UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For
the Quarterly Period Ended
OR
For the transition period from ______________ to ______________
Commission
File No.
(Exact name of small business issuer as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(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.
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).
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 ☐ | |
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Smaller
reporting company
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Emerging
growth company
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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, $ par value of the registrant outstanding at May 20, 2025, was .
FORGE INNOVATION DEVELOPMENT CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2025
TABLE OF CONTENTS
| i |
PART I
ITEM 1. FINANCIAL STATEMENTS
FRORGE INNOVATION DEVELOPMENT CORP.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1 |
FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
March 31, 2025 (Unaudited) |
December 31, 2024 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ |
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$ |
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||||
| Account receivable |
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||||||
| Prepaid expense and other current assets, net |
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| Total Current Assets |
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| NONCURRENT ASSETS | ||||||||
| Property and equipment, net |
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| Real estate investments, net |
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| Total Non-Current Assets |
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| TOTAL ASSETS | $ |
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$ |
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| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | $ |
|
$ |
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| Due to related parties |
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| Unearned revenue |
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| Rent payable, current |
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| Loan payables, current |
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| Total Current Liabilities |
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| Security deposits payable |
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| Rent payable |
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| Long term portion of Chase auto loan |
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| Long term portion of SBA loan |
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| Commercial loan |
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| TOTAL LIABILITIES |
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| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Preferred stock, $ par value, shares authorized; share issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding |
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| Additional paid-in capital |
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| Accumulated deficit |
(
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) |
(
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) | ||||
| Total Forge Stockholders’ Equity |
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||||||
| Noncontrolling interests |
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||||||
| Total Equity |
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||||||
| TOTAL LIABILITIES AND EQUITY | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Rent income | $ |
|
$ |
|
||||
| Total revenue |
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||||||
| Operating expenses | ||||||||
| Professional expenses |
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| Depreciation expense |
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| Share-based compensation |
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| Property operating expense |
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| Selling, general and administrative expenses |
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| Total operating expenses |
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| Other income (expense) | ||||||||
| Other income, net |
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||||||
| Interest expense and loan fee, net |
(
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) |
(
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) | ||||
| Total other expense , net |
(
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) |
(
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) | ||||
| Net loss before tax |
(
|
) |
(
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) | ||||
| Income tax expense | ||||||||
| Net loss | $ |
(
|
$ |
(
|
) | |||
| Net loss attributable to non-controlling interest in a subsidiary |
(
|
) |
(
|
) | ||||
| Net loss attributable to common stockholders | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average shares outstanding ： | ||||||||
| Basic and diluted | ||||||||
| Loss per share： | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
FORGE INNOVATION DEVELOPMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
For the three months ended March 31, |
||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense |
|
|
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| Interest expense |
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|
Reserve for other current assets |
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| Expense paid by a related party on behalf of the Company |
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| Share-based compensation |
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| Change in operating assets and liabilities: | ||||||||
| Account receivable |
(
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) |
(
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) | ||||
| Prepaid expense and other current assets |
(
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) |
(
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) | ||||
| Unearned revenue |
(
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) |
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| Other current liability – related party |
|
|||||||
| Rent payable |
(
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) |
(
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) | ||||
| Accounts payable and accrued liabilities |
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||||||
| Net cash used in operating activities |
(
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) |
(
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) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment to third parties |
(
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) |
(
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) | ||||
| Proceeds from third parties |
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| Repayment to related parties |
(
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) | ||||||
| Proceeds from related parties |
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| Net cash (used in) provided by financing activities |
(
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) |
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| Net decrease in Cash |
(
|
) |
(
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) | ||||
| Cash at beginning of period: |
|
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| Cash at end of period: | $ |
|
$ |
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||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFOR | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ |
|
|||||
| NONCASH TRANSACTION OF INVESTING ACTIVITIES | ||||||||
| Shares issued for acquisition of Legend | $ | $ | ||||||
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 EQUITY
|
Number of Shares |
Common Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Noncontrolling interests |
Total Equity |
|||||||||||||||||||
| Balance, January 1, 2025 |
|
$ |
|
$ |
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$ |
(
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) | $ |
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$ |
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||||||||||||
| Net loss | - |
(
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) |
(
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) |
(
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) | |||||||||||||||||
| Balance, March 31, 2025 (unaudited) |
|
$ |
|
$ |
|
$ |
(
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) |
|
$ |
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|||||||||||||
|
Number of Shares |
Common Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Noncontrolling interests |
Total Equity |
|||||||||||||||||||
| Balance, January 1, 2024 |
|
$ |
|
$ |
|
$ |
(
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) | $ |
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$ |
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||||||||||||
| Net loss | - |
(
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) |
(
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) |
(
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) | |||||||||||||||||
| Balance, March 31, 2024 (unaudited) |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
|
|||||||||||||
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 March 31, 2025, we have not generated any income from the subsidiary due to our business strategy adjustment.
