FORGE
INNOVATION DEVELOPMENT CORP.
CONDENSED
BALANCE SHEETS
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT ASSETS
|
|
|
|
Cash
|
|
$
|
589,846
|
|
|
$
|
653,142
|
|
Note receivable
|
|
|
110,000
|
|
|
|
110,000
|
|
Account receivable
|
|
|
-
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
699,846
|
|
|
|
766,142
|
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSET
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
|
164,579
|
|
|
|
-
|
|
Property and equipment, net
|
|
|
36,409
|
|
|
|
29,217
|
|
Other assets
|
|
|
13,953
|
|
|
|
18,238
|
|
Total Non-Current Assets
|
|
|
214,941
|
|
|
|
47,455
|
|
TOTAL ASSETS
|
|
$
|
914,787
|
|
|
$
|
813,597
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Other current liability
|
|
$
|
9,276
|
|
|
$
|
4,873
|
|
Operating lease liabilities
|
|
|
55,101
|
|
|
|
-
|
|
Total Current Liabilities
|
|
|
64,377
|
|
|
|
4,873
|
|
|
|
|
|
|
|
|
|
|
Long term portion of operating lease liabilities
|
|
|
110,105
|
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
|
174,482
|
|
|
|
4,873
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
Preferred stock ($.0001 par value, 50,000,000 shares authorized; no share issued and outstanding as of March 31, 2019 and December 31, 2018)
|
|
|
-
|
|
|
|
-
|
|
Common stock ($.0001 par value, 200,000,000 shares authorized, 45,621,868 shares issued and outstanding as of March 31, 2019 and December 31, 2018)
|
|
|
4,562
|
|
|
|
4,562
|
|
Additional Paid-in Capital
|
|
|
1,469,678
|
|
|
|
1,469,678
|
|
Accumulated Deficit
|
|
|
(733,935
|
)
|
|
|
(665,516
|
)
|
Total Stockholders’ Equity
|
|
|
740,305
|
|
|
|
808,724
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
914,787
|
|
|
$
|
813,597
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
FORGE
INNOVATION DEVELOPMENT CORP.
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the three months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
9,000
|
|
|
$
|
9,000
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross Profit
|
|
|
9,000
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Consulting Expenses
|
|
|
18,010
|
|
|
|
18,000
|
|
Other Selling, General and Administrative Expenses
|
|
|
59,159
|
|
|
|
40,326
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
77,169
|
|
|
|
58,326
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
550
|
|
|
|
1,550
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(67,619
|
)
|
|
|
(47,776
|
)
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
800
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(68,419
|
)
|
|
$
|
(47,776
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted
|
|
|
45,621,868
|
|
|
|
57,621,868
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
FORGE
INNOVATION DEVELOPMENT CORP.
CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss
|
|
$
|
(68,419
|
)
|
|
$
|
(47,776
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Amortization of ROU
|
|
|
627
|
|
|
|
-
|
|
Depreciation expense
|
|
|
1,874
|
|
|
|
472
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Rent deposit
|
|
|
-
|
|
|
|
(13,953
|
)
|
Account receivable
|
|
|
3,000
|
|
|
|
-
|
|
Accrued liability
|
|
|
-
|
|
|
|
2,500
|
|
Other current liability
|
|
|
4,403
|
|
|
|
2,805
|
|
Net cash used in operating activities
|
|
|
(58,515
|
)
|
|
|
(55,952
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Note receivable
|
|
|
-
|
|
|
|
100,000
|
|
Purchase of property and equipment
|
|
|
(4,781
|
)
|
|
|
(27,116
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(4,781
|
)
|
|
|
72,884
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Increase (decrease) in Cash
|
|
|
(63,296
|
)
|
|
|
16,932
|
|
Cash at beginning of period:
|
|
|
653,142
|
|
|
|
824,777
|
|
Cash at end of period:
|
|
$
|
589,846
|
|
|
$
|
841,709
|
|
|
|
|
|
|
|
|
|
|
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.
FORGE INNOVATION DEVELOPMENT CORP.
