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 June 30, 2020March 31, 2021

 

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 655281-4635390

(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)

 

N/A

( (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 [X]
 Emerging growth company [X]

 

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareFGNVOTC Markets Group

 

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 August 7. 2020May 14, 2021, was 45,621,868.

 

 

 

 

 

FORGE INNOVATION DEVELOPMENT CORP.

 

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30,MARCH 31, 2020

 

TABLE OF CONTENTS

 

 PAGE
  
Part I. FINANCIAL INFORMATION: 
  
Item 1. Condensed Financial Statements:1
  
Balance Sheets June 30, 2020as of March 31, 2021 (unaudited) and December 31, 201920202
  
Statements of Operations (unaudited), for the Three Months ended March 31, 2021 and Six Months ended June 30, 2020 and 20193
  
Statements of Cash Flows (unaudited), for the SixThree Months ended June 30,March 31, 2021 and 2020 and 20194
  
Statements of Changeschanges in Shareholders’ Equity (unaudited) for the Three Months and Six Months ended June 30, 2020 and 2019shareholders’ equity5
  
Notes to Condensed Financial Statements (unaudited)6
  
Item 2. Management’s Discussion and Analysis and Plan of Financial Condition and Results of OperationsOperation1110
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk1211
  
Item 4. Controls and Procedures1211
  
Part II. OTHER INFORMATION: 
  
Item 1. Legal Proceedings1312
  
Item 1A. Risk Factors1312
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds1312
  
Item 3. Defaults Upon Senior Securities1312
  
Item 4. Mine Safety Disclosures1312
  
Item 5. Other Information1312
  
Item 6. Exhibits1413
  
SIGNATURES1514
  
EXHIBIT INDEX1615

 

i
 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FRORGE INNOVATION DEVELOPMENT CORP.

 

INDEX TO CONDENSED FINANCIAL STATEMENTS

 

Balance Sheets, June 30, 2020March 31, 2021 (Unaudited) and December 31, 201920202
  
Statements of Operations (unaudited), for the Three Months ended March 31, 2021 and Six Months ended June 30, 2020 and 20193
  
Statements of Cash Flows (unaudited), for the SixThree Months ended June 30,March 31, 2021 and 2020 and 20194
  
Statements of Changes in Shareholders’ Equity (unaudited) for the Three Months ended March 31, 2021 and Six Months ended June 30, 2020 and 20195
  
Notes to Condensed Financial Statements (unaudited)6

 

1
 

 

FORGE INNOVATION DEVELOPMENT CORP.

 

CONDENSED BALANCE SHEETS

 

 June 30, December 31,  March 31, December 31, 
 2020  2019  2021  2020 
 (unaudited)          
ASSETSASSETS           
CURRENT ASSETS                
Cash $360,161  $366,270  $199,147  $236,586 
Note receivable  -   110,000 
Account receivable  3,000   3,000 
Other receivable - related party  1,297   1,297 
Prepaid expense and other current assets  8,000   8,000   10,359   11,500 
                
Total Current Assets  368,161   484,270   213,803   252,383 
                
NONCURRENT ASSET        
NONCURRENT ASSETS        
Operating lease right-of-use assets  92,855   122,122   47,414   62,773 
Property and equipment, net  29,504   34,395   43,887   24,614 
Rent deposit  13,953   13,953   13,953   13,953 
Total Non-Current Assets  136,312   170,470   105,254   101,340 
TOTAL ASSETS $504,473  $654,740  $319,057  $353,723 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES:                
Other current liability $17,731  $4,774 
PPP loan  19,400     
Other current liabilities $33,720  $11,562 
Other payable - related party  56,873   24,000 
SBA loan, current  187   116 
Operating lease liabilities  62,274   59,313   49,322   79,554 
        
Total Current Liabilities  99,405   64,087   140,102   134,632 
                
Long term portion of operating lease liabilities  33,106   65,317 
Payable to related party  14,497   - 
SBA Loan, noncurrent  13,813   13,884 
TOTAL LIABILITIES  132,511   129,404   168,412   148,516 
                
