UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 20202021
OR
☐[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 333-218248
FORGE INNOVATION DEVELOPMENT CORP.
(Exact name of small business issuer as specified in its charter)
| NEVADA | 6552 | 81-4635390 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
17800 Castleton Street, Suite 5836280 Mission Blvd Unit 205
City of Industry,Jurupa Valley, CA 9174892509
(Address of principal executive offices)
(626) 986-4566
(Registrant’s telephone number, including area code)
(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 ☒[X] No ☐[ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒[X] No ☐[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | Accelerated filer |
| Non-accelerated filer | Smaller reporting company |
| Emerging growth company |
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. ☐[ ]
Securities registered pursuant to Section 12(b) of the Act:
None
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐[ ] No ☒[X]
The number of shares of Common Stock, $0.0001 par value, of the registrant outstanding at May 13, 2020,14, 2021, was 45,621,868.
FORGE INNOVATION DEVELOPMENT CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2020
TABLE OF CONTENTS
i
| i |
FRORGE INNOVATION DEVELOPMENT CORP.
INDEX TO CONDENSED FINANCIAL STATEMENTS
| 1 |
FORGE INNOVATION DEVELOPMENT CORP.
CONDENSED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 396,866 | $ | 366,270 | ||||
| Note receivable | - | 110,000 | ||||||
| Prepaid expense and other current assets | 11,000 | 8,000 | ||||||
| Total Current Assets | 407,866 | 484,270 | ||||||
| NONCURRENT ASSET | ||||||||
| Operating lease right-of-use assets | 107,589 | 122,122 | ||||||
| Property and equipment, net | 31,950 | 34,395 | ||||||
| Rent deposit | 13,953 | 13,953 | ||||||
| Total Non-Current Assets | 153,492 | 170,470 | ||||||
| TOTAL ASSETS | $ | 561,358 | $ | 654,740 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Other current liability | $ | 2,040 | $ | 4,774 | ||||
| Operating lease liabilities | 60,783 | 59,313 | ||||||
| Total Current Liabilities | 62,823 | 64,087 | ||||||
| Long term portion of operating lease liabilities | 49,322 | 65,317 | ||||||
| TOTAL LIABILITIES | 112,145 | 129,404 | ||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock ($.0001 par value, 50,000,000 shares authorized; no share issued and outstanding as of March 31, 2020 and December 31, 2019) | - | - | ||||||
| Common stock ($.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding as of March 31, 2020 and December 31, 2019) | 4,562 | 4,562 | ||||||
| Additional Paid-in Capital | 1,469,678 | 1,469,678 | ||||||
| Accumulated Deficit | (1,025,027 | ) | (948,904 | ) | ||||
| Total Stockholders’ Equity | 449,213 | 525,336 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 561,358 | $ | 654,740 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
FORGE INNOVATION DEVELOPMENT CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Revenue | $ | 9,000 | $ | 9,000 | ||||
| Cost of revenue | - | - | ||||||
| Gross Profit | 9,000 | 9,000 | ||||||
| Operating Expenses | ||||||||
| Consulting Expenses | 18,000 | 18,010 | ||||||
| Other Selling, General and Administrative Expenses | 67,123 | 59,159 | ||||||
| Total Operating Expenses | 85,123 | 77,169 | ||||||
| Other income | - | 550 | ||||||
| Loss before income taxes | (76,123 | ) | (67,619 | ) | ||||
| Income taxes | - | 800 | ||||||
| Net loss | $ | (76,123 | ) | $ | (68,419 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 45,621,868 | 45,621,868 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
FORGE INNOVATION DEVELOPMENT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (76,123 | ) | $ | (68,419 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Amortization of ROU | 8 | 627 | ||||||
| Depreciation expense | 2,445 | 1,874 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expense | (3,000 | ) | - | |||||
| Account receivable | - | 3,000 | ||||||
| Other current liability | (2,734 | ) | 4,403 | |||||
| Net cash provided by (used in) operating activities | (79,404 | ) | (58,515 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Note receivable | 110,000 | - | ||||||
| Purchase of property and equipment | - | (4,781 | ) | |||||
| Net cash provided by (used in) investing activities | 110,000 | (4,781 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net cash provided by financing activities | - | - | ||||||
| Net Increase (decrease) in Cash | 30,596 | (63,296 | ) | |||||
| Cash at beginning of period: | 366,270 | 653,142 | ||||||
| Cash at end of period: | $ | 396,866 | $ | 589,846 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFOR | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | - | $ | 800 | ||||
