Quarterly Report for Quarter Ending October 31, 2025 (Form 10-Q)

Management's Discussion and Analysis or Plan of Operation Overview

This discussion updates our business plan for the three-month period ending October 31, 2025. It also analyzes our financial condition on October 31, 2025 and compares it to our financial condition at July 31, 2025. This discussion and analysis should be read in conjunction with our audited financial statements for the year ended July 31, 2025, including footnotes, contained in our Annual Report on Form 10-K, and with the unaudited financial statements for the interim period ended October 31, 2025, including footnotes, which are included in this quarterly report.

Overview of the Business

Hartford Creative Group, Inc. (formly Hartford Great Health Corp.) was incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. The Company changed its name to Hartford Great Health Corp. on August 22, 2018 and subsequently changed its name to Hartford Creative Group, Inc. on May 11, 2024.

Ability to continue as a "going concern".

The reports of our independent registered public accounting firm on our consolidated financial statements as of and for the year ended July 31, 2025 include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Management's plans to address the conditions giving rise to that uncertainty are described in our consolidated financial statements and the related notes.

Plan of Operation

After years of experience in education and hospitality, the Company shifted its focus in January 2024 to social media advertising and related marketing services in China. On January 10, 2024, Shanghai Hartford Health Management, Ltd. changed its legal name to Hartford ZY Culture Media (Shanghai) Co., Ltd. ("HFZY"). On June 18, 2024, the Company completed the acquisition of ShaoXing HuoMao Network Technology Ltd. ("SXHM"). HFZY and SXHM provide media and advertising services on mainstream social media platforms, including TikTok, Toutiao, Kwai, RED, WeChat, and Baidu. On May 12, 2025, HFZY established Nanjing HaoYiPeng Information Technology Ltd. ("NJHY") to further expand the Company's social media advertising business. The Company intends to provide vertical integration services, including advertising creative development, video production, editing, and advertising operations and campaign management. The Company also plans to develop overseas TikTok advertising campaigns for domestic Chinese customers seeking to reach international markets.

During the three months ended October 31, 2025, the Company recognized USD 0.3 million net revenue from the advertisement placement services. The Company provides service to place advertisements. The advertisements are published on the targeted media platforms as determined by the customers. Revenue is recognized at a point in time when the placement of advertisements is completed. As disclosed in Note 1 under category "Revenue Recognition", the Company is not the principal in executing these transactions. The Company reports the amount received from the customers and the amounts paid to the media platforms or upstream agent related to these transactions on a net basis.

Based on market research and discussions between the Board and various third-party suppliers and industry experts, the Company has further developed its strategic plan for the mini-drama business. Management believes the Company is well positioned to capture growing market interest and expand its revenue streams through this initiative. To date, only preliminary activities have been undertaken, and there can be no assurance that the business plan will ultimately be successful. In July 2025, the Company completed its first mini-drama transaction, generating $36,000 in revenue. In October 2025, the Company received customer deposits of $71,600 related to a mini-drama service agreement, which remain pending delivery to the customer and recorded as contract liabilities as of October 31, 2025.

Results of Operations - Three months ended October 31, 2025 Compared to Three months ended October 31, 2024.

The following table presents certain consolidated statement-of-operations information and presentation of that data as a percentage of change from year to year.

		For the Three Months ended October 31,
		2025				2024				Variance
Revenues		$	330,267			$	467,462				-29	%
Operating cost and expenses:
Cost of revenue			-				109,822				-100	%
Selling, general and administrative			216,375				165,568				31	%
Total operating cost and expenses			216,375				275,390				-21	%
Operating income			113,892				192,072				-41	%
Other expenses			(6,647	)			(1,842	)			261	%
Income before income taxes			107,245				190,230				-44	%
Income tax expense			56,571				62,961				-10	%
Net income			50,674				127,269				-60	%

Revenue: Net revenue recognized from advertising placement services was USD 0.33 million in 2025 and USD 0.47 million in 2024. The decrease in net placement revenue for the period was primarily due to the Company's ongoing negotiation efforts with the majority of its customers to revise contract terms in order to achieve higher margins. As a result of these negotiations, certain advertising activities were temporarily paused and postponed.

