Hartford Great Health (HFUS) 10-Q2024 Q3 Quarterly report

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, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ________ to ________

Commission File Number: 000-54439

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

HARTFORD GREAT HEALTH CORP.

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.

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:  

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 100,108,000 shares of common stock outstanding as of June 07, 2024.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

HARTFORD CREATIVE GROUP, INC.
(FORMERLY KNOWN AS HARTFORD GREAT HEALTH CORP.)

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, 2023, including footnotes, contained in our Annual Report on Form 10-K.

Organization

Hartford Creative Group, Inc. (Former name Hartford Great Health Corp.) was originally incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. It changed its name to Hartford Great Health Corp. on August 22, 2018. On May 11, 2024, the Company further changed its name to Hartford Creative Group, Inc.

Through its wholly owned subsidiary - Hangzhou Hartford Comprehensive Health Management, Ltd (“HZHF) and HZHF’s 60 percent owned subsidiary - Hangzhou Longjing Qiao Fu Vacation Hotel Co., Ltd. (“HZLJ”), and through Shanghai Hartford Health Management, Ltd. (“HFSH”) and its 90 percent owned subsidiary - Shanghai Qiao Garden International Travel Agency (“Qiao Garden Int’l Travel”), the Company engages in hospitality industry in China. Qiao Garden Int’l Travel was disposed on December 31, 2020.

The Company started to engage in early childhood education industry at Hartford International Education Technology Co., Ltd (“HF Int’l Education”). On July 24, 2019 and March 23, 2020, HF Int’l Education established two 100% owned subsidiaries, Pudong Haojin Childhood Education Ltd. (“PDHJ”) and Shanghai Hongkou HaiDeFuDe Childcare Co., Ltd.(“HDFD”), respectively, to operate the early childhood education service under the brand name of “HaiDeFuDe” in Shanghai, China. On July 20, 2020, HF Int’l Education entered an agreement with two individuals to acquire the whole ownership of Shanghai Gelinke Childcare Education Center (“Gelinke”). Gelinke temporally ceased its operations by the end of August 2021. On August 31, 2021, PDHJ established one 96% owned subsidiary, Shanghai HDFD Zhongli Education Technology Co., Ltd. (“Zhongli”), two individual investors hold the remaining 4% ownership.

Impacted by the government regulation implemented in education industry and the restrictions posted by the Chinese government to control the pandemic in China since 2021, to avoid further operation losses, on August 1, 2022, HFSH entered a contract with a related party, Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), to sell 90 percent ownership of HF Int’l Education and its subsidiaries for $900 (RMB 5,850). On August 1, 2022, HFUS entered a contract with SH Oversea and another individual, to sell 100 percent ownership of HZHF and its subsidiaries for $1,000 (RMB 6,500). See Note 3 Acquisitions and Disposals.

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 10, 2024, HFSH changed its legal name from Shanghai Hartford Health Management, Ltd. to Shanghai Hartford ZY Culture Media Ltd. (“HFZY”). HFZY mainly engage in social media advertising business on mainstream social media platforms such as Tik Tok, Toutiao, Kwai, RED, WeChat, and more. As an advertising partner of China’s major social media platforms, the Company relies on a high-quality and professional media strategy execution team and network to help customers use the massive media resources of different types of social media platforms and receive competitive prices due to large-scale media resource procurement to purchase media resources. It aims to become one of the total solution advertising providers for domestic social media industry in China and provide customers with vertical integration services from early-stage advertising video creativity, shooting, editing, to advertising operation and management on social media apps. 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”).

Basis of Presentation

The consolidated financial statements include the accounts of Hartford Creative Group, Inc., its wholly-owned subsidiaries and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests of the consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in the consolidation.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the amounts of assets and liabilities, the identification and disclosure of impaired assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

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) we satisfy a performance obligation. Billings to customers for which services are not rendered are considered deferred revenue. The Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products or providing services to a customer. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms.