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 199,147 | $ | 236,586 | ||||
| Account receivable | 3,000 | 3,000 | ||||||
| Other receivable - related party | 1,297 | 1,297 | ||||||
| Prepaid expense and other current assets | 10,359 | 11,500 | ||||||
| Total Current Assets | 213,803 | 252,383 | ||||||
| NONCURRENT ASSETS | ||||||||
| Operating lease right-of-use assets | 47,414 | 62,773 | ||||||
| Property and equipment, net | 43,887 | 24,614 | ||||||
| Rent deposit | 13,953 | 13,953 | ||||||
| Total Non-Current Assets | 105,254 | 101,340 | ||||||
| TOTAL ASSETS | $ | 319,057 | $ | 353,723 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Other current liabilities | $ | 33,720 | $ | 11,562 | ||||
| Other payable - related party | 56,873 | 24,000 | ||||||
| SBA loan, current | 187 | 116 | ||||||
| Operating lease liabilities | 49,322 | 79,554 | ||||||
| Total Current Liabilities | 140,102 | 134,632 | ||||||
| Payable to related party | 14,497 | - | ||||||
| SBA Loan, noncurrent | 13,813 | 13,884 | ||||||
| TOTAL LIABILITIES | 168,412 | 148,516 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock ($.0001 par value, 50,000,000 shares authorized; no share issued and outstanding as of March 31, 2021 and December 31, 2020) | - | - | ||||||
| Common stock ($.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding as of March 31, 2021 and December 31, 2020) | 4,562 | 4,562 | ||||||
| Additional Paid-in Capital | 1,469,678 | 1,469,678 | ||||||
| Accumulated Deficit | (1,323,595 | ) | (1,269,033 | ) | ||||
| Total Stockholders’ Equity | 150,645 | 205,207 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 319,057 | $ | 353,723 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
FORGE INNOVATION DEVELOPMENT CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYOPERATIONS
(Unaudited)
| Number of Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2019 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (665,516 | ) | $ | 808,724 | ||||||||||
| Net loss | (68,419 | ) | (68,419 | ) | ||||||||||||||||
| Balance, March 31, 2019 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (733,935 | ) | $ | 740,305 | ||||||||||
| Number of Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2020 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (948,904 | ) | $ | 808,110 | ||||||||||
| Net loss | (76,123 | ) | (76,123 | ) | ||||||||||||||||
| Balance, March 31, 2020 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (1,025,027 | ) | $ | 449,213 | ||||||||||
| For the three months ended | ||||||||
| March 31, 2021 | March 31, 2020 | |||||||
| Service revenue | $ | 9,000 | $ | 9,000 | ||||
| Operating Expenses | ||||||||
| Consulting expenses | 18,000 | 18,000 | ||||||
| Other selling, general and administrative expenses | 64,962 | 67,123 | ||||||
| Total Operating Expenses | 82,962 | 85,123 | ||||||
| Other Income (Expense) | ||||||||
| Forgiveness of PPP loan | 19,400 | - | ||||||
| Total Other Income | 19,400 | - | ||||||
| Net loss before tax | (54,562 | ) | (76,123 | ) | ||||
| Provision for income tax | - | - | ||||||
| Net loss | $ | (54,562 | ) | $ | (76,123 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 45,621,868 | 45,621,868 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
FORGE INNOVATION DEVELOPMENT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (54,562 | ) | $ | (76,123 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of ROU | 1,225 | 8 | ||||||
| Depreciation expense | 3,589 | 2,445 | ||||||
| Forgiveness of PPP loan | (19,400 | ) | - | |||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expense and other current assets | 1,140 | (3,000 | ) | |||||
| Other current liabilities | 6,059 | (2,734 | ) | |||||
| Other current liability - related party | 26,183 | - | ||||||
| Net cash used in operating activities | (35,766) | (79,404 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Note receivable | - | 110,000 | ||||||
| Purchase of property and equipment | (1,673) | - | ||||||
| Net cash (used in) provided by investing activities | (1,673) | 110,000 | ||||||
| Net (decrease) increase in Cash | (37,439) | 30,596 | ||||||
| Cash at beginning of period: | 236,586 | 366,270 | ||||||
| Cash at end of period: | $ | 199,147 | $ | 396,866 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFOR | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | $ | ||||||
| NONCASH TRANSACTION OF INVESTING ACTIVITIES | ||||||||
| Loan carried through purchase of vehicle | $ | 22,861 | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
FORGE INNOVATION DEVELOPMENT CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| Number of Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2020 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (948,904 | ) | $ | 525,336 | ||||||||||
