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Forge Innovation Development (FGNV)

Filed: 10 Aug 20, 4:04pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended June 30, 2020

 

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 81-4635390

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

17800 Castleton Street, Suite 583

City of Industry, CA 91748

(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 ☒  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  ☒   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:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share FGNV OTC Markets Group

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No ☒

 

The number of shares of Common Stock, $0.0001 par value, of the registrant outstanding at August 7. 2020 was 45,621,868. 

 

 

 

 

 

 

FORGE INNOVATION DEVELOPMENT CORP.

 

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

 

TABLE OF CONTENTS

 

 PAGE
  
Part I. FINANCIAL INFORMATION: 
  
Item 1. Condensed Financial Statements:1
  
Balance Sheets, June 30, 2020 (unaudited) and December 31, 20192
  
Statements of Operations (unaudited), for the Three Months and Six Months ended June 30, 2020 and 20193
  
Statements of Cash Flows (unaudited), for the Six Months ended June 30, 2020 and 20194
  
Statements of Changes in Shareholders’ Equity (unaudited) for the Three Months and Six Months ended June 30, 2020 and 20195
  
Notes to Condensed Financial Statements (unaudited)6
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations11
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk12
  
Item 4. Controls and Procedures12
  
Part II. OTHER INFORMATION: 
  
Item 1. Legal Proceedings13
  
Item 1A. Risk Factors13
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds13
  
Item 3. Defaults Upon Senior Securities13
  
Item 4. Mine Safety Disclosures13
  
Item 5. Other Information13
  
Item 6. Exhibits14
  
SIGNATURES15
  
EXHIBIT INDEX16

 

 i 

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FRORGE INNOVATION DEVELOPMENT CORP.

 

INDEX TO CONDENSED FINANCIAL STATEMENTS

 

Balance Sheets, June 30, 2020 (Unaudited) and December 31, 20192
  
Statements of Operations (unaudited), for the Three Months and Six Months ended June 30, 2020 and 20193
  
Statements of Cash Flows (unaudited), for the Six Months ended June 30, 2020 and 20194
  
Statements of Changes in Shareholders’ Equity (unaudited) for the Three Months 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, 
  2020  2019 
  (unaudited)    
ASSETS   
CURRENT ASSETS        
Cash $360,161  $366,270 
Note receivable  -   110,000 
Prepaid expense and other current assets  8,000   8,000 
         
Total Current Assets  368,161   484,270 
         
NONCURRENT ASSET        
Operating lease right-of-use assets  92,855   122,122 
Property and equipment, net  29,504   34,395 
Rent deposit  13,953   13,953 
Total Non-Current Assets  136,312   170,470 
TOTAL ASSETS $504,473  $654,740 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES:        
Other current liability $17,731  $4,774 
PPP loan  19,400     
Operating lease liabilities  62,274   59,313 
Total Current Liabilities  99,405   64,087 
         
Long term portion of operating lease liabilities  33,106   65,317 
TOTAL LIABILITIES  132,511   129,404 
         
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 
Additional Paid-in Capital  1,469,678   1,469,678 
Accumulated Deficit  (1,102,278)  (948,904)
Total Stockholders’ Equity  371,962   525,336 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $504,473  $654,740 

 

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 

 

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 

 

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 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 Company filed an amendment to its Articles of Incorporation in the State of Nevada to change the Company’s name to Forge Innovation Development Corp. Our current principle executive office is located at 17800 Castleton Street, Suite 583, City of Industry, CA 91748. Tel: 626-986-4566. The Company’s main business will be focus 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”.

  

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. 

 

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 effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC 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.

 

Liquidity

 

As of June 30, 2020, the Company’s principal sources 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 capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.

 

Note 3 - 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 six months ended June 30, 2020 and 2019, the Company has incurred a net loss of $153,374 and $138,583, respectively, which resulted in a net operating loss for income tax purposes. At June 30, 2020 and December 31, 2019, the loss results in a deferred tax assets of approximately $295,000 and $252,722, respectively at the tax rate of 21%. The deferred tax asset has been off-set by an equal valuation allowance.

 

 6 

 

 

Note 4 - Concentration of Risk

 

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

 

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

 

Note 5 - Related Party Transactions 

 

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

 

Note 6 - Notes Receivable

 

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

 

For the six months ended June 30, 2020 and 2019, total interest income was $Nil and $1,100, respectively.

 

Note 7 - Leases

 

The Company has operating lease for its lease’s office space from a third party. We determined if an arrangement is a lease inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of identified asset for a period of time. The 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, 2020 is 18 months. We currently have no finance leases.

 

During the six months ended June 30, 2020 and 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease were $32,196 and 30,960, respectively.

 

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 

 

 

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 

 

 

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 

 

Future minimum lease payment under non-cancellable lease as of June 30, 2020 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 

 

 9 

 

 

Note 8 – PPP Loan

 

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

 

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

 

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

 

Note 9 - Subsequent Event

 

On July 14, 2020, the Company entered into a loan agreement with SBA, pursuant to which the Company obtained 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. 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.

 

 10 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

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

 

Overview

 

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

 

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

 

During the three months ended June 30, 2020 and 2019, the Company generated $9,000 and $9,000 of revenues, respectively; the revenue was generated from property management service. The corresponding cost of revenue was $0. During the three months ended June 30, 2020 and 2019, the Company incurred general and administrative expenses of $86,251 and $79,714, respectively. The increase was mainly due to the increase in salary expense. For the three months ended June 30, 2020 and 2019, our net loss was $77,251 and $70,164, respectively. The increase in net loss was mainly due to the increase in general and administrative expense for the three months ended June 30, 2020, compared to the same period in last year.

 

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

 

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

 

 Equity and Capital Resources

 

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

 

As of June 30, 2020, the Company’s principal sources 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 capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.

 

 11 

 

 

Off-Balance Sheet Arrangements

 

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

 

 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.

 

Critical Accounting Policies

 

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

  

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

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

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

 

Changes in Internal Control over Financial Reporting

 

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

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors.

 

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

 

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

 

None 

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None

 

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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.

  

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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, 2020/s/ Patrick Liang
 Patrick Liang, President
 (Principal Executive Officer)
  
Date: August 10, 2020/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