The Company is developing business plan and aim to provide customers with vertical integration services from early-stage advertising video creativity, shooting, editing, to advertising operation and management on social media apps. Most of the advertising revenue will be generated by placing ad products on Tik Tok, Toutiao, Kwai, RED, WeChat, and other third-party affiliated websites and mobile applications. The revenues from the display of impression-based ads will be recognized in the contracted period in which the impressions are delivered. The Company will also generate revenue from the delivery of certain services, such as the creation and delivery of ads that appear on third-party publishers’ websites and social platforms. The Company recognizes revenues from these services in the period in which the service is completed.

During the three months ended April 30, 2024, the Company has entered advertising service contracts with twenty customers and received approximately RMB 22.5 million (USD 3.1 million) as advanced payment from these customers. The Company also entered into two major supplier contracts for advertising placement and prepaid RMB 21.8 million (USD 3.0 million). During the three months ended April 30, 2024, the Company recognized $116,640 net revenue from the advertisement placement services. The Company provides traffic acquisition 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. 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. The Company reports the amount received from the customers and the amounts paid to the media platforms related to these transactions on a net basis.

During the nine months ended April 30, 2024, the Company also generated $62,443 revenue from designing, making, and placing video advertising for our related party customers, primarily Shanghai DuBian Assets Management Ltd.( “SH Dubian”), which is managed by our major shareholder’s relatives.

In the past years, the company’s main operations were focusing on early childhood education and hospitality services. Impacted by the Covid-19 pandemic and Chinese regulation on education industry, both early childhood education services and hospitality services have been sold on August 1, 2022. Thus, there was no revenue recognized for the three and nine months ended April 30, 2023. See Note 3 Acquisitions and Disposals.

Recent Accounting Pronouncements.

Recently not yet adopted accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The new guidance requires enhanced disclosures about income tax expenses. The Company is required to adopt this guidance in the first quarter of the fiscal year 2026. Early adoption is permitted on a prospective basis. We are currently evaluating the impact of this ASU on our annual income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The new guidance requires enhanced disclosures about significant segment expenses. The Company is required to adopt this guidance for its annual reporting in fiscal year 2025 and for interim period reporting beginning the first quarter of fiscal year 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our segment 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 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. However, the Company has incurred losses since inception, resulting in an accumulated deficit of $6,995,390 as of April 30, 2024. These conditions raise substantial doubt about the ability of Hartford Creative Group, Inc. to continue as a going concern.

In view of these matters, continuation as a going concern is dependent upon several factors, including the availability of debt or equity funding upon terms and conditions acceptable to the Company, and ultimately achieving profitable operations. Management believes that the Company’s business plan provides it with an opportunity to continue as a going concern. However, management cannot provide assurance that the Company will meet its objectives and be able to continue in operation.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

NOTE 3. ACQUISITIONS AND DISPOSALS

In January 2019, HFSH entered agreements to acquire 100 percent equity interest of Shanghai Luo Sheng International Trade Ltd. (“SH Luosheng”). On August 1, 2022, HFSH decided to withdraw from the agreement entered in January 2019 to acquire 100 percent equity interest of Shanghai Luo Sheng International Trade Ltd. (“SH Luosheng”). There was no penalty levied or to be levied due to delayed execution or inexecution.

Impacted by the government regulation newly implemented in education industry and the restrictions posted by the Chinese government to control the pandemic in China since 2021, the Company’s business hasn’t been developed as planned and occurred significant loss from the early child education practice. To avoid further operation losses, subsequently on August 1, 2022, HFSH entered a contract with a related party, Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), to sell 90 percent ownership of HF Int’l Education and its subsidiaries for $900 (RMB 5,850). On August 1, 2022, HFUS entered a contract with SH Oversea and another individual, to sell 100 percent ownership of HZHF and its subsidiaries for $1,000 (RMB 6,500).