COMMITMENTS AND CONTINGENCIES        
        
STOCKHOLDERS’ EQUITY:                
Preferred stock ($.0001 par value, 50,000,000 shares authorized; no share issued and outstanding as of June 30, 2020 and December 31, 2019)  -   - 
Common stock ($.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding as of June 30, 2020 and December 31, 2019)  4,562   4,562 
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   1,469,678   1,469,678 
Accumulated Deficit  (1,102,278)  (948,904)  (1,323,595)  (1,269,033)
Total Stockholders’ Equity  371,962   525,336   150,645   205,207 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $504,473  $654,740  $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 OPERATIONS

 

(Unaudited)

 

  For the three months ended  For the six months ended 
  June 30,
2020
  June 30,
2019
  June 30,
2020
  June 30,
2019
 
             
Revenue $9,000  $9,000  $18,000  $18,000 
Cost of revenue      -       - 
Gross Profit  9,000   9,000   18,000   18,000 
                 
Operating Expenses                
Consulting Expenses  18,000   18,000   36,000   36,010 
Other Selling, General and Administrative Expenses  68,251   61,714   135,374   120,873 
                 
Total Operating Expenses  86,251   79,714   171,374   156,883 
                 
Interest income  -   550   -   1,100 
 Income tax  -   -   -   800 
Net loss $(77,251) $(70,164) $(153,374) $(138,583)
                 
Net loss per common share, basic and diluted $(0.00) $(0.00) $(0.00) $(0.00)
                 
Weighted average number of common shares outstanding, basic and diluted  45,621,868   45,621,868   45,621,868   45,621,868 
  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 six months ended
June 30,
 
  2020  2019 
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $(153,374) $(138,583)
Adjustments to reconcile net loss to net cash used in operating activities:        
Amortization of ROU  17   1,254 
Depreciation expense  4,891   4,014 
Change in operating assets and liabilities:        
Account receivable  -   3,000 
Other current liability  12,957   (1,684)
Net cash used in operating activities  (135,509)  (131,999)
         
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        
PPP loan  19,400   - 
Net cash provided by financing activities  19,400   - 
         
Net decrease in Cash  (6,109)  (136,780)
Cash at beginning of period:  366,270   653,142 
Cash at end of period: $360,161  $516,362 
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFOR        
Interest paid $-  $- 
Income taxes paid $-  $800 

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 
Net loss              (77,251)  (77,251)
Balance, June 30, 2020  45,621,868  $4,562  $1,469,678  $(1,102,278)  371,962 

  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 
Net loss              (70,164)  (70,164)
Balance, June 30, 2019  45,621,868  $4,562  $1,469,678  $(804,099) $670,141 
  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.

 

45
 

 

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, 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, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable 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, 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 June 30, 2020,assets and the Company’s principal sourcessatisfaction of liquidity consisted of approximately $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 capitalobligations in the future.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, 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 business plan provides it with an opportunity to continue as a going concern. However, management cannot assureprovide assurance that itthe Company will meet its objectives and 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 sixthree months ended June 30,March 31, 2021 and 2020, and 2019, the Company has incurred a net loss before tax of $153,374$54,562 and $138,583, respectively, which resulted$76,123, respectively. Net operation losses (“NOLs”) will be expired in a net operating loss for income tax purposes. At June 30, 20202036. As of March 31, 2021 and December 31, 2019, the loss results in a2020, deferred tax assets resulted from NOLs of approximately $295,000$281,337 and $252,722, respectively 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.

6

 

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. At June 30, 2020On March 31, 2021 and December 31, 2019,2020, there was no uninsured cash balances were $120,539 and $116,174, respectively. for the Company.

 

For the sixthree months ended June 30,March 31, 2021 and 2020, and 2019, the Company’s revenue generated from one customer in the amount of $18,000$9,000 and $18,000,$9,000, respectively. At June 30, 2020As of March 31, 2021 and December 31, 2019,2020, the Company had $Nil$3,000 and $Nil$3,000 accounts receivable from the customer, respectively.

 

Note 56 - Related Party Transactions

 

During the sixthree months ended June 30,March 31, 2021 and 2020, and 2019, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in the amount of $1,535$754 and $8,028,$Nil, respectively. At June 30, 2020As of March 31, 2021 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 six months ended June 30, 2020 and 2019, total interest income was $Nil and $1,100, 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 contract 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.

7

 

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 June 30,December 31, 2020 is 1812 months. We currently have no finance leases.