On
March 24, 2023, pursuant to an Asset Purchase Agreement between Forge Innovation Development Corp. (the “Company” or the
“Buyer”) and Legend Investment Management, LLC (“Legend LLC” or the “Seller”), the Company acquired
A
relative of the President of the Company has significant influence of the Seller’s management, therefore the acquisition is being
treated as a related party transaction. The Company acquired
Note 2 - Summary of Significant Accounting Policies
The accompanying unaudited consolidated 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.
| 6 |
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.
Rental income
The Company’s rental income, which is derived primarily from lease contracts through Legend LP, includes rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the non-cancelable term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. In addition to base rent, the Company’s lease agreements generally require tenants to pay or reimburse the Company for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by the Company and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by the Company. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.
If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on several factors including, but not limited to:
● whether the lease stipulates how and on what a tenant improvement allowance may be spent.
● whether the tenant or landlord retains legal title to the improvements at the end of the lease term.
● whether the tenant improvements are unique to the tenant or general-purpose in nature; and
● whether the tenant improvements are expected to have any residual value at the end of the lease.
Pursuant
to the lease agreements, the Company receives security deposits which will be refunded or applied as final payments as outlined in the
agreements. Such security deposits are recorded as liabilities for the Company on the consolidated balance sheet. As of March 31, 2025
and December 31, 2024, security deposits totaled $
Business Combination
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair values of these identifiable assets and liabilities over the fair value of purchase consideration is recorded as gain on bargain purchase included in other income on the consolidated statement of operations.
| 7 |
Non-controlling Interests
Non-controlling interests are portions of entities included in the condensed consolidated financial statements that are not attributable to the Company. Non-controlling interests are identified separately from the Company’s stockholders’ equity and its net income (loss). Non-controlling interest equity balances include the non-controlling entity’s initial contribution at the date of the original acquisition, on-going contributions, distributions, and percentage share of earnings since inception. The non-controlling interests are calculated based on percentages of ownership.
Accounting Standards Issued Recently Adopted
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) : Improvements to Reportable Segment Disclosures . The amended guidance requires incremental reportable segment disclosures, primarily about significant segment expenses. The amendments also require entities with a single reportable segment to provide all disclosures required by these amendments, and all existing segment disclosures. The amendments will be applied retrospectively to all prior periods presented in the financial statements and are effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU No. 2023-07 has no impact on its financial position and results of operations.
Accounting Standards Issued but Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate reconciliation and further information on reconciling items meeting a quantitative threshold. In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. It also requires disaggregating individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amended guidance is effective for fiscal years beginning after December 15, 2024. The guidance can be applied either prospectively or retrospectively. The Company is currently in the process of evaluating the impact this amended guidance may have on the footnotes to our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.
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 $
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.
| 8 |
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 – Property and equipment, net
|
March 31,
2025 |
December 31, 2024 |
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| Furniture | $ |
|
$ |
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| Equipment |
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| Vehicle |
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| Computers |
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| Total property and equipment |
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| Less: accumulated depreciation |
(
|
(
|
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| Property and equipment, net | $ |
|
$ |
|
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Note 5 – Real Estate Investments
On
March 24, 2023, the Company acquired
|
March 31,
2025 |
December 31, 2024 |
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| Commercial building | $ |
|
$ |
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| Tenant improvements |
|
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| Construction in progress |
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| Land |
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| Total real estate investments, at cost |
|
|
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| Less: accumulated depreciation |
(
|
) |
(
|
) | ||||
| Total real estate investments, net | $ |
|
$ |
|
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Note 6 - Concentration of Risk
The
Company maintains cash in two accounts within two local commercial banks located in Southern California. The standard insurance amount
is $
For
the three months ended March 31, 2025, the Company generate
Note 7 - 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.