| Net loss | (76,123 | ) | (76,123 | ) | ||||||||||||||||
| Balance, March 31, 2020 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (1,025,027 | ) | $ | 449,213 | ||||||||||
| Number of Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2021 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (1,269,033 | ) | $ | 205,207 | ||||||||||
| Net loss | (54,562 | ) | (54,562 | ) | ||||||||||||||||
| Balance, March 31, 2021 | 45,621,868 | $ | 4,562 | $ | 1,469,678 | $ | (1,323,595 | ) | $ | 150,645 | ||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 5 |
Forge Innovation Development Corp.
Notes to the unaudited financial statements
Note 1 - Organization and Description of Business
Forge Innovation Development Corp., or (individually “Forge” and collectively with its subsidiary, the “Company”), was initially incorporated in the State of Nevada on January 15, 2016 under the name of You-Go enterprises,Enterprises, LLC (the “Company Predecessor”). On November 3, 2016, the CompanyForge filed an amendment to its Articles of Incorporation in the State of Nevada to change the Company’sCompany Predecessor’s name to Forge Innovation Development Corp. Our current principle executive office is located at 17800 Castleton Street, Suite 583 City of Industry,6280 Mission Blvd Unit 205, Jurupa Valley, CA 91748.92509. Tel: 626-986-4566. The Company’s main business will be focusfocuses on real estate development, land purchasing and selling and property management. The Company’s common stock is currently traded on OTCQB under the symbol “FGNV”.
On August 17, 2020, the Company established a wholly owned subsidiary, Forge Network Inc, in the State of California. Forge Network Inc is engaged in online retail under the website: http://www.ez2go.us. The website has been formally launched in January 2021.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the consolidated financial statements not misleading have been included. Actual results could differ from those estimates.
Revenue Recognition
The Company adopted ASU 2014-09 (ASC 606), Revenue from Contracts with Customers, using the modified retrospective approach on January 1, 2018. Under the standard, revenue is recognized upon transfer of control of promised goods and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods and services.
Property management services: the Company deals directly with prospects and tenants for the owners of properties, which mainly includes marketing property, collecting rent, handling maintenance, repairing issues and responding to tenant complaints. The Company recognizes revenue as earned on a monthly basis under ASC 606.
Real estate sales: The Company accounts for the sale of real estate assets and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than retail land sales. The Company recognizes the sale, and associated gain or loss from the disposition, provided that the earnings process is complete, and the Company does not have significant continuing involvement.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, (FASB ASC Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, rather than the “incurred loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts.forecasts, rather than the “incurred loss” model. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments.
In November 2019, the FASB issued ASU No. 2019-10 to postpone the The effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SECis postponed to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company believes the adoption of ASU No. 2016-13 will not have a material impact on its financial position and results of operations.
The management does not believe that other than disclosed above, accounting pronouncements the recently issued but not yet adopted accounting pronouncements will have a material impact on its financial position results of operations or cash flows.
LiquidityNote 3 - Going Concern
AsThe 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. However, the Company has suffered recurring losses from operations since inception, resulting in an accumulated deficit of $1,323,595 as of March 31, 2020,2021. These conditions raise substantial doubt about the ability of the Company 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 principal sources of liquidity consisted of approximately $400,000 of cash, and future cash generated from operations. Thebusiness plan provides it with an opportunity to continue as a going concern. However, management cannot provide assurance that 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 consumptionobjectives 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 capitalcontinue in operation.
