Note 4 - Concentration of Risk

The Company maintains cash in one account within one local commercial bank located in Southern California. The standard insurance amount is $250,000 per depositors under the FDIC’s general deposit insurance rules. At March 31,June 30, 2020 and December 31, 2019, uninsured cash balances were $157,795$120,539 and $116,174, respectively. 

For the threesix months ended March 31,June 30, 2020 and 2019, the Company’s revenue generated from one customer in the amount of $9,000$18,000 and $9,000,$18,000, respectively. At March 31,June 30, 2020 and December 31, 2019, the Company had $3,000$Nil and $Nil accounts receivable from the customer, respectively.

Note 5 - Related Party Transactions 

During the threesix months ended March 31,June 30, 2020 and 2019, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in the amount of $Nil$1,535 and $5,805,$8,028, respectively. At March 31,June 30, 2020 and December 31, 2019, the Company had balance of due to Mr. Liang in the amount of $Nil.

Note 6 - Notes Receivable

On March 17, 2017, the Company entered into a Land Transaction Agreement with Steven Zhi Qin, a third party individual. Pursuant to the agreement, the Company sold the undeveloped land located in Desert Hot Spring with value of $283,333, to Steven Zhi Qin in exchange for a Promissory Note in the amount of $310,000. The Promissory Note is secured by a Deed of Trust to Chicago Title Company, a California corporation and an independent institution insuring the Company’s collection right, and was due on March 17, 2018, with interest at the rate of 2% per annum, payable in monthly installment of interest only, in the amount of $517. The Promissory Note also applies to Steven Zhi Qin’s personal property located at 1715 East Cortez Street, West Covina, CA 91791 as additional collateral, of which a lien will be recorded against said property. On March 6, 2018, the Company reached an agreement with Steven Zhi Qin, pursuant to which the Company agreed and approved the amendment of the Promissory Note to extend maturity date to March 17, 2019. On March 12, 2019, the Company reached another agreement with Steven Zhi Qin, pursuant to which the Company agreed and approved amendment of the Promissory Note to extend maturity date to June 30, 2019. On June 26, 2019, the Company reached the third amendment with Steven Zhi Qi, pursuant to which the Company agreed and approved amendment of the Promissory Note to extend maturity date to September 30, 2019, and the remaining $110,000 will be due on September 30, 2019. On September 30, 2019, the Company reached the fourth amendment with Steven Zhi Qi, pursuant to which the Company agreed and approved amendment of the Promissory Note to extend maturity date to December 31, 2019, and the remaining $110,000 was due on December 31, 2019. On March 12, 2020, the Company received the note in the amount of $110,000.

For the threesix months ended March 31,June 30, 2020 and 2019, total interest income was $0and $550,$Nil and $1,100, respectively.

Note 7 - Leases

The Company has operating lease for its lease’s office space from a third party. We determined if an arrangement is a lease inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of identified asset for a period of time. The contactcontract provides us the right to obtain substantially all the economic benefits from the use of the identified asset and the right to direct use of the identified asset, we consider it to be, or contain, a lease.  

Leases is classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because our leases do not provide an explicit or implicit rate of return, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 5.5%. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Our leases do not contain any residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. The remaining term as of March 31,June 30, 2020 is 2118 months. We currently have no finance leases.

During the threesix months ended March 31,June 30, 2020 and 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease were $16,098$32,196 and 15,480,30,960, respectively.

The components of lease expense consist of the following:

Balance sheet information related to leases consists of the following:

Cash flow information related to leases consists of the following:

Future minimum lease payment under non-cancellable lease as of March 31,June 30, 2020 are as follows:

Note 8 – PPP Loan

On April 15, 2020, the Company got a Promissory Note (the “Note”) in the amount of $19,400 approved from the Paycheck Protection Program (the “PPP Loan”) through East West Bank (the “Lender”). The PPP is a loan program of U.S. Small Business Administration (the “SBA”) designated to provide a direct incentive for small business to keep their workers on the payroll due to the Covid-19 crisis. The interest rate on this Note is a fixed rate of 1.00% per annum. The Company will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on that date that is two years after the date of this Note (“Maturity Date”). In addition, the Company will pay regular monthly payments in an amount equal to one month’s accrued interest commencing on that date that is seven months after the date of this Note, with all subsequent interest payments to be due on the same day of each month after that. All interest which accrues during the initial six months of the loan period will be deferred to and payable on the Maturity Date. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal.

According to SBA’s PPP description, the PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

The Company received the amount of $19,400 from East West Bank on April 16, 2020.

