Quarterly Report for Quarter Ending January 31, 2026 (Form 10-Q)

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.

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.

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.

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

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.