on disposal of subsidiaries of $21,362, a $1,561,253 decrease of advance to contract, a $449,264 decrease of accounts receivable, a $15,995 increase of related party payables and a $13,445 decrease of prepaid and other current receivable, offset by a $1,214,039 decrease of accounts payable, a $770,664 decrease of contract liabilities, a $72,542 decrease of other current payable.
Investing activities
No investing activities occurred during the six months ended January 31, 2026. Cash used in investing activities during the comparable period in 2025 was $529,298, 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 was $264,136 for the six months ended January 31, 2026, compared to net cash used in financing activities of $28,746 in the same period of 2025. In 2026, cash provided by financing activities was primarily attributable to $214,000 in proceeds from related-party notes payable (bearing a 5% annual interest rate) and $154,420 in non-interest-bearing advances received from related parties. These inflows were partially offset by $54,284 in payments for offering expenses and $50,000 in repayments of related-party notes payable. (Refer to Note 3, ‘Related Party Transactions,’ for further details).
In the prior-year period, net cash used in financing activities of $28,746 was primarily driven by $201,200 in proceeds from related-party notes payable (bearing a 5% annual interest rate), which were offset by $60,000 in repayments of related-party notes payable, $121,404 in repayments of non-interest-bearing payables, and $48,542 in payments for offering costs
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Off-Balance Sheet Arrangements
As of and subsequent to January 31, 2026, we have no off-balance sheet arrangements.
Contractual Commitments
As of January 31, 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 January 31, 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 six months ended January 31, 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.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We were not subject to any other legal proceedings during the six months ended January 31, 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) |
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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: March 13, 2026 | By: | /s/ Sheng-Yih Chang |
| Sheng-Yih Chang | ||
| Chief Executive Officer | ||
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