| 9 |
For
the three months ended March 31, 2025 and 2024, the Company has incurred a net loss before tax of $
Note 8 - Related Party Transactions
As of March 31, 2025 and December 31, 2024, the amounts due to related parties consisted of the following:
| Party | Nature of relationship |
March 31,
2025 |
December 31, 2024 |
|||||||
| Patrick Liang (“Patrick”) | Chief Executive Officer | $ |
|
$ |
|
|||||
| Hua Guo | Officer |
|
|
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| Glory Investment International Inc. (“Glory”) | Entity controlled by Mother of CEO |
|
|
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| Prime Investment International Inc. (“Prime”) | Entity controlled by Mother of CEO |
|
|
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| University Campus Hotel LP (“University”) | Entity controlled by Mother of CEO |
|
|
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| $ |
|
$ |
|
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The
amounts due to related parties are unsecured, non-interest-bearing and due on demand. During the three months ended March 31, 2025,.
proceeds received from these related parties totaled $
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 $
Note 9 – Commercial and SBA Loans
| March 31, | December 31, | |||||||
| Party | 2025 | 2024 | ||||||
| Chase auto loan (Note 8) | $ |
|
$ |
|
||||
| SBA Loan (a) |
|
|
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| Third party entity A (b) |
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|
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| Third party entity B (c) |
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|
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| Total commercial loans |
|
|
||||||
| Less: current portion |
(
|
) |
(
|
) | ||||
| Non-current portion | $ |
|
$ |
|
||||
During
the three months ended March 31, 2025, the Company recognized interest expense $
| a. |
|
| 10 |
| b. |
|
| c. |
|
Note 10 – Contingencies
On
December 8, 2017, the Company entered into a lease agreement with Puente Hills Business Center II, L.P. (“PHBC-II”) for a
lease term of forty-eight
months, and which was scheduled to expire on
As
of December 31, 2024, the Company had
rent payable of
$
On May 23, 2023, Legend International Investment, LP. (“Legend LP”) and Forge Innovation Development Corp. (the “Company”) were added as defendants in a derivative case associated with the case#: CVRI2104400. On December 9, 2024, the Riverside Superior Court (the “Court”) granted Matthew Taylor as receiver of Legend LP (the “Receiver”) to assume control Legend LP and to manage Legend LP’s finances. As of December 31, 2024, Legend LP was under receivership ordered by the Court. Legend LP filed a motion to set aside the receivership on February 28 th , 2025, and successfully suspending the receivership on March 17, 2025. The Company and Legend LP are currently evaluating the impacts of the receivership and may bring up a lawsuit to against the plaintiff of receivership.
The
rents for the period from January through March 2025 were collected by the Receiver and will be returned to Legend LP, subject to
any amount that may have been spent. The $
On March 3, 2025, Plaintiff Xinyi Guo initiated legal proceedings against Defendant Legend International Investment LP. As of May 20, 2025, the Defendant has not yet been formally served with the complaint; therefore, the specific allegations and claims set forth by the Plaintiff are currently unavailable.
| 11 |
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 March 31, 2025, we have not generated any income from the subsidiary due to our business strategy adjustment.
On March 24, 2023, pursuant to an Asset Purchase Agreement between Forge Innovation Development Corp. (the “Company” or the “Buyer”) and Legend Investment Management, LLC (“Legend LLC” or the “Seller”), the Company acquired 77.3% of Legend LLC’s 66% ownership of Legend International Investment, LP (“Legend LP”). Legend LP owns 100% of Mission Marketplace; a grocery anchored shopping center (the “Property”) located at 6240 Mission Boulevard in Jurupa Valley, California. The Property contains two, one-story and one, two-story buildings containing 48,722 total square foot of gross leasable area situated on a 4.51acre site.
A relative of the President of the Company has significant influence of the Seller’s management, therefore the acquisition is being treated as a related party transaction. The Company acquired 51% interest of Legend LP from Legend LLC in exchanged for 1,967,143 common stocks of the Company, valued at $0.70 per share for a total purchase price of $1,377,000, which equals 51% of Legend LP’s approximate net value of $2,700,000 based on (1) the Property’s valuation appraisal report dated on February 20, 2023, (2) Legend LP’s net book value as of February 28, 2023, and (3) the loan agreement to Legend LP by a third-party lender effective on March 23, 2023. After the closing of the acquisition, the Company will own 51% of Legend LP and the Seller will own 15% of Legend LP.
