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EX-2.5 - ASSET PURCHASE AGREEMENT BY AND BETWEEN ENFORCE GLOBAL SOLUTIONS, LLC AND FORGEHOUSE, INC., DATED AS OF DECEMBER 29, 2009. - United American Petroleum Corp.forgehouseex25.htm
EX-31.1 - CERTIFICATION OF PRESIDENT AND TREASURER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. - United American Petroleum Corp.forgehouseex311.htm
EX-32.1 - CERTIFICATION OF PRESIDENT AND TREASURER PURSUANT TO 18 U.S.C. ? 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. - United American Petroleum Corp.forgehouseex321.htm
EX-2.6 - MEMBERSHIP INTEREST PURCHASE AGREEMENT BY AND BETWEEN THE COMPANY AND JOHN BRITCHFORD-STEEL, DATED AS OF DECEMBER 31, 2009. - United American Petroleum Corp.forgehouseex26.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
(Mark one)
o
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
   
 
For the fiscal year ended December 31, 2009
   
 
OR
   
o
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:  000-51465
 
FORGEHOUSE, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
(State or Other Jurisdiction
of Incorporation or Organization)
 
20-1904354
(I.R.S. Employer
Identification No.)
1906 Berkeley Avenue, Los Angeles, CA
(Address and telephone number of Principal Executive Offices)
 
90026
(Zip Code)
 
(323) 868-2002
(Issuer’s Telephone Number, Including Area Code)

 
Securities registered under Section 12(b) of the Exchange Act: None
 
Securities registered under Section 12(g) of the Exchange Act:  Common Stock, $0.001 par value

 
 
Indicate by check mark if the registrant is a well-known seasonal issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 x No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.
 
Large accelerated filer                                                      o                                Accelerated filer                                                      o
 
Non-accelerated filer                                                      o                                Smaller reporting company      x
 

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o No x
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of May 14, 2010 was $5,425,000.
 
The number of shares outstanding of the registrant’s common stock as of May 14, 2010 was 29,500,000.

 


 
1

 


 

FORGEHOUSE, INC.

 
TABLE OF CONTENTS

   
Page
 
PART I
 
     
Item 1.
Business.
3
     
Item 2.
Properties.
12
     
Item 3.
Legal Proceedings.
12
     
Item 4.
Submission of Matters to a Vote of Security Holders.
12
     
 
PART II
 
     
Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities.
13
     
Item 7.
Management’s Discussion and Analysis or Plan of Operation.
14
     
Item 8.
Financial Statements and Supplementary Data.
15
     
Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
44
     
Item 9A.
Controls and Procedures.
44
     
Item 9B
Other Information.
44
     
 
PART III
 
     
Item 10.
Directors, Executive Officers and Corporate Governance.
45
     
Item 11.
Executive Compensation.
47
     
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
49
     
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
49
     
Item 14.
Principal Accountant Fees and Services.
50
     
 
PART IV
 
     
Item 15.
Exhibits, Financial Statement Schedules.
51
     
 
SIGNATURES
53
     
 

 


 
2

 


PART I
 
Item 1.  Business.
 
General
 
ForgeHouse, Inc. (“we,” “our,” “us,” or the “Company”), is a corporation that was formed in Nevada on November 19, 2004.  Our principal place of business is located at 1906 Berkeley Avenue, Los Angeles, California 90026.  Between January 31, 2008, and December 16, 2009, we were solely engaged in the business of developing and selling physical security industry application and software (the “Prior Business”).  We supplemented that business on that date with the acquisition of Northern Future Energy Corp., a Nevada corporation engaged in the oil and gas business.  We have since discontinued our Prior Business and in December 2009, our management changed.
 
Business
 
We were engaged in the Prior Business, primarily directly, but also through a wholly-owned subsidiary, ForgeHouse, LLC, a Georgia limited liability company (“FH LLC”).  As of December 29, 2009, we sold all of the property and assets associated with the Prior Business and, as of December 31, 2009, we sold all of our membership interests in FH LLC.  In connection with such transactions, the directors and officers holding office at that time resigned and Philip Mann was elected to our board of directors and appointed our Assistant Secretary.
 