The consolidated financial statements do not include any adjustments to reflect the possible future effects on acceptable terms,the recoverability and classification of assets or at all. Subject to the foregoing, management believesamounts and classification of liabilities that the Company has sufficient capital and liquidity to fund its operations for at least one yearmay result from the datepossible inability of issuance of the accompanying financial statements.Forge Innovation Development Corp. to continue as a going concern.
Note 34 - Income Taxes
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the period presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.
For the three months ended March 31, 20202021 and 2019,2020, the Company has incurred a net loss before tax of $54,562 and $76,123, and $68,419 which resulted in a net operating loss for income tax purposes. NOLs begin expiringrespectively. Net operation losses (“NOLs”) will be expired in 2036. AtAs of March 31, 20202021 and December 31, 2019, the loss results in a2020, deferred tax assets resulted from NOLs of approximately $275,437$281,337 and $252,722 at the tax rate of 21%. The deferred tax asset has been$266,497, which was fully off-set by an equal valuation allowance.allowance reserved.
Note 45 - Concentration of Risk
The Company maintains cash in one accounttwo accounts within onetwo local commercial bankbanks located in Southern California. The standard insurance amount is $250,000 per depositors under the FDIC’s general deposit insurance rules. AtOn March 31, 20202021 and December 31, 2019,2020, there was no uninsured cash balances were $157,795 and $116,174, respectively. for the Company.
For the three months ended March 31, 20202021 and 2019,2020, the Company’s revenue generated from one customer in the amount of $9,000 and $9,000, respectively. AtAs of March 31, 20202021 and December 31, 2019,2020, the Company had $3,000 and $Nil$3,000 accounts receivable from the customer, respectively.
Note 56 - Related Party Transactions
During the three months ended March 31, 20202021 and 2019,2020, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in the amount of $754 and $Nil, and $5,805, respectively. AtAs of March 31, 20202021 and December 31, 2019,2020, the Company had no payable balance to Mr. Liang.
On January 4, 2021, the Company purchased a vehicle from Patrick Liang, the President of the Company, for daily business operation, in the amount of $22,861, which equals to the remaining vehicle loan with 7.11% interest rate annum for a period of 41 months and monthly repayment of $558. As of March 31, 2021, the loan payments due within the next 12 months is $6,691. The title of the car is under the process of transferring as of March 31, 2021 and car loan balance was $21,188 as of March 31, 2021.
During the three months ended March 31, 2021 and 2020, the Company incurred professional fee with Speedlight Consulting Services Inc. whose owner, Mr. Hengjiang Pang, is our director starting November 9, 2020, in the amount of $14,000 and $9,000, respectively. On March 31, 2021 and December 31, 2020, the Company had balance of due to Speedlight Consulting Services Inc. in the amount of $38,000 and $24,000, respectively.
On March 31, 2021 and December 31, 2020, Forge Network Inc. had balance of receivables from Mr. Liang in the amount of $Nil.$1,297 and $1,297.
Note 67 - 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 bewas 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 bewas 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 repayment of the note in the amount of $110,000.
For the three months ended March 31, 2020 and 2019, total interest income was $0and $550, respectively.Note 8 - Lease
Note 7 - Leases
The Company has operating lease for its lease’s office space from a third party.party, Puente Hills Business Center II, L.P. (“PHBC-II”), which the Company vacated the premises on or about September 29, 2020. 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 MarchDecember 31, 2020 is 2112 months. We currently have no finance leases.
During the three months ended March 31, 20202021 and 2019,2020, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease were nil and $16,098, respectively. As of March 31, 2021 and 15,480,December 31, 2020, $32,841 and $16,098 lease liability were outstanding under the lease agreement, respectively. On October 22, 2020, PHBC-II filed a lawsuit against the Company and its guarantor, Mr. Liang. No judgment has been rendered as of March 31, 2021, and the litigation is in its infancy stage. The Company has retained legal counsel to address the matter.
