10-Q 1 f10q0919_forgeinnovatio.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

 

For the Quarterly Period Ended September 30, 2019

 

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 583

City of Industry, CA 91748

(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 ☒  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 November 4, 2019, was 45,621,868.

  

 

 

 

 

 

FORGE INNOVATION DEVELOPMENT CORP.

 

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2019

 

TABLE OF CONTENTS

 

  PAGE
   
Part I. FINANCIAL INFORMATION:  
   
Item 1. Financial Statements: 1
   
Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018 2
   
Statements of Operations (unaudited) for the nine Months ended September 30, 2019 and 2018 3
   
Statements of Cash Flows (unaudited) for the nine Months ended September 30, 2019 and 2018 4
   
Notes to Financial Statements (unaudited) 6
   
Item 2. Management’s Discussion and Analysis and Plan of Operation 11
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
   
Item 4. Controls and Procedures 13
   
Part II. OTHER INFORMATION:  
   
Item 1. Legal Proceedings 14
   
Item 1A. Risk Factors 14
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
   
Item 3. Defaults Upon Senior Securities 14
   
Item 4. Mine Safety Disclosures 14
   
Item 5. Other Information 14
   
Item 6. Exhibits 14
   
SIGNATURES 15
   
EXHIBIT INDEX 16

 

i

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FRORGE INNOVATION DEVELOPMENT CORP.

 

INDEX TO FINANCIAL STATEMENTS

 

Balance Sheets, September 30, 2019 (Unaudited) and December 31, 2018   2
     
Statements of Operations (unaudited), for the Three and Nine Months ended September 30, 2019 and 2018   3
     
Statements of Cash Flows (unaudited), for the Nine Months ended September 30, 2019 and 2018   4
     
Statements of Changes in Shareholder’s Equity (unaudited) for the Three and Nine Months ended September 30, 2019 and 2018   5
     
Notes to Condensed Financial Statements (unaudited)   6

 

1

 

 

FORGE INNOVATION DEVELOPMENT CORP. 

 

CONDENSED BALANCE SHEETS

 

   September  30,   December 31, 
   2019   2018 
   (unaudited)     
ASSETS    
CURRENT ASSETS    
Cash  $434,086   $653,142 
Prepaid expense and other current asset   11,000    - 
Note receivable   110,000    110,000 
Account receivable   -    3,000 
           
Total Current Assets   555,086    766,142 
           
NONCURRENT ASSET          
Operating lease right-of-use assets   136,460    - 
Property and equipment, net   36,840    29,217 
Other assets   13,953    18,238 
Total Non-Current Assets   187,253    47,455 
TOTAL ASSETS  $742,339   $813,597 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Other current liability  $2,498   $4,873 
Operating lease liabilities   57,890    - 
Total Current Liabilities   60,388    4,873 
           
Long term portion of operating lease liabilities   80,451    - 
TOTAL LIABILITIES   140,839    4,873 
           
STOCKHOLDERS’ EQUITY:          
Preferred stock ($.0001 par value, 50,000,000 shares authorized; no share issued and outstanding as of September 30, 2019 and December 31, 2018)   -    - 
Common stock ($.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding as of September 30, 2019 and December 31, 2018)   4,562    4,562 
Additional Paid-in Capital   1,469,678    1,469,678 
Accumulated Deficit   (872,740)   (665,516)
Total Stockholders’ Equity   601,500    808,724 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $742,339   $813,597 

 

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 nine months ended 
   September 30,
2019
   September 30,
2018
   September 30,
2019
   September 30,
2018
 
                 
Revenue  $9,000   $9,000   $27,000   $27,000 
Cost of revenue   -    -    -    - 
Gross Profit   9,000    9,000    27,000    27,000 
                     
Operating Expenses                    
Consulting Expenses   18,000    38,000    54,010    94,000 
Other Selling, General and Administrative Expenses   60,191    79,700    181,064    186,685 
                     
Total Operating Expenses   78,191    117,700    235,074    280,685 
                     
Interest income   550    1,050    1,650    3,650 
 Income tax   -    -    800    - 
Net loss  $(68,641)  $(107,650)  $(207,224)  $(250,035)
                     
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    53,871,868 

 

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 nine months ended
September 30,
 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss  $(207,224))  $(250,035)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of ROU   1,881    - 
Depreciation expense   6,459    3,865 
Change in operating assets and liabilities:          
Rent deposit   -    (13,953)
Prepaid expense   (11,000)   (6,064)
Account receivable   3,000    (3,000)
Other assets   -    (4,285)
Other current liability   (2,675)   4,382 
Net cash used in operating activities   (209,559)   (269,090)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Note receivable   -    100,000 
Purchase of property and equipment   (9,797)   (34,823)
Net cash provided by (used in) investing activities   (9,797)   65,177 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Process from related party borrowings   300    4,722 
Net cash provided by financing activities   300    4,722 
           