SCHEDULE OF NET ASSETS (LIABILITIES) DISPOSED OF SUBSIDIARY

On April 1, 2024, as part of its strategy to broaden its advertising business, the Company regained full ownership of HZHF without incurring any costs. Following this reacquisition, it was rebranded to Hangzhou Hartford WP Culture Media Ltd. (“HZWP”). The transaction did not involve the transfer of any substantial opening balances.

NOTE 4. RELATED PARTY TRANSACTIONS

Related Party Receivables

HFUS had $964 related party receivable as of both April 30, 2024 and July 31, 2023, due from SH Oversea in relation to the disposal consideration.

Related Party Payables and loans

As of April 30, 2024 and July 31, 2023, amounts of $570,950 and $586,236, respectively, are payable to SH Qiaohong. The balances were mainly funding support from SH Qiaohong for operation. The funding support bears no interest and due on demand.

HFSH had payable balances to Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), an entity previously managed by the same management team, in the amounts of $3,198,724 and $3,291,324 as of April 30, 2024 and July 31, 2023, respectively. The payable is funding support from SH Oversea for operation, bears no interest and due on demand.

HFUS borrowed in 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. $4,667 and $14,998 of interest expenses were recorded during the three and nine months ended April 30, 2024, respectively. $4,776 and $12,954 of interest expenses were recorded during the three and nine months ended April 30, 2023, respectively. As of April 30, 2024 and July 31, 2023, the unpaid principal and interest amount of $398,500 and $417,501, respectively, will be due on demand.

HFUS borrowed in form of a short-term loan at an annual rate of 5% from its principal shareholder, Mr. Liangyue Song, a total of $135,000 across February and April 2024. On April 22, 2024, an amount of $29,022 from the principal was used to offset the profits Mr. Song allegedly earned in violation of Section 16(b) of the Securities Exchange Act. This action was based on the requirement that any profits from such a violation be returned to the Company. During the period ending April 30, 2024, interest expense amounting to $821 was recorded. As of April 30, 2024, the outstanding balance of principal and interest, totaling $106,799, is payable upon demand.

The Company also had related party payable of $71,153 and $72,133 as of April 30, 2024 and July 31, 2023, respectively, represents the unpaid portion of operating advances from its main shareholder, Mr. Song. These advances do not bear interest and are considered due on demand.

Other Related Party Transactions

During the three and nine months ended April 30, 2024, the Company generated $Nil and $62,443 revenue from designing, making, and placing video advertising for its related parties, respectively, primarily SH Dubian, which is managed by the Company’s major shareholder’s relatives. For the three and nine months ended April 30, 2024, the Company incurred $Nil and $55,505, respectively, in costs related to revenue generation, primarily stemming from services provided by another related party, HF Int’l Education, a subsidiary of SH Oversea.

The Company has entered into a lease agreement for office space located in Shanghai measuring approximately 543 square feet (50.4 square meters) with SH Dubian. The lease is effective from February 18, 2024 to February 17, 2026, at a fixed monthly rent of USD 638 (RMB 4,600). Pertaining to this lease, as of April 30, 2024, the Company’s financial records reflect Right-of-Use (ROU) assets valued at $12,530, current operating lease liabilities of $1,548, and noncurrent lease liabilities of $5,600.

As disclosed in Note 3, on April 1, 2024, the Company re-acquired the full ownership of HZHF from SH Oversea and one individual, without incurring any costs. The transaction did not involve the transfer of any substantial opening balances.

Office space at Rosemead, CA is provided to Hartford Creative Group, Inc. at no cost by the sole executive officer. No provision for these costs has been included in these financial statements as the amounts are not material.

Note 5. Advance to contractor 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, 2024, the Company’s balance sheets reflect $290,011 in prepayments to contractors, categorized as “Advance to contractor” and $261,577 in customer advance payments, recorded under “Contract Liabilities”. As of July 31, 2023, the Company had not engaged in the advertisement placement services, resulting in zero outstanding balances.

Note 6. Concentration risk

For the three and nine months ended April 30, 2024, four customers accounted for 81% and 79%, respectively, of the Company’s total gross billing. As of April 30, 2024, the Company had no outstanding receivables. Prepayments received from three customers, which are recorded as contract liabilities, comprised 98% of total contract liabilities as of April 30, 2024.