Note 89 - Subsequent Event

On April 15,July 14, 2020, the Company gotentered into a Promissory Note (the “Note”)loan agreement with SBA, pursuant to which the Company obtained a loan in the amount of $19,400 approved from$14,000 with the Paycheck Protection Program (the “PPP Loan”) through East West Bank (the “Lender”). The PPP is a loan programterm of U.S. Small Business Administration (the “SBA”) designated to provide a direct incentive for small business to keep their workers on30 years and at the payroll dueinterest rate of 3.75%, payable monthly including principal and interest in the amount $69. Pursuant to the Covid-19 crisis. The interest rate on this Note is a fixed rate of 1.00% per annum. The Company will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on that date that is two years afteragreement, the date of this Note (“Maturity Date”). In addition, the Company will pay regular monthly payments in an amount equal to one month’s accrued interest commencing on that date that is seven months after the date of this Note, with all subsequent interest payments to be due on the same day of each month after that. All interest which accrues during the initial six monthsproceeds of the loan periodprincipal amount will be deferred to and payable on the Maturity Date. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal.

According to SBA’s PPP description, the PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

solely as working capital. The Company received the amount of $19,400 from East West Bank$14,000 on April 16,July 20, 2020.

Item 2. Management’s Discussion and Analysis or Plan of OperationFinancial Condition and Results of Operations

This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

Overview

The Company is a development stage company and was incorporated in the State of Nevada in January 2016. The Company’s primary objective is commercial and residential land development, including the purchase and sale of real estate, targeting properties primarily in Southern California. We also intend to manage properties we own and properties owned by unaffiliated third parties. Our activities will include securing acquisition rights to properties, obtaining zoning and other entitlements for the properties, securing financing for purchase of the properties, improving the properties’ infrastructure and amenities and selling the properties to homeowner and commercial owners for restaurants, offices and small businesses. Our first property acquisition was 29 acres in the city of Desert Hot Springs in Southern California. Due to problems with permits and adjacent landowners, rather than getgetting involved in protracted negotiations, the Company sold the property to an independent third party for a profit.

Results of Operation for the three months ended March 31,June 30, 2020 and 2019

During the three months ended March 31,June 30, 2020 and 2019, the Company generated $9,000 and $9,000 of revenues. Therevenues, respectively; the revenue was generated from property management service. The corresponding cost of revenue was $0. During the three months ended March 31,June 30, 2020 and 2019, the Company incurred general and administrative expenses of $85,123$86,251 and $77,169,$79,714, respectively. The increase was mainly due to the increase in payroll expense that we recruited one employee on January 2020.salary expense. For the three months ended March 31,June 30, 2020 and 2019, our net loss was $76,123$77,251 and $68,419,$70,164, respectively. The increase in net loss was mainly due to the increase in general and administrative expense for the three months ended March 31,June 30, 2020, compared to the same period in last year.

Results of Operation for the six months ended June 30, 2020 and 2019

During the six months ended June 30, 2020 and 2019, the Company generated $18,000 and $18,000 of revenues, respectively; the revenue was generated from property management service. The corresponding cost of revenue was $0. During the six months ended June 30, 2020 and 2019, the Company incurred general and administrative expenses of $171,374 and $156,883, respectively. The increase in general and administrative expenses was mainly due to the increase in salary expense. For the six months ended June 30, 2020 and 2019, our net loss was $153,374 and $138,583, respectively. The increase in net loss was mainly due to the increase in general and administrative expenses for the six months ended June 30, 2020, compared to the same period in last year.

Equity and Capital Resources

We have incurred losses since inception of our business in 2016 and, as of March 31,June 30, 2020, we had an accumulated deficit of $1,025,027.$1,102,278. As of March 31,June 30, 2020, we had cash of $396,866$360,161 and a working capital of $345,043,$268,756, compared to cash of $366,270 and a working capital of $420,183 at December 31, 2019. The decrease in the working capital was primarily due to cash used to pay off operating expense. 

As of March 31,June 30, 2020, the Company’s principal sources of liquidity consisted of approximately $400,000$360,000 of cash, and future cash generated from operations. The Company believes its current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet its working capital requirements for at least one year from the date of the issuance of the accompanying financial statements. The Company continues to control its cash expenses. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.

Off-Balance Sheet Arrangements

Under SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have: 

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

Critical Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. 

The critical accounting policies are discussed in further detail in the notes to the unaudited financial statements appearing elsewhere in this prospectus. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “small reporting company” we are not required to provide this information under this item pursuant to Regulation S-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report on Form 10-Q, our President (principal executive officer) and our Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer each concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures were not effective in timely alerting them to material information relating to Forge Innovation Development Corp. required to be included in our Exchange Act filings.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended March 31,June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

As a “smaller reporting company”, we are not required to provide this information under this item pursuant to Regulation S-K.

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.

Item 5. Other Information.

None

Item 6. Exhibits.

(a) Exhibits.

*   Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EXHIBIT INDEX

*   Filed herewith.

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