 

During the sixthree months ended June 30,March 31, 2021 and 2020, and 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease were $32,196nil and 30,960,$16,098, respectively. As of March 31, 2021 and 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:

 

    Six Months Ended
June 30,
 
    2020  2019 
  $32,214  $32,214 
           
    $32,214  $32,214 

    Three Months Ended
June 30,
 
  Classification 2020  2019 
Operating lease cost G&A expense $16,107  $16,107 
           
Net lease cost   $16,107  $16,107 

    Three Months Ended
March 31,
 
  Classification 2021  2020 
Operating lease cost G&A expense $16,107  $16,107 
           
Net lease cost   $16,107  $16,107 

 

Balance sheet information related to leases consists of the following:

 

  Classification June 30,
2020
  

December 31,

2019

 
Assets          
Operating lease ROU assets Right-of-use assets $92,855  $122,122 
           
Total leased assets   $92,855  $122,112 
Liabilities          
Current portion          
Operating lease liabilities Current maturities of operating lease liabilities $62,274  $59,313 
           
Non-current portion          
Operating lease liabilities Long-term portion of operating lease liabilities  33,106   65,317 
           
Total lease liabilities   $95,380  $124,630 
           
Weighted average remaining lease term          
Operating leases    1.5   2.0 
           
Weighted average discount rate          
Operating leases    5.5%  5.5%

8

  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:

 

  Six Months Ended
March 31,
 
  2020  2019 
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flows from operating leases $29,250  $26,499 
Right-of-use assets obtained in exchange for lease obligations:        
Operating leases  29,267   27,752 

  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 June 30, 2020March 31, 2021 are as follows:

 

Ending December 31, Operating Leases 
2020 $32,196 
2021  66,972 
2022  - 
Total lease payments  99,168 
Less: Interest  (3,788)
Present value of lease liabilities $95,380 

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Ending December 31, Operating Leases 
2021 $50,229 
2022  - 
     
Total lease payments  50,229 
Less: Interest  (907)
Present value of lease liabilities $49,322 

 

Note 8 – PPP Loan9 –Loans

 

On April 15,16, 2020, the Company gotreceived a Promissory Note (the “Note”) in the amount of $19,400 approved fromunder 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 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 East West BankSBA on April 16,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 911 - Subsequent Event

 

On July 14, 2020,The Company has evaluated all other subsequent events through the Company entered into a loan agreement with SBA, pursuant to which the Company obtained a loandate 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 $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. Pursuant to the loan agreement, the proceeds of the principal amount will be solely as working capital. The Company received the amount of $14,000 on July 20, 2020.consolidated financial statements.

 

910
 

 

Item 2. Management’s Discussion and Analysis or Plan of Financial Condition and Results of OperationsOperation

 

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 getting 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 June 30,March 31, 2021 and 2020 and 2019

 

During the three months ended June 30,March 31, 2021 and 2020, and 2019, the Company generated $9,000 and $9,000 of revenues, respectively; therevenues. The revenue was generated from property management service. The corresponding cost of revenue was $0. During the three months ended June 30,March 31, 2021 and 2020, and 2019, the Company incurred general and administrative expenses of $86,251$82,962 and $79,714,$85,123, respectively. The increasedecrease was mainly due to the increasedecrease in salary expense.payroll expense and head count during the three months ended March 31, 2021. For the three months ended June 30,March 31, 2021 and 2020, and 2019,, our net loss was $77,251losses were $54,562 and $70,164, respectively.$76,123, 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 June 30, 2020, compared to the same period in last year.March 31, 2021.

 

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 June 30, 2020,March 31, 2021, we had an accumulated deficit of $1,102,278.$1,323,595. As of June 30, 2020,March 31, 2021, we had cash of $360,161$199,147 and a working capital of $268,756,$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 June 30, 2020,Going Concern Assessment

The Company demonstrates adverse conditions that raise substantial doubt about the Company’s principal sources of liquidity consisted of approximately $360,000 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.

 

11

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:

Any obligation under certain guarantee contracts,
Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets,
Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and
Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

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 June 30, 2020March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

1112
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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.

 

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

13

Item 6. Exhibits.

 

(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.

 

1314
 

 

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.

 

 FORGE INNOVATION DEVELOPMENT CORP.
  
Date: August 10, 2020May 14, 2021/s/ Patrick Liang
 Patrick Liang, President
 (Principal Executive Officer)
  
Date: August 10, 2020May 14, 2021/s/ Patrick Liang
 Patrick Liang, Chief Financial Officer
 (Principal Financial and Accounting Officer)

15

EXHIBIT INDEX

 

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

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