For the three and nine months ended April 30, 2024, one contractor accounted for 100% and 98%, respectively, of the Company’s total services acquisition. As of April 30, 2024, the Company had no outstanding payables to the contractors. Advances made to two contractors amounted to 100% of the Company’s total advanced payments as of April 30, 2024.

In the corresponding periods of the prior year, the Company did not participate in advertisement placement services, and no significant customer or vendor concentration risks were identified.

NOTE 7. COMMITMENTS AND CONTINGENCIES

There has been no material contractual obligations and commitments as of April 30, 2024.

NOTE 8. SEGMENT INFORMATION

Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility.

The Company used to operate in two reportable segments: hospitality (hotel and travel agency) and early childhood education industry in China in the past years. Due to the disposal of operating subsidiaries on August 1, 2022, we currently have one reportable segment for advertising services.

NOTE 9. 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 except the name change on May 11, 2024 as disclosed in Note 1.

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:

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions.

Item 2. Management’s Discussion and Analysis or Plan of Operation Overview

This discussion updates our business plan for the three and nine-month periods ending April 30, 2024. It also analyzes our financial condition on April 30, 2024 and compares it to our financial condition at July 31, 2023. This discussion and analysis should be read in conjunction with our audited financial statements for the year ended July 31, 2023, including footnotes, contained in our Annual Report on Form 10-K, and with the unaudited financial statements for the interim period ended April 30, 2024, including footnotes, which are included in this quarterly report.

Overview of the Business

Hartford Creative Group, Inc. (Formerly name Hartford Great Health Corp.) was originally incorporated in the State of Nevada on April 2, 2008 under the name PhotoAmigo, Inc. It changed its name to Hartford Great Health Corp. on August 22, 2018, and since then we have been engaged in activities to formulate and implement our business plan as set forth below. On May 11, 2024, the Company further changed its name to Hartford Creative Group, Inc.

Ability to continue as a “going concern”.

The independent registered public accounting firms’ reports on our financial statements as of July 31, 2023, includes a “going concern” explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding the factors prompting the explanatory paragraph are discussed in the financial statements, including footnotes thereto.

Plan of Operation

As of April 30, 2024, the company has issued a total of 100,108,000 shares of common stock. On December 11, 2018, 96,090,000 shares of common stock were issued at the price of $0.02 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 1,000,000 shares of common stock to a significant shareholder of the Company at $0.02 per share.

On December 28, 2018, the Company acquired Hangzhou Hartford Comprehensive Health Management, Ltd (“HZHF”). On March 22, 2019, the Company acquired 60 percent of Hangzhou Longjing Qiao Fu Vacation Hotel Co., Ltd. (“HZLJ”). On March 20, 2019, the Company acquired Shanghai Hartford Comprehensive Health Management, Ltd. (“HFSH”). Since 2019, HFSH had acquired and formed multiple subsidiaries and tried to develop the childhood education and childcare business. Impacted by Covid-19 pandemic and the government regulation implemented in education industry and the restrictions posted by the Chinese government to control the pandemic in China since 2021, to avoid further operation losses, on August 1, 2022, HFSH entered a contract with a related party, Shanghai Oversea Chinese Culture Media Ltd. (“SH Oversea”), to sell its subsidiaries for $900 (RMB 5,850). On August 1, 2022, HFUS entered a contract with SH Oversea and another individual, to sell HZHF and its subsidiaries for $1,000 (RMB 6,500).