On December 16, 2009, we entered into an agreement and Plan of Merger (the “Merger Agreement”) with Northern Future Energy Corp. and our newly formed, wholly-owned subsidiary, NFE Acquisition Corp.  In anticipation of the Merger Agreement, we had previously formed the acquisition subsidiary into which, at closing, Northern Future Energy Corp. was merged and was the surviving entity.  Our newly acquired subsidiary owns oil and gas properties located near Anchorage, Alaska.  Production on the properties has not commenced and there can be no assurance that any hydrocarbons will be economically recoverable, if at all; however, pre-production activities, such as a multi-phase exploration program of trenching, sampling, geophysical surveys and test drilling have commenced.  We intend to continue such exploratory activities on the properties in the forseeable future.
 
On March 12, 2010, Christian Negri was appointed our President, Treasurer, and Secretary and also became a director of the Company.
 
On April 13, 2010, Philip Mann resigned as assistant secretary and as a director of the Company.  Mr. Mann’s resignation was not the result of any disagreement with the policies, practices or procedures of the Company.
 
Real Property
 
We do not currently own any property, other than certain oil and gas properties located near Anchorage, Alaska, owned by our newly acquired subsidiary.  Production on the properties has not commenced and there can be no assurance that any hydrocarbons will be economically recoverable, if at all; however, pre-production activities, such as a multi-phase exploration program of trenching, sampling, geophysical surveys and test drilling have commenced.
 
 
3

 
Legal Proceedings
 
We are not a party to any pending legal proceeding.
 
Competition
 
The oil and gas industry is intensely competitive.  We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial, and operational resources and staffs.  Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations, and necessary drilling equipment, as well as for access to funds.
 
Regulation
 
Our oil and gas operations are subject to various United States federal, state, and local governmental regulations.  Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties, and taxation.  From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas.  The production, handling, storage, transportation, and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, provincial, and local laws and regulations relating primarily to the protection of human health and the environment.  To date, our expenditures related to complying with these laws, and for remediation of existing environmental contamination, have not been significant.  The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.
 
Employees
 
As of May 14, 2010, we have no employees.  We expect we will utilize independent contractors, consultants, and other personnel from time to time to assist in our business efforts.  We are not a party to any employment agreements.
 
RISK FACTORS
 
This Annual Report and the documents accompanying or incorporated by reference into this Annual Report contains forward-looking statements about equity exchange transaction and us within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act.  These forward-looking statements generally include the plans and objectives of management for future operations, including plans and objectives relating to our future economic performance, and can generally be identified by the use of the words “believe,” “intend,” “plan,” “expect,” “forecast,” “project,” “may,” “should,” “could,” “seek,” “pro forma,” “goal,” “estimates,” “continues,” “anticipate,” and similar words.
 
These forward-looking statements necessarily depend upon assumptions and estimates that may prove to be incorrect.  Although we believe that the assumptions and estimates reflected in the forward-looking statements are reasonable, we cannot guarantee that we will achieve our plans, intentions or expectations. The forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ in significant ways from any future results expressed or implied by the forward-looking statements.
 
 
4

 
 
We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of invoking these safe harbor provisions. Such statements are based upon current expectations and beliefs and are subject to risks, uncertainties and changes in condition, significance, value and effect, including those discussed in the sections entitled “Risk Factors” below and to be contained in our subsequent periodic filings pursuant to our obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those anticipated events. Except as may be required under federal law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur.
 
Please refer to the cautionary statements regarding forward-looking statements” immediately above. The discussion below highlights some important risks we have identified in connection with the proposed equity exchange transaction and related transactions, but these should not be assumed to be the only factors that could affect our future performance and condition, financial or otherwise.  We do not have a policy of updating or revising forward-looking statements, and silence by management over time should not be assumed to mean that actual events are bearing out as estimated in such forward-looking statements.
 
An investment in our securities involves a high degree of risk. In determining whether to purchase or sell our securities, you should carefully consider all of the material risks described below, together with the other information contained in this Annual Report, before making a decision to purchase our securities; however, as stated above, the risks below should not be assumed to be the only factors that could affect our future performance and condition, financial and otherwise.  You should only purchase our securities if you can afford to suffer the loss of your entire investment.
 