STATEMENTS OF CHANGES IN SHAREHOLDER’S
EQUITY
(Unaudited)
|
|
Number of Shares
|
|
|
Common Shares
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Total Shareholder’s Equity
|
|
Balance, January 1, 2019
|
|
|
45,621,868
|
|
|
$
|
4,562
|
|
|
$
|
1,469,678
|
|
|
$
|
(665,516
|
)
|
|
$
|
808,724
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68,419
|
)
|
|
|
(68,419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2019
|
|
|
45,621,868
|
|
|
$
|
4,562
|
|
|
$
|
1,469,678
|
|
|
$
|
(733,935
|
)
|
|
$
|
740,305
|
|
|
|
Number of Shares
|
|
|
Common Shares
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Total Shareholder’s 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
|
|
The accompanying notes are an integral part
of these unaudited condensed financial statements.
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 three months ended March 31, 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.
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 three months ended March 31, 2019 and 2018, the depreciation expense were $1,874 and $472, 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 three months ended March 31, 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. Early adoption is permitted for annual periods beginning after
December 15, 2018, and interim periods therein. 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.
As
of March 31, 2019 and 2018, the Company has incurred a net loss of $68,419 and $47,776 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 $202,102 and
$23,920 at the effective tax rate of 21%. The deferred tax asset has been off-set by an equal valuation allowance.
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 March 31, 2019 and December 31, 2018,
uninsured cash balances were $349,387 and $595,451, 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 three months
ended and as of March 31, 2019 and 2018, rent expense was $0 and $250.
During
the three months ended March 31, 2019, Mr. Liang, the Company’s CEO, paid operating expenses on behalf of the Company in
the amount of $5,805. At March 31, 2019 and December 31, 2018, the Company had balance of due to Mr. Liang in the amount of $5,805
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, and the remaining $110,000
will be due on June 30, 2019.
For
the three months ended March 31, 2019 and 2018, total interest income was $550 and $1,550, 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.
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 March 31, 2019 is 33 months. We currently have no finance leases.
During
the three months ended March 31, 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash
flows from operating lease was $15,480.
The
components of lease expense consist of the following:
|
|
Classification
|
|
Three Months
Ended
March 31,
2019
|
|
Operating lease cost
|
|
G&A expense
|
|
$
|
16,107
|
|
|
|
|
|
|
|
|
Net lease cost
|
|
|
|
$
|
16,107
|
|
Balance
sheet information related to leases consists of the following:
|
|
Classification
|
|
March 31,
2019
|
|
Assets
|
|
|
|
|
|
Operating lease ROU assets
|
|
Right-of-use assets
|
|
$
|
164,579
|
|
|
|
|
|
|
|
|
Total leased assets
|
|
|
|
$
|
164,579
|
|
Liabilities
|
|
|
|
|
|
|
Current portion
|
|
|
|
|
|
|
Operating lease liabilities
|
|
Current maturities of operating lease liabilities
|
|
$
|
55,101
|
|
|
|
|
|
|
|
|
Non-current portion
|
|
|
|
|
|
|
Operating lease liabilities
|
|
Long-term portion of operating lease liabilities
|
|
|
110,105
|
|
|
|
|
|
|
|
|
Total lease liabilities
|
|
|
|
$
|
165,206
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term
|
|
|
|
|
|
|
Operating leases
|
|
|
|
|
2.75
|
|
|
|
|
|
|
|
|
Weighted average discount rate
|
|
|
|
|
|
|
Operating leases
|
|
|
|
|
5.5
|
%
|
Cash
flow information related to leases consists of the following:
|
|
Three Months
Ended
March 31, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
13,159
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
|
Operating leases
|
|
|
13,786
|
|
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 March 31, 2019 are as follows:
Ending December 31,
|
|
Operating Leases
|
|
2019
|
|
$
|
46,440
|
|
2020
|
|
|
64,392
|
|
2021
|
|
|
66,972
|
|
2022
|
|
|
-
|
|
Total lease payments
|
|
|
177,804
|
|
Less: Interest
|
|
|
(12,598
|
)
|
Present value of lease liabilities
|
|
$
|
165,206
|
|