The company’s sole subsidiary, HFSH was working with herbal manufacturers to develop new herbal health supplement products for wholesale distribution in China. Due to deflation in China, demand of herbal health supplement was lower than expected. Therefore, HFSH decided to deviate from its prior business focus and to engage in social media advertising endeavors. On January 10, 2024, HFSH changed its legal name from Shanghai Hartford Health Management, Ltd. to Hartford ZY Culture Media (Shanghai) Co., Ltd., hereon refer to as “HFZY”. and started to deliver media and advertisement services. The pent-up demand from social media influencers’ marketing needs on social media apps lead HFZY to seize the opportunity in providing advertisement services. HFZY begins to engage in social media advertising business on mainstream social media platforms such as Tik Tok, Toutiao, Kwai, RED, WeChat, and more. As an advertising partner of China’s major social media platforms, it aims to provide customers with vertical integration services from early-stage advertising video creativity, photograph shooting, editing, to advertising operation and management on social media apps. HFZY will also gradually launch overseas TikTok advertising campaign in 2024, providing social media advertising solutions for domestic Chinese customers to engage in international markets in the United States.

During the three months ended April 30, 2024, HFZY has entered advertising service contracts with twenty customers and received approximately RMB 22.5 million (USD 3.1 million) as advanced payment from these customers. HFZY also entered two major supplier contracts for advertising placement and prepaid RMB 21.8 million (USD 3.0 million). During the three months ended April 30, 2024, the Company recognized $116,640 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 related to these transactions on a net basis. The Company expects the number of customers to grow and the advertising service revenue will significantly increase in the next few months due to the vast demand in social media advertising services.

Results of Operations – Three months ended April 30, 2024 Compared to Three months ended April 30, 2023.

Revenue: We recognized $116,640 and $Nil revenue in the three months ended April 30, 2024 and 2023, respectively. For the three months ended April 30, 2024, we primarily earned its revenue through advertising placement services, functioning as an intermediary. The revenue for these services is presented on a net basis in our financial statements, representing the difference between the total charges billed to our customers and the expenses incurred for media resource suppliers. As both early childhood education services and hospitality services have been sold on August 1 2022, there was no revenue recognized for the three months ended April 30, 2023.

Operating Cost and Expenses: During the three months ended April 30, 2024, the selling, general and administrative expenses increased to $86,300 compared to $21,417 during the comparable period of 2023. This escalation in operating costs is attributed to the expansion of business operations, which necessitated higher payroll and professional expenses.

Other Income (Expense): Other income, net amount of $23,440 for the three months ended April 30, 2024, compared to Other expense, net amount of $4,776 for the three months ended April 30, 2023. The primary source of other income was the $29,022 recovery from Mr. Song, following a Section 16 infraction as outlined in Note 4. This amount was partially offset by the interest expenses on loans from related parties. Other expenses for the comparable period in 2023 mainly resulted from interest expenses.

Net Income (Loss): We recorded a net income of $53,780 or $0.00 per share for the three months ended April 30, 2024, compared to a net loss of $(26,193) or $(0.00) for the three months ended April 30, 2023, due to the factors discussed above.

Results of Operations – Nine months ended April 30, 2024 Compared to Nine months ended April 30, 2023.

Revenue: During the nine month period ending April 30, 2024, we reported revenues of $179,083, in contrast to no revenue in the corresponding period of 2023. Of the total revenue recognized in 2024, $116,640 was mainly generated through advertising placement services, while $62,443 was derived from the design, creation, and placement of video advertisements for Shanghai DuBian Assets Management Ltd. (“SH Dubian”), which is managed by our major shareholder’s relatives. As both early childhood education services and hospitality services have been sold on August 1 2022, there was no revenue recognized for the nine months ended April 30, 2023.

Operating Cost and Expenses: Cost of revenue increased to $55,505 for the nine months ended April 30, 2024, in contrast to no cost of revenue in the corresponding period of 2023. The increase of Cost of revenue was mainly due to the increase of the revenue derived from the services provided to SH Dubian. During the nine months ended April 30, 2024, the selling, general and administrative expenses slightly increased to $128,434 compared to $97,427 during the comparable period of 2023. The increase was due to the increase of professional expenses as a result of the expansion of business operation.