Risks Related to Our Business and Our Marketplace
 
We have a limited history operating in the oil and gas industry.  As a result, it is difficult to evaluate our business and prospects.
 
Our continuing operations were recently acquired and we operated our Prior Business for approximately two years.  Thus, we, have a significantly limited operating and financial history available to help our stockholders evaluate our past performance.  Moreover, our limited historical financial results may not accurately predict our future performance.  We have changed out business strategy and are now engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas.  Companies in their initial stages of development present substantial business and financial risks and may suffer significant losses.  As a result of the risks specific to our new business and those associated with new companies in general, it is possible that we may not be successful in implementing our business strategy.
 
ForgeHouse has a history of losses and accumulated deficits that may continue in the future and, along with “going concern” reports, may adversely affect our business, prospects, financial condition, results of operations, cash flows and stock price by, among other things, making it more difficult to obtain debt or equity financing.
 
In our Prior Business, we incurred net losses each fiscal year.  For the year ended December 31, 2009, we recorded a net income of approximately $125,000 (after taking into account the loss from our discontinued operations and certain related income tax consequences as compared to a net loss of approximately $2,489,000 for the year ended December 31, 2008.  Our accumulated deficit through December 31, 2009, was approximately $6,982,000.
 
Our recurring losses from operations, limited cash resources and continued negative cash flow from operations, and accumulated deficit, and change in business operations, among other factors, raised substantial doubt about our ability to continue as a going concern and led our independent registered public accounting firm to include an explanatory paragraph related to our ability to continue as a going concern in their report for the year-ended December 31, 2009.
 
Reports of independent auditors questioning a company’s ability to continue as a going concern generally are viewed unfavorably by analysts and investors.  This may make it difficult for us to raise additional debt or equity financing needed for our continued operations or for planned expansion, particularly if we are unable to attain and maintain profitable operations in the future.  Consequently, future losses may adversely affect our business, prospects, financial condition, results of operations and cash flows.  You should review the reports of our independent registered public accounting firm and its financial statements and unaudited pro forma financial information before making any investment decision.
 
 
5

 
 
As our properties are in the exploration stage there can be no assurance that we will establish commercial discoveries on our properties.

Exploration for economic reserves of oil and gas is subject to a number of risk factors.  Few properties that are explored are ultimately developed into producing oil and/or gas wells.  Our properties are in the exploration stage only and are without proven reserves of oil and gas.  Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein.  We may not establish commercial discoveries on any of our properties.

The potential profitability of oil and gas ventures depends upon factors beyond our control.

The potential profitability of oil and gas properties is dependent upon many factors beyond our control.  For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments.  Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project.  These changes and events will likely materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations.  A productive well may become uneconomic in the event water or other deleterious substances are encountered that impair or prevent the production of oil and/or gas from the well.  In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances.  The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control.  These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production, and environmental protection.  These factors cannot be accurately predicted and the combination of these factors may result in us not receiving an adequate return on invested capital.

Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring properties or leases.

The oil and gas industry is intensely competitive.  We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial, and operational resources and staffs.  Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations, and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed.  Desirable acreage may not become available or if it is available for leasing, that we may not be successful in acquiring the leases.

The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control.  These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas, and environmental protection regulations.  The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

 
6

 
 
Oil and gas operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on us.

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment.  Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.  Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received.  Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities.  Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us.  Additionally, we may be subject to liability for pollution or other environmental damages that we may elect not to insure against due to prohibitive premium costs and other reasons.  To date we have not been required to spend any material amount on compliance with environmental regulations.  However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Exploration and production activities are subject to certain environmental regulations, which may prevent or delay the commencement or continuance of our operations.

In general, exploration and production activities are subject to certain federal, state, and local laws and regulations relating to environmental quality and pollution control.  Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation.  Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date.  Specifically, we will be subject to legislation regarding emissions into the environment, water discharges and storage, and disposition of hazardous wastes.  In addition, legislation has been enacted that requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities.  However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance.  Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

We believe that our operations currently comply, in all material respects, with all applicable environmental regulations.  We are not insured against all possible environmental risks.

