Quarterly Report (10-q)

 

 

 

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, 2022

 

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.)

 

6280 Mission Blvd Unit 205

Jurupa Valley, CA 92509

(Address of principal executive offices)

 

[phone]

(Registrant’s telephone number, including area code)

 

N/A

( Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Not applicable		Not applicable		Not applicable

 

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. ☐

 

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 11, 2022, was 45,621,868.

 

 

 

 

 

FORGE INNOVATION DEVELOPMENT CORP.

 

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2022

 

TABLE OF CONTENTS

 

	PAGE
Part I. FINANCIAL INFORMATION:
Item 1. Condensed Financial Statements:	1
Consolidated Balance Sheets, September 30, 2022 (unaudited) and December 31, 2021	2
Consolidated Statements of Operations (unaudited) for the Three and Nine Months ended September 30, 2022 and 2021	3
Consolidated Statements of Cash Flows (unaudited) for the Nine Months ended September 30, 2022 and 2021	4
Consolidated Statements of Changes in Shareholders’ Deficit (unaudited) for the Three and Nine Months ended September 30, 2022 and 2021	5
Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2. Management’s Discussion and Analysis and Plan of Operation	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk	10
Item 4. Controls and Procedures	10
Part II. OTHER INFORMATION:
Item 1. Legal Proceedings	11
Item 1A. Risk Factors	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults Upon Senior Securities	11
Item 4. Mine Safety Disclosures	11
Item 5. Other Information	11
Item 6. Exhibits	12
SIGNATURES	13
EXHIBIT INDEX	14

 

i

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FRORGE INNOVATION DEVELOPMENT CORP.

 

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated Balance Sheets, September 30, 2022 (Unaudited) and December 31, 2021	2
Consolidated Statements of Operations (Unaudited) for the Three and Nine Months ended September 30, 2022 and 2021	3
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months ended September 30, 2022 and 2021	4
Consolidated Statements of Changes in Shareholders’ Deficit (Unaudited) for the Three and Nine Months ended September 30, 2022 and 2021	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6

 

1

 

 

FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARY

 

CONSOLIDATED BALANCE SHEETS

 

		September 30,				December 31,
		2022				2021
			(Unaudited)
ASSETS
CURRENT ASSETS
Cash		$	3,961			$	60,364
Account receivable			-				9,000
Prepaid expense and other current assets			21,931				14,692
Total Current Assets			25,892				84,056
NONCURRENT ASSETS
Property and equipment, net			87,512				47,314
Rent deposit			13,953				13,953
Total Non-Current Assets			101,465				61,267
TOTAL ASSETS		$	127,357			$	145,323
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Other accrued liability		$	1,547			$	19,203
Other payable - Related Party			60,183				70,591
Unearned revenue			14,063				-
Rent payable			83,070				83,070
Loans, current			9,224				6,878
Total Current Liabilities			168,087				179,742
Long term portion of Chase auto loan			40,246				9,478
Long term portion of SBA loan			12,709				13,330
TOTAL LIABILITIES			221,042				202,550
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $.0001 par value, 50,000,000 shares authorized; no share issued and outstanding			-				-
Common stock, $.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding			4,562				4,562
Additional Paid-in Capital			1,469,678				1,469,678
Accumulated Deficit			(1,567,925	)			(1,531,467	)
Total Stockholders’ Deficit			(93,685	)			(57,227	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	127,357			$	145,323

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

2

 

 

FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

		For the three months ended								For the nine months ended
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Property management income		$	37,000			$	9,000			$	82,863			$	27,000
Operating Expenses
Consulting Expenses			9,800				18,000				29,400				54,000
Selling, General and Administrative Expenses			30,001				66,461				98,845				202,750
Total Operating Expenses			39,801				84,461				128,245				256,750
Other income (expense)
Gain on sales of property and equipment			6,874				-				6,874
Other income			938				-				938				-
Debt settlement			-				-				3,284				-
Government grants			-				5,000				-				24,400
Total other income, net			7,812				5,000				11,096				24,400
Net income (loss) before tax			5,011				(70,461	)			(34,286	)			(205,350	)
Income tax			(1,372	)							(2,172	)			(800	)
Net income (loss)		$	3,639			$	(70,461	)		$	(36,458	)		$	(206,150	)
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. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