Net decrease in Cash   (219,056)   (199,191)
Cash at beginning of period:   653,142    824,777 
Cash at end of period:  $434,086   $625,586 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Interest paid  $-   $- 
Income taxes paid  $800   $800 
Common stock issued to settle with the accrued consulting expenses   -   $300,000 

 

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, 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 
Net loss                  (68,641)   (68,641)
                          
Balance, September 30, 2019   45,621,868   $4,562   $1,469,678   $(872,740)  $601,500 

 

   Number of Shares   Common Shares   Additional Paid-in Capital   Accumulated Deficit   Total
Shareholders’ Equity
 
Balance, January 1, 2018   57,621,868   $5,762   $1,168,478   $(366,130)  $808,110 
Implementation of ASU2014-09                  26,667    26,667 
Net loss                  (47,776)   (47,776)
                          
Balance, March 31, 2018   57,621,868   $5,762   $1,168,478   $(387,239)  $787,001 
Net loss                  (94,609)   (94,609)
Common stock issued for service   3,000,000    300    299,700         300,000 
Cancellation of common stock   (15,000,000)   (1,500)   1,500         - 
Balance, June 30, 2018   45,621,868   $4,562   $1,469,678   $(481,848)  $992,392 
Net loss                  (107,650)   (107,650)
                          
Balance, September 30, 2018   45,621,868   $4,562   $1,469,678   $(589,498)  $884,742 

 

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.

 

Development Stage Company 

 

The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) ASC 915, “Development Stage Entities”. The Company has devoted substantially all of its efforts to establishing a new business and for which either of the following conditions exists: planned principal operations have not commenced; or the planned principal operations have commenced, but there has been no significant revenue there from. The Company’s first sales activity was in March 2017 by the sale of real estate in Desert Springs, California. There were revenue from real estate management services during the nine months ended September 30, 2019. There is no assurance of any future revenues.

 

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. 

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective approach, which applies the new standard to contracts that are not completed as of the date of adoption. Under the new 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.

 

Revenue streams that are scoped into ASU 2014-09 include:

 

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 and has concluded this is appropriate under the new standard.

 

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. Subsequent to the adoption of the new standard, the Company may recognize a gain on a real estate disposition that previously did not qualify as a sale or for full profit recognition due to the timing of the transfer of control.

 

6

 

 

Property and equipment

  

Property and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated residual value) over 5 or 7 years, the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

 

During the nine months ended September 30, 2019 and 2018, the depreciation expense were $6,459 and $3,865, respectively.

 

Recently Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new leasing guidance (“Topic 842”) that replaced the existing lease guidance (“Topic 840”). Topic 842 established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. This guidance also expanded the requirements for lessees to record leases embedded in other arrangements and the required quantitative and qualitative disclosures surrounding leases.

 

The Company adopted Topic 842 on its effective date of January 1, 2019 using a modified retrospective transition approach; as such, Topic 842 will not be applied to periods prior to adoption and the adoption had no impact on the Company’s previously reported results. The Company elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed the Company to carry forward its identification of contracts that are or contain leases, its historical lease classification and its accounting for initial direct costs for existing leases. The impact of adopting Topic 842 was not material to the Company’s result of operations or cash flows for the nine months ended September 30, 2019. The Company recognized operating lease liabilities of $178,365 upon adoption, with corresponding ROU assets on its balance sheet. See Note 7 for further details.

 

Recently Issued Accounting Pronouncements Not Yet Adopted 

 

In June 2016, the FASB issued ASU No. 2016-13, (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. 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. ASU 2016-13 is effective for public entities for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The Company is evaluating the impact of the adoption of ASU 2016-13 on its financial position and results of operations.

 

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.

 

During the nine months ended September 30, 2019 and 2018, the Company has incurred a net loss of $207,224 and $250,035 which resulted in a net operating loss for income tax purposes. NOLs begin expiring in 2036. The loss results in a deferred tax assets of approximately $230,000 and $110,000 at the effective tax rate of 21%. The deferred tax asset has been off-set by an equal valuation allowance.

 

7

 

 

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 September 30, 2019 and December 31, 2018, uninsured cash balances were $194,556 and $415,490, respectively. 

 

Note 5 - Related Party Transactions 

 

On February 1, 2017, the Company entered into a lease for office space (the “Office Lease”) with Glory Investment International Inc. (“Glory Investment”) whose CEO is an immediate family of the Company. Pursuant to the Office Lease, the Company subleased 200 square feet office from Glory Investment, and the monthly rent of $500 is due within first five business days of each month. The term of the Office Lease is renewable from year-to-year, and was terminated on March 31, 2018. For the nine months ended as of September 30, 2019 and 2018, rent expense was $0 and $ 250.

 

During the nine months ended September 30, 2019, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in the amount of $17,203. At September 30, 2019 and December 31, 2018, the Company had balance of due to Mr. Liang in the amount of $300 and $Nil, respectively.

 

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 will be due on December 31, 2019.