Exploratory drilling involves many risks and we may become liable for pollution or other liabilities, which may have an adverse effect on our financial position.

Drilling operations generally involve a high degree of risk.  Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labor, and other risks are involved.  We may become subject to liability for pollution or hazards against which we cannot adequately insure or that we may elect not to insure.  Incurring any such liability may have a material adverse effect on our financial position and operations.

Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The laws, regulations, policies, or current administrative practices of any government body, organization, or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner that will fundamentally alter the ability of our company to carry on our business.  The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us.  Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.

 
7

 
 
We may need additional financing to continue and grow operations, which financing may not be available on acceptable terms or at all.

We may need to raise additional funds to fund our operations or grow our business.  Additional financing may not be available on terms or at times favorable to us, or at all.  If adequate funds are not available when required or on acceptable terms, we may be unable to continue and grow our operations.  In addition, such additional financing transactions, if successful, may result in additional dilution of our stockholders.  They may also result in the issuance of securities with rights, preferences, and other characteristics superior to those of the common stock and, in the case of debt or preferred stock financings, may subject us to covenants that restrict our ability to operate our business freely.
 
We may not successfully grow our business nor manage our growth, if any.
 
Our success is significantly dependent on a successful acquisition, drilling, completion, and production program.  We may be unable to locate recoverable reserves or operate on a profitable basis, which would place a significant strain on our management and administrative, operational, and financial resources.  If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in us.  In addition, if we are unable to manage our expected growth effectively, our business would be harmed.  There is no assurance that we will be able to expand our operations or effectively manage any growth.
 
We may incur additional costs and experience impaired operating results if we are unable to retain an experienced management team.
 
We rely on the experience, expertise, industry knowledge, and historical company knowledge of our executive officers.  It would be extremely difficult to replace them if we were to lose the services of any of them.  The loss of these officers could adversely affect our business, financial condition, and results of operations.
 
The costs and effects of litigation, investigations, or similar matters could adversely affect our financial position and result of operations.
 
We may be involved from time to time in a variety of litigation, investigations, or similar matters arising out of our business.  Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation.  If the ultimate judgments or settlements in any litigation or investigation significantly exceed insurance coverage, they could adversely affect our financial position and results of operations.  In addition, we may be unable to obtain appropriate types or levels of insurance in the future.
 
If we acquire additional companies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value, or adversely affect our operating results.
 
We may decide to make other investments in complementary companies.  We may not realize the anticipated benefits of any other acquisition or investment.  The success of our acquisition program will depend on our ability to overcome substantial obstacles, such as the availability of acquisition candidates, our ability to compete successfully with other acquirers seeking similar acquisition candidates, the availability of funds to finance acquisitions, and the availability of management resources to oversee the operation of acquired businesses.  Furthermore, we may have to incur debt or issue equity securities to pay for any additional future acquisitions or investments, the issuance of which could be dilutive to us or our existing stockholders.  In addition, any profitability may suffer because of acquisition-related costs or future impairment costs for acquired goodwill and other intangible assets.  We have limited resources, and we can offer no assurance that we will succeed in consummating any additional acquisitions or that we will be able to integrate and manage any acquisitions successfully.
 
We have no present commitments, understandings, or plans to acquire other companies.
 
 
8

 
 
Risks Associated with Investing in our Common Stock
 
The equity exchange transaction may be dilutive to our existing stockholders and will subject our stockholders to the prior rights and preferences of preferred stockholders.
 
We have issued 2,000,000 shares of Series A Convertible Preferred Stock to certain persons, which issuances amount to approximately six percent of all outstanding stock on an as-converted basis.  Furthermore, an additional 8,000,000 preferred shares are authorized for issuance at the discretion of our Board, which, if issued, could represent a material percentage of our outstanding stock.
 
Series A Convertible Preferred stockholders may elect a disproportionately high number of directors.
 