		For the nine months ended September 30,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(36,458	)		$	(206,150	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of ROU			-				48,321
Depreciation expense			11,745				10,766
Gain on disposal of property and equipment			(6,874	)			-
Forgiveness of PPP loan			-				(19,400	)
Change in operating assets and liabilities:
Account receivable			9,000				3,000
Prepaid expense and other current assets			(7,239	)			(6,693	)
Other receivable-related party			-				(193	)
Unearned revenue			14,063				-
Other current liability – Related Party			(10,408	)			36,365
Other current liabilities			(17,656	)			(4,403	)
Net cash used in operating activities			(43,827	)			(138,387	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(6,880	)			(5,019	)
Net cash used in investing activities			(6,880	)			(5,019	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of SBA loan and car loans			(5,696	)			(276	)
Net cash used in financing activities			(5,696	)			(276	)
Net decrease in Cash			(56,403	)			(143,682	)
Cash at beginning of period:			60,364				236,586
Cash at end of period:		$	3,961			$	92,904
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFOR
Interest paid		$	-			$	-
Income taxes paid		$	2,172			$	800
NONCASH TRANSACTION OF INVESTING ACTIVITIES
Net loan carried through purchase of vehicle with trade-in		$	36,029			$	22,861

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

4

 

 

FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

 

		Number of Shares				Common Shares				Additional Paid-in Capital				Accumulated Deficit				Total Shareholders’ Equity
Balance, January 1, 2022			45,621,868			$	4,562			$	1,469,678				(1,531,467	)		$	(57,227	)
Net loss			-				-				-				(36,458	)			(36,458	)
Balance, September 30, 2022(unaudited)			45,621,868			$	4,562			$	1,469,678			$	(1,567,925	)		$	(93,685	)

 

		Number of Shares				Common Shares				Additional Paid-in Capital				Accumulated Deficit				Total Shareholders’ Equity
Balance, July 1, 2022			45,621,868			$	4,562			$	1,469,678				(1,571,564	)		$	(97,324	)
Net income			-				-				-				3,639				3,639
Balance, September 30, 2022(unaudited)			45,621,868			$	4,562			$	1,469,678			$	(1,567,925	)		$	(93,685	)

 

		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			-				-				-				(206,150	)			(206,150	)
Balance, September 30, 2021(unaudited)			45,621,868			$	4,562			$	1,469,678			$	(1,475,183	)		$	(943	)

 

		Number of Shares				Common Shares				Additional Paid-in Capital				Accumulated Deficit				Total Shareholders’ Equity
Balance, July 1, 2021			45,621,868			$	4,562			$	1,469,678			$	(1,404,722	)		$	69,518
Net loss			-				-				-				(70,461	)			(70,461	)
Balance, September 30, 2021(unaudited)			45,621,868			$	4,562			$	1,469,678			$	(1,475,183	)		$	(943	)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

5

 

 

Forge Innovation Development Corp. and Subsidiary

 

Notes to the consolidated financial statements

 

Note 1 - Organization and Description of Business

 

Forge Innovation Development Corp. (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, Forge amended its Articles of Incorporation in the State of Nevada to change the Company Predecessor’s name to Forge Innovation Development Corp. Our current principle executive office is located at 6280 Mission Blvd Unit 205, Jurupa Valley, CA 92509. The Company’s main business focuses 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. As of September 30, 2022, we have not generated any income from the subsidiary due to our business strategy adjustment. Meanwhile, we are also looking for other business opportunities which could potentially increase the profits of Company in the year of 2022.

 

Note 2 - Summary of Significant Accounting Policies

 

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

 

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

 

 

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. The effective date of ASU No. 2016-13 for smaller reporting companies is 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.