 

For the nine months ended September 30, 2019 and 2018, total interest income was $1,650 and $3,650, respectively.

 

Note 7 - Leases

 

The Company has operating lease for its leases 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 contact provides us the right to 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.  

 

8

 

 

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 September 30, 2019 is 27 months. We currently have no finance leases.

 

During the nine months ended September 30, 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease was $46,440.

 

The components of lease expense consist of the following:

 

   Classification  Three Months
Ended
September  30,
2019
   Nine Months
Ended
September  30,
2019
 
Operating lease cost  G&A expense  $16,107   $48,321 
              
Net lease cost     $16,107   $48,321 

 

Balance sheet information related to leases consists of the following:

 

    Classification   September 30,
2019
 
Assets          
Operating lease ROU assets   Right-of-use assets   $ 136,460  
             
Total leased assets       $ 136,460  
Liabilities            
Current portion            
Operating lease liabilities   Current maturities of operating lease liabilities   $ 57,890  
             
Non-current portion            
Operating lease liabilities   Long-term portion of operating lease liabilities     80,451  
             
Total lease liabilities       $ 138,341  
             
Weighted average remaining lease term            
Operating leases         2.25  
             
Weighted average discount rate            
Operating leases         5.5 %

 

9

 

 

Cash flow information related to leases consists of the following:

 

    Nine Months
Ended
September 30,
2019
 
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flows from operating leases   $ 40,023  
Right-of-use assets obtained in exchange for lease obligations:        
Operating leases     41,904  

 

As previously discussed, the Company adopted Topic 842 by applying the guidance at adoption date, January 1, 2019. As required, the following disclosure is provided for periods prior to adoption, which continue to be presented in accordance with ASC 840. Future minimum lease payment under non-cancellable lease as of September 30, 2019 are as follows:

  

Ending December 31,   Operating Leases  
2019   $ 15,480  
2020     64,392  
2021     66,972  
2022     -  
Total lease payments     146,844  
Less: Interest     (8,503 )
Present value of lease liabilities   $ 138,341  

 

10

 

 

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 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 get involved in protracted negotiations, the Company sold the property to an independent third party for a profit.

 

Development Stage and Capital Resources

 

Since its inception, the Company has devoted substantially all of its efforts to business planning. Accordingly, the Company is considered to be in the development stage. In March, 2017, the Company generated its first revenues from the sale of vacant property in Desert Springs, California. There were revenue from real estate management services during the nine months ended September 30, 2019.There is no assurance of future revenues. 

 

There is no assurance that the Company’s activities will result in any operations or that any operations, if begun, will generate revenues. The Company will need additional capital, but there is no assurance that the Company will be able to obtain such capital on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans. 

 

Results of Operation for the three months ended September 30, 2019 and 2018

 

During the three months ended September 30, 2019 and 2018, 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 September 30, 2019 and 2018, the Company incurred general and administrative expenses of $78,191 and $117,700, respectively. The decrease was mainly due to the decrease in consulting expense. For the three months ended September 30, 2019 and 2018, our net loss was $68,641 and $107,650 respectively. The decrease in net loss was mainly due to the decrease in general and administrative expense for the three months ended September 30, 2019, compared to the same period in last year.

 

Results of Operation for the nine months ended September 30, 2019 and 2018

 

During the nine months ended September 30, 2019 and 2018, the Company generated $27,000 and $27,000 of revenues. The revenue was generated from property management service. The corresponding cost of revenue was $0. During the nine months ended September 30, 2019 and 2018, the Company incurred general and administrative expenses of $235,074 and $280,685, respectively. The decrease in general and administrative expenses was mainly due to the decrease in consulting expenses from $94,000 for the period ended September 30, 2018 to $54,010 for the same period in this year. For the nine months ended September 30, 2019 and 2018, our net loss was $207,224 and $250,035, respectively. The decrease in net loss was mainly due to the decrease in general and administrative expenses for the nine months ended September 30, 2019, 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 September 30, 2019, we had an accumulated deficit of $872,740 As of September 30, 2019, we had cash of $434,086 and a working capital of $494,698, compared to cash of $653,142 and a working capital of $761,269 at December 31, 2018. The decrease in the working capital was primarily due to purchase of fixed assets and cash used to pay off operating expense. 

 

The Company does not anticipate that it will generate revenue sufficient to cover its planned operating expenses in the foreseeable future, and the Company must obtain additional financing in order to develop and implement its business plan and proposed operations. If the Company is not successful in generating sufficient revenues and/or obtaining additional funding to develop its business plan and proposed operations, this could have a material adverse effect on its business, results of operations liquidity and financial condition. 

 

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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.

 

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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 September 30, 2019 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

 

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: November 4, 2019 /s/ Patrick Liang
  Patrick Liang, President
  (Principal Executive Officer)
   
Date: November 4, 2019 /s/ Patrick Liang
  Patrick Liang, Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

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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.

 

 

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