Other Income (Expense): Other income, net amount of $13,183 for the nine months ended April 30, 2024, compared to Other income, net amount of $526,185 for the corresponding period of 2023. The primary source of other income was the $29,022 recovery from Mr. Song, following a Section 16 infraction as outlined in Note 4. This amount was partially offset by the interest expenses on loans from related parties. Other income for the nine months ended April 30, 2023, was mainly resulted from the gain on disposal of subsidiaries offset by interest expenses.

Net Income (Loss): We recorded a net income of $8,327 or $0.00 per share for the nine months ended April 30, 2024, compared to a net income of $428,758 or $0.00 per share for the nine months ended April 30, 2023, due to the factors discussed above.

Liquidity and Capital Resources

As of April 30, 2024, we had a working capital deficit of $4,433,927 comprised of current assets of $331,980 and current liabilities of $4,765,907. This represents a decrease of $56,509 in the working capital deficit from the July 31, 2023 amount of $4,490,436.

We believe that our funding requirements for the next twelve months will be in excess of $1,350,000. We are currently seeking for further funding through related parties’ loan and finance.

As of April 30, 2024, the company has issued a total of 100,108,000 shares of common stock. On December 11, 2018, 96,090,000 shares of common stock were issued at the price of $0.02 per share to raise an additional $1,921,800 in capital. On November 24, 2020, the Company issued additional 1,000,000 shares of common stock to a significant shareholder of the Company at $0.02 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. Any sales of our securities would dilute the ownership of our existing investors.

Cash Flows – Nine months ended April 30, 2024 Compared to Nine months ended April 30, 2023

Operating Activities

Cash provided by operating activities was $18,498 for the nine months ended April 30, 2024 as compared to $83,083 cash used in the operations for the nine months ended April 30, 2023. During the nine months ended April 30, 2024, we recorded net income of $8,327, a $262,872 increase of contract liabilities, a $29,757 increase of other current payable, a $15,818 increase of related party payables, and offset by a $291,448 increase of advance to contractor.

During the nine months ended April 30, 2023, we recorded net income of $428,758, adjusted by subsidiary disposal gain of $539,230, related party payables net with receivables increased by $33,211 and offset by other current payable decreased by $6,654.

Investing activities

Nil of investing activities occurred during the nine months ended April 30, 2024 and 2023, respectively.

Financing activities

Cash provided by financing activities was $16,512 for the nine months ended April 30, 2024 as compared to $85,000 cash provided by financing activities for nine months ended April 30, 2023. The cash flows provided by financing activities for the nine months ended April 30, 2024 were primarily from the proceeds of notes payable $141,978 offset by repayment of notes payable $70,000 and repayment of related party advancement of $55,466. The notes payable was borrowed from two related parties with 5% annual interest rate. See Note 4 Related Party Transactions.

The cash flows provided by financing activities for the nine months ended April 30, 2023 was from the proceeds of notes payable. The notes payable was borrowed from one related party with 5% annual interest rate.

Future Capital Expenditures

We are currently engaging a consulting firm to evaluate and facilitate the potential uplisting of the Company’s stock from the OTC market to the Nasdaq exchange. If all conditions align favorably, the Company intends to secure financing through either debt or equity. The funds raised will be allocated to cover the expenses associated with the uplisting process.

Off-Balance Sheet Arrangements

As of and subsequent to April 30, 2024, we have no off-balance sheet arrangements.

Contractual Commitments

As of April 30, 2024, 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, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Interim Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Interim Chief Financial Officer, concluded that, as of April 30, 2024, 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 material weaknesses in our internal controls described below.

Management’s Report on Internal Control over Financial Reporting

Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:

Changes in Internal Control

During the Nine months ended April 30, 2024, there has been no change in internal control within the Company.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings .

We were not subject to any other legal proceedings during the nine months ended April 30, 2024, and are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our results of operation or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

Item 1A. Risk Factors.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not applicable to our Company.

Item 5. Other Information

Not applicable to our Company.

Item 6. Exhibits.

The following exhibits are filed with or incorporated by referenced in this report:

Exhibit Index

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.