The components of lease expense consist of the following:
| Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||
| Classification | 2020 | 2019 | Classification | 2021 | 2020 | |||||||||||||||
| Operating lease cost | G&A expense | $ | 16,107 | $ | 16,107 | G&A expense | $ | 16,107 | $ | 16,107 | ||||||||||
| Net lease cost | $ | 16,107 | $ | 16,107 | $ | 16,107 | $ | 16,107 | ||||||||||||
Balance sheet information related to leases consists of the following:
| Classification | March 31, 2020 | December 31, 2019 | ||||||||
| Assets | ||||||||||
| Operating lease ROU assets | Right-of-use assets | $ | 107,589 | $ | 122,122 | |||||
| Total leased assets | $ | 107,589 | $ | 122,112 | ||||||
| Liabilities | ||||||||||
| Current portion | ||||||||||
| Operating lease liabilities | Current maturities of operating lease liabilities | $ | 60,783 | $ | 59,313 | |||||
| Non-current portion | ||||||||||
| Operating lease liabilities | Long-term portion of operating lease liabilities | 49,322 | 65,317 | |||||||
| Total lease liabilities | $ | 110,105 | $ | 124,630 | ||||||
| Weighted average remaining lease term | ||||||||||
| Operating leases | 1.8 | 2.0 | ||||||||
| Weighted average discount rate | ||||||||||
| Operating leases | 5.5 | % | 5.5 | % | ||||||
| Classification | March 31, 2021 | December 31, 2020 | ||||||||
| Assets | ||||||||||
| Operating lease ROU assets | Right-of-use assets | $ | 47,414 | $ | 62,773 | |||||
| Total leased assets | $ | 47,414 | $ | 62,773 | ||||||
| Liabilities | ||||||||||
| Current portion | ||||||||||
| Operating lease liabilities | Current maturities of operating lease liabilities | $ | 49,322 | $ | 79,554 | |||||
| Non-current portion | ||||||||||
| Operating lease liabilities | Long-term portion of operating lease liabilities | - | - | |||||||
| Total lease liabilities | $ | 49,322 | $ | 79,554 | ||||||
| Weighted average remaining lease term | ||||||||||
| Operating leases | 0.75 | 1.0 | ||||||||
| Weighted average discount rate | ||||||||||
| Operating leases | 5.5 | % | 5.5 | % | ||||||
Cash flow information related to leases consists of the following:
| Three Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | 14,526 | $ | 13,159 | ||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating leases | 14,534 | 13,786 | ||||||
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | - | $ | 14,526 | ||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating leases | 15,359 | 14,533 | ||||||
Future minimum lease payment under non-cancellable lease as of March 31, 20202021 are as follows:
| Ending December 31, | Operating Leases | Operating Leases | ||||||
| 2020 | $ | 48,294 | ||||||
| 2021 | 66,972 | $ | 50,229 | |||||
| 2022 | - | - | ||||||
| 2023 | - | |||||||
| Total lease payments | 115,266 | 50,229 | ||||||
| Less: Interest | (5,161 | ) | (907 | ) | ||||
| Present value of lease liabilities | $ | 110,105 | $ | 49,322 | ||||
Note 9 –Loans
On April 16, 2020, the Company received a Promissory Note (the “Note”) in the amount of $19,400 under the Paycheck Protection Program (the “PPP Loan”) through East West Bank (the “Lender”). 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 submit its application for the forgiveness of the full amount $19,400 PPP Loan and received the approval letter from SBA on March 10, 2021. The Company recognized government grant in the amount of $19,400 for the three months ended March 31, 2021.
On July 14, 2020, the Company entered into a loan agreement with The U.S. Small Business Administration (SBA), pursuant to which the Company obtain a loan in the amount of $14,000 with the term of 30 years and at the interest rate of 3.75%, payable monthly including principal and interest in the amount $69. The first repayment will be on July 13, 2021. The Company received the loan amount of $14,000 from SBA on July 20, 2020.
Note 10 – Contingencies
On December 8, 2017, the Company entered into a lease agreement with Puente Hills Business Center II, L.P. (“PHBC-II”) for a lease term of forty-eight months, and which was scheduled to expire on January 14, 2022, at monthly rent of $4,962, subject to increase. On or about September 29, 2020, the Company vacated the premises. On October 22, 2020, PHBC-II filed a lawsuit against the Company and its guarantor, Mr. Liang. No judgment has been rendered as of March 31, 2021, and the litigation is in its infancy stage. The Company has retained legal counsel to address the matter.