Results of Operation for the three months ended March 31, 2025 and 2024
For the three months ended March 31, 2025, we had total revenue of $175,200, as compared to $136,219 for the three months ended March 31, 2024, an increase of $38,981, or 29%. The increase was mainly due to more units rented out in March 2025.
During the three months ended March 31, 2025 and 2024, the Company incurred general and administrative expenses of $182,142 and $66,090, respectively. During the same period of 2024 and 2025, the depreciation expense decreased from $78,361 to $77,395, and property operating expense decreased from $36,148 to $28,030. The increases in expenses are mainly due to the adjustment and recognition of audit-related fees.
During the three months ended March 31, 2025 and 2024, the Company had interest expense, net of $91,202 and $131,014, respectively.
During the three months ended March 31, 2025 and 2024, the Company had share-based compensation of $ nil and $494,028, respectively.
Equity and Capital Resources
We have incurred losses since inception of our business in 2016, except for current quarter, and as of March 31, 2025, we had an accumulated deficit of $3,8 75,200 . As of March 31, 2025, we had cash of $10,026 and a negative working capital of $1,349 ,276 , compared to cash of $32,403 and a negative working capital of $1,174,511 as of December 31, 2024. The increase in the working capital deficiency was primarily due to cash used to pay for operating expenses and loans and interest of Legend.
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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 March 31, 2025 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 scheduled to expire on January 14, 2022, at monthly rent of $4,962, subject to increase. On or about September 29, 2020, the Company vacated the premises. On October 22, 2020, PHBC-II filed a lawsuit against the Company and its guarantor, Mr. Liang. The Company has retained legal counsel to address the matter and the Court has rescheduled the trial date from January 31, 2023 to April 18, 2023, and then again rescheduled to June 14, 2023. On July 14, 2023, the Company reached a settlement with PHBC-II and agreed to pay rent of $100,000 and rent deposit of $13,953 became nonrefundable.
As of December 31, 2024, the Company had rent payable of $57,059, with $45,294 due in one year and $11,765 due after one year. As of March 31, 2025, the Company had rent payable of $52,353, with $47,647 due in one year and $4,706 due after one year. The rent payable is grouped under other current liabilities and other liabilities for the short-term and long-term portion, respectively.
On May 23, 2023, Legend International Investment, LP. (“Legend LP”) and Forge Innovation Development Corp. (the “Company”) were added as defendants in a derivative case associated with the case#: CVRI2104400. On December 9, 2024, the Riverside Superior Court (the “Court”) granted Matthew Taylor as receiver of Legend LP (the “Receiver”) to assume control Legend LP and to manage Legend LP’s finances. As of December 31, 2024, Legend LP was under receivership ordered by the Court. Legend LP filed a motion to set aside the receivership on February 28 th , 2025, and successfully suspending the receivership on March 17, 2025. The Company and Legend LP are currently evaluating the impacts of the receivership and may bring up a lawsuit to against the plaintiff of receivership.
The rents for the period from January through March 2025 were collected by the Receiver and will be returned to Legend LP, subject to any amount that may have been spent. The $123,126 rent payments collected by the Receiver from December 9m 2024 to March 17, 2025 were recorded under the “Prepaid expenses and other current assets” account as of March 31, 2025. The Receiver is currently in the process of finalizing the accounting, which is expected to take approximately 30 days. As of the reporting date, we have not yet received any funds or reports from the receiver. Further details will be provided once the receiver’s report is made available.
On March 3, 2025, Plaintiff Xinyi Guo initiated legal proceedings against Defendant Legend International Investment LP. As of May 20, 2025, the Defendant has not yet been formally served with the complaint; therefore, the specific allegations and claims set forth by the Plaintiff are currently unavailable.
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: May 20, 2025 | /s/ Patrick Liang |
| Patrick Liang | |
| Chief Executive Officer | |
| Date: May 20, 2025 | /s/ Patrick Liang |
| Patrick Liang | |
| Chief Financial 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.
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