 

Note 3 - Going Concern

 

The accompanying consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, the Company has suffered recurring losses from operations since inception, resulting in an accumulated deficit of $1,567,925 as of September 30, 2022. 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 provide assurance that the Company will meet its objectives and be able to continue in operation.

 

The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of Forge Innovation Development Corp. to continue as a going concern.

 

Note 4 - 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 nine months ended September 30, 2022 and 2021, the Company has incurred a net loss before tax of $34,286 and $205,350, respectively. Net operation losses (“NOLs”) can be carried forever based on the 2017 Tax Cuts and Jobs Act. As of September 30, 2022 and December 31, 2021, deferred tax assets resulted from NOLs of approximately $423,875 and $430,783, respectively, which were fully off-set by valuation allowance reserved.

 

Note 5 - Related Party Transactions

 

During the nine months ended September 30, 2022 and 2021, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in the amount of $4,809 and $1,702, respectively. As of September 30, 2022 and December 31, 2021, the Company had payable balance to Mr. Liang in the amount of $nil and $284, respectively.

 

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 equaled to the remaining vehicle loan balance with 7.11% interest rate annum for a period of 41 months and monthly installment of $558.

 

7

 

 

On July 15, 2022, the Company traded its Mazda vehicle with Longo Toyota to exchange a 2022 Toyota Mirai. The total purchase price for the 2022 Toyota Mirai is $84,406.12 and the loan amount is $48,295.54 by deducting the value of the trade-in Mazda vehicle and the rebate from the manufacturer. The monthly installment amount is $671 with 0% APR and a payment term of 72 months. Along with the transaction, we received a $15,000 Hydrogen subsidy card for the compensation for the purchase of new energy automobile. We recorded the subsidy as prepaid expense and unearned revenue to amortize on a straight-line basis over the estimate useful life of four years started on the purchase date. As a result of the trade-in transaction, $6,874 gain on disposal was recognized during the three and nine months period ended September 30, 2022.

 

During the nine months ended September 30, 2022 and 2021, 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 $29,400 and $36,000, respectively. On September 30, 2022 and December 31, 2021, the Company had balance of due to Speedlight Consulting Services Inc in the amount of $60,000 and $63,000, respectively.

 

Note 7 - Leases

 

The Company leased an office space from a third party on December 2017 for four-year term with the expiration date on January 14, 2022. We determined the lease is an operating lease upon adoption of ASC 842 on January 1, 2019. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet with 5.5% incremental borrowing rate used. Lease expense for these leases is recognized on a straight-line basis over the lease term. During the nine months ended September 30, 2022 and 2021, the Company recorded $nil and $48,321 rent expenses, respectively, and no lease payments made during the quarters. As of September 30, 2022 and December 31, 2021, the Company had $83,070 rent payable toward the lease agreement.

 

Note 8 – PPP and SBA Loans

 

On April 16, 2020, the Company received a Promissory Note (the “Note”) in the amount of $19,400 under the Paycheck Protection Program (the “PPP Loan”) through East West Bank (the “Lender”). The interest rate on this Note is a fixed rate of 1.00% per annum. According to SBA’s PPP Loan 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). 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 forgiveness letter from SBA on March 10, 2021 and the Company recognized under other income in the amount of $19,400 for the nine months ended September 30, 2021, accordingly.

 

On July 14, 2020, the Company entered into a loan agreement with the U.S. Small Business Administration (“SBA”), pursuant to which the Company obtained a loan in the amount of $14,000 with the term of 30 years and interest rate of 3.75%, payable monthly including principal and interest in the amount $69. As of September 30, 2022 and December 31, 2021, the outstanding loan balances were $12,709 and $13,330, respectively.

 

Note 9 – 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 expired 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 for default on rent payments. No judgment has been rendered as of September 30, 2022, and the case is in the pre-trial stage. The Company has retained legal counsel to address the matter and the Court has scheduled the trial date on January 31, 2023.

 

Note 10 - Subsequent Event

 

The Company has evaluated all other subsequent events through the date these consolidated financial statements were issued and determine that there were no other subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.