Note 811 - Subsequent Event
On April 15, 2020,The Company has evaluated all other subsequent events through the Company got a Promissory Note (the “Note”)date these consolidated financial statements were issued and determine that there were no other subsequent events or transactions that require recognition or disclosures 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.consolidated financial statements.
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.
| 9 |
Item 2. Management’s Discussion and Analysis or Plan of Operation
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 CompanyForge Innovation Development Corp. 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.
On August 17, 2020, the Company established a wholly owned subsidiary, Forge Network Inc, in the State of California. Forge Network Inc is engaged in online retail under the website: http://www.ez2go.us. The website has been formally launched in January 2021.
Results of Operation for the three months ended March 31, 20202021 and 20192020
During the three months ended March 31, 20202021 and 2019,2020, the Company generated $9,000 and $9,000 of revenues. The revenue was generated from property management service. The corresponding cost of revenue was $0. During the three months ended March 31, 20202021 and 2019,2020, the Company incurred general and administrative expenses of $85,123$82,962 and $77,169,$85,123, respectively. The increasedecrease was mainly due to the increasedecrease in payroll expense that we recruited one employee on January 2020.and head count during the three months ended March 31, 2021. For the three months ended March 31, 2021 and 2020, and 2019,, our net loss waslosses were $54,562 and $76,123, and $68,419, respectively.respectively The increasedecrease in net loss was mainly due to the increase in general and administrative expense$19,400 PPP loan forgiven for the three months ended March 31, 2020, compared to the same period in last year.2021.
Equity and Capital Resources
We have incurred losses since inception of our business in 2016 and, as of March 31, 2020,2021, we had an accumulated deficit of $1,025,027.$1,323,595. As of March 31, 2020,2021, we had cash of $396,866$199,147 and a working capital of $345,043,$73,700, compared to cash of $366,270$236,586 and a working capital of $420,183 at$117,751 on December 31, 2019.2020. The decrease in the working capital was primarily due to cash used to pay offfor operating expense. expenses.
As of March 31, 2020,Going Concern Assessment
The Company demonstrates adverse conditions that raise substantial doubt about the Company’s principal sources of liquidity consisted of approximately $400,000 ofability to continue as a going concern. These adverse conditions are negative financial trends, specifically cash outflow from operating activities, operating losses, accumulated deficit and future cash generated from operations. The Company believesother adverse key financial ratios.
Management’s plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern include attempting to improve its current cash balances coupled with anticipatedbusiness profitability, its ability to generate sufficient cash flow from its operations and execute the business plan of the Company in order to meet its operating activitiesneeds on a timely basis. However, there can be no assurance that these plans and arrangements will be sufficient to meet its workingfund the Company’s ongoing capital requirements for at least one year fromexpenditures and other requirements.
The consolidated financial statements do not include any adjustments relating to the daterecoverability and classification of recorded assets, or the issuanceamounts and classification of the accompanying financial statements. The Company continues to control its cash expenses. The Company cannot give assuranceliabilities 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 capitalmight be necessary in the future. However,event that 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.continue as a going concern.
Off-Balance Sheet Arrangements
Under SEC regulations, we are required to discloseWe have no 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 areis 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.stockholders.
Critical Accounting Policies
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated 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 unauditedaudited consolidated financial statements appearing elsewhere in this prospectus.report. 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, 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 11 |
None.On December 8, 2017, the Company entered into a lease agreement with Puente Hills Business Center II, L.P. (“PHBC-II”) for a lease term of forty-eight months, and which was scheduled to expire on January 14, 2022, at monthly rent of $4,962, subject to increase. On or about September 29, 2020, the Company vacated the premises. On October 22, 2020, PHBC-II filed a lawsuit against the Company and its guarantor, Mr. Liang. No judgment has been rendered, and the litigation is in its infancy stage. The Company has retained legal counsel to address the matter.
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.
None
(a) Exhibits.
| Exhibit | Item | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
| 13 |
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.
| FORGE INNOVATION DEVELOPMENT CORP. | |
| Date: May | /s/ Patrick Liang |
| Patrick Liang, President | |
| (Principal Executive Officer) | |
| Date: May | /s/ Patrick Liang |
| Patrick Liang, Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
| Exhibit | Item | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
16
| 15 |