Operating Cost and Expenses: For the three months ended October 31, 2025, the Company recorded no cost of revenue, compared to $0.11 million in the same period of 2024. The prior-year cost of revenue was primarily attributable to design fees and channel service expenses incurred in connection with project execution. Selling, general and administrative expenses increased to $0.22 million for the three months ended October 31, 2025, from $0.17 million in the same period of 2024. The increase was primarily driven by higher audit expenses and directors' and officers' (D&O) insurance premiums.

Other Expense: Other expense remained immaterial in both periods and primarily consisted of net interest expense on loans from related parties.

Income tax expense: The income tax recognized for the three months ended October 31, 2025 and 2024, resulted from the income tax from the operating income in China.

Net Income (Loss): We recorded a net income of $0.05 million or $0.00 per share for the three months ended October 31, 2025, compared to a net income of $0.13 million or $0.01 per share for the same period of 2024, due to the factors discussed above.

Liquidity and Capital Resources

As of October 31, 2025, we had a working capital deficit of $53,735 comprised of current assets of $2,971,566 and current liabilities of $3,025,301. This represents a decrease of $52,004 in the working capital deficit from the July 31, 2025 amount of $105,739. We had an accumulated deficit of $4,761,059 compared to $4,811,733 at the previous year end. To date, we have funded our operations through short-term borrowing from related parties and equity financing.

As of October 31, 2025, the Company has issued a total of 25,027,004 shares (reflecting the 1 for 4 Reverse Stock Split) of common stock. On December 11, 2018, 24,022,500 shares of common stock were issued at the price of $0.08 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 250,000 shares of common stock to a significant shareholder of the Company at $0.08 per share.

We will seek additional financing in the form of debt or equity. There is no assurance that we will be able to obtain any needed financing on favorable terms, or at all, or that we will find qualified purchasers for the sale of our stock. If we are unable to raise sufficient capital, we will be required to delay or forego some of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. Any sales of our securities would dilute the ownership of our existing investors.

Future Capital Expenditures

We believe that our funding requirements for the next twelve months will be in excess of $2,000,000. We are currently seeking further funding through related parties' loan and finance.

We are in the process of uplisting the Company's stock from the OTC market to the Nasdaq exchange. Assuming all conditions are met in our favor, we plan to raise capital through either debt or equity financing. The proceeds from this financing will be used to cover the costs related to the uplisting procedure.

Cash Flows - Three months ended October 31, 2025 Compared to Three months ended October 31, 2024

Operating Activities

Cash used in operating activities was $195,800 for the three months ended October 31, 2025 as compared to $348,049 cash provided by the operations for the same period in 2024. During the three months ended October 31, 2025, we recorded net income of $50,674, a $3,725,493 decrease of advance to contractors, a $86,308 increase in accounts payable, and offset a $3,793,584 decrease of contract liabilities, a $196,929 decrease of other current payable (mainly tax payable), and a $69,251 increase of accounts receivable.

During the three months ended October 31, 2024, we recorded net income of $127,269, a $1,631,243 decrease of advance to contract, a $583,009 decrease of accounts receivable and $582 decrease of prepaid and other current receivable, offset by a $1,179,176 decrease of accounts payable and a $831,501 decrease of contract liabilities.

Investing activities

No investing activities occurred during the three months ended October 31, 2025. Cash used in investing activities was $675,826 during the three months ended October 31, 2024, primarily due to the short term related party loan receivables bearing interest at 3% interest rate, matured in July and August, 2025.

Financing activities

Net cash provided by financing activities increased to $202,112 for the three months ended October 31, 2025, from $64,949 in the comparable period of 2024. Cash provided by financing activities in the 2025 period was primarily attributable to $219,396 in non-interest-bearing advances received from related parties, and offset by $12,284 payment of offering expenses and $5,000 repayment of notes payable.

In the same period of 2024, net cash provided by financing activities of $64,949 resulted primarily from the proceeds of notes payable of $126,700 and offset by the repayment of notes payable $35,000 and repayment of related party advances of $26,751. The notes payable was borrowed from related parties with 5% annual interest rate. See Note 3 Related Party Transactions.

Off-Balance Sheet Arrangements

As of and subsequent to October 31, 2025, we have no off-balance sheet arrangements.

Contractual Commitments

As of October 31, 2025, we don't have material contractual commitments.

Critical Accounting Policies

There have been no other changes in our critical accounting policies since our most recent audit dated July 31, 2025.