 

8

 

 

Item 2. Management’s Discussion and Analysis and 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 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

 

Forge 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. As of September 30, 2022, we have not generated any income from the subsidiary due to our business strategy adjustment. Meanwhile, we are also looking for other business opportunities which could potentially increase the profits of Company in the year of 2022.

 

Results of Operation for the three months ended September 30, 2022 and 2021

 

For the three months ended September 30, 2022, we had total revenue of $37,000, as compared to $9,000 for the three months ended September 30, 2021, an increase of $28,000 or 311%. The increase in total revenue was attributable to the newly signed Property Management Agreement (the “PMA”) with Legend Investment International, LP (“Legend Investment”) on April 2, 2022. Pursuant to the PMA, the original monthly service charge was $5,000 which was amended to $10,000 per month in June 2022 due to Legend Investment required additional management services for their properties. In April 2022, we terminated the property management services with Bloomage Beverly Hills Investment Inc. due to the sales of the managed properties. On July 15, 2022, we traded our Mazda auto with Longo Toyota to exchange a 2022 Toyota Mirai. Along with the transaction, we received a $15,000 Hydrogen subsidy card to reward for the purchase of new energy automobile, which will be amortized over the estimated period Hydrogen volume being consumed.

 

During the three months ended September 30, 2022 and 2021, the Company incurred general and administrative expenses of $39,801and $85,261, respectively. The decrease was mainly due to the decreasing in payroll expense and professional fees during the three months ended September 30, 2022. For the three months ended September 30, 2022 and 2021, our net income (loss) were $3,639 and $(71,261), respectively. The increase in net income was mainly due to the increasing of revenue generated, along with the decreasing in general administrative expenses for the three months ended September 30, 2022, compared to the same period in last year.

 

Results of Operation for the nine months ended September 30, 2022 and 2021

 

For the nine months ended September 30, 2022, we had total revenue of $82,863, as compared to $27,000 for the nine months ended September 30, 2021, an increase of $55,863 or 207%. The increase in total revenue was attributable to the newly signed Property Management Agreement (the “PMA”) with Legend Investment International, LP (“Legend Investment”) on April 2, 2022. Pursuant to the PMA, the original monthly service charge was $5,000 which was amended to $10,000 per month in June due to Legend Investment required additional management services for their properties. In April 2022, we terminated the property management services with Bloomage Beverly Hills Investment Inc. due to the sales of the managed properties.

 

During the nine months ended September 30, 2022 and 2021, the Company incurred general and administrative expenses of $128,245 and $256,750, respectively. The decrease in general and administrative expenses was mainly due to the decreasing in salary expense and professional expenses. For the nine months ended September 30, 2021 and 2020, our net loss was $36,458 and $206,150, respectively. The decrease in net loss was mainly due to the increase in revenue and decrease in general and administrative expenses for the nine months ended September 30, 2022, compared to the same period in last year.

 

Equity and Capital Resources

 

We have incurred losses since inception of our business in 2016, except for current quarter, and as of September 30, 2022, we had an accumulated deficit of $1,567,925. As of September 30, 2022, we had cash of $3,961 and a negative working capital of $142,195, compared to cash of $60,364 and a negative working capital of $95,686 as of December 31, 2021. The decrease in the working capital was primarily due to cash used to pay for operating expenses.

 

9

 

 

Going Concern Assessment

 

The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern. These adverse conditions are negative financial trends, specifically cash outflow from operating activities, operating losses, accumulated deficit and other 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 business 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 needs on a timely basis. However, there can be no assurance that these plans and arrangements will be sufficient to fund the Company’s ongoing capital expenditures and other requirements.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to 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 audited consolidated financial statements appearing elsewhere in this 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 September 30, 2022 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.

 

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 expired 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 for default on rent payments. No judgment has been rendered as of September 30, 2022, and the case is in the pre-trial stage. The Company has retained legal counsel to address the matter and the Court has scheduled the trial date on January 31, 2023.

 

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		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL 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 14, 2022	/s/ Patrick Liang
	Patrick Liang, President
	(Principal Executive Officer)
Date: November 14, 2022	/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		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

 

14