The holders of our Series A Convertible Preferred Stock are entitled to elect two members of our Board.  We have five authorized members for our Board, two of whom are electable by the Series A Convertible Preferred stockholders voting as a class, two of whom are electable by the common stockholders voting as a class, and one of whom may be agreed upon by the other four directors.  As of the date of this Annual Report, we have two directors, one of whom was elected by our Series A Convertible Preferred stockholders and the other of whom was appointed by such director.
 
If a trading market for our common shares does develop, trading prices may be volatile.
 
In the event that an orderly trading market develops and is maintained for our common shares, the market price of such shares may be based on factors that may not be indicative of future market performance.  Consequently, the market price of our shares may vary greatly.  If an orderly market for our shares develops and is maintained, there is a significant risk that our share price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control:
 
·  
variations in our quarterly operating results;
 
·  
announcements that our revenue or income/loss levels are below analysts’ expectations;
 
·  
general economic slowdowns;
 
·  
changes in market valuations of similar companies;
 
·  
announcements by us or our competitors of significant contracts; or
 
·  
acquisitions, strategic partnerships, joint ventures or capital commitments.
 
Because we became “public” by means of a reverse acquisition, we may not be able to attract the attention of major brokerage firms.
 
Additional risks may exist since we became “public” through a reverse acquisition.  Securities analysts of major brokerage firms may not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common shares.  No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our company in the future.
 
 
9

 
 
We are not required to meet or maintain any listing standards for our common stock to be quoted on the OTC Bulletin Board or in the Pink OTC Markets, which could affect our stockholders’ ability to access trading information about our common stock.
 
The OTC Bulletin Board and the Pink OTC Markets are each separate and distinct from the Nasdaq Stock Market and any national stock exchange, such as the New York Stock Exchange or the NYSEAmex.  Although the OTC Bulletin Board is a regulated quotation service operated by FINRA that displays real-time quotes, last sale prices, and volume information in over-the-counter (“OTC”) equity securities like our common stock, and although Pink OTC Markets’ Electronic Quotation Service is an Internet-based, real-time quotation service for OTC equities for market-makers and brokers that provides pricing and financial information for the OTC securities markets, we are not required to meet or maintain any qualitative or quantitative standards for our common stock to be quoted on either the OTC Bulletin Board or in the Pink OTC Markets.  Our common stock does not presently meet the minimum listing standards for listing on the Nasdaq Stock Market or any national securities exchange, which could affect our stockholders’ ability to access trading information about our common stock.  We are required, however, to satisfy the reporting requirements under the Exchange Act.  If we fail to do so, our shares may no longer be quoted on the OTC Bulletin Board.
 
Our securities are considered highly speculative.
 
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our exploration and development operations.  We have neither generated any material revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term.  Since we have not generated any material revenues, we expect that we will need to raise additional monies through the sale of our equity securities or debt in order to effectuate our business plan and continue our business operations.

Trading of our common stock may be restricted by the SEC’s “Penny Stock” regulations which may limit a stockholder’s ability to buy and sell our stock.
 
The U.S. Securities and Exchange Commission (“SEC”) has adopted regulations that generally define a “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.”  The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.
 
Stockholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses.  Our management is aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our common stock.
 
 
10

 
 
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information.  Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  FINRA’s requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
Our common stock has been thinly traded and, as a result, you may be unable to sell at or near ask prices or at all if you need to liquidate your shares.
 
The shares of our common stock have been, and may continue to be, thinly-traded on the OTC Bulletin Board, meaning that the number of persons interested in purchasing shares at or near ask prices at any given time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume and, that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares of common stock until such time as we become more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our shares of common stock is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on securities price.  We cannot give you any assurance that a broader or more active public trading market for our shares of common stock will develop or be sustained or that any trading levels will be sustained.  Due to these conditions, we cannot provide any assurances that our stockholders will be able to sell their shares at or near ask prices or at all.
 
In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted.  Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.
 
The price of our common stock could be highly volatile.
 
It is likely that our common stock will be subject to price volatility, low volumes of trades, and large spreads in bid and ask prices quoted by market makers.  Due to the low volume of shares that may be traded on any trading day, persons buying or selling in relatively small quantities may easily influence prices of our common stock.  This low volume of trades could also cause the price of our stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session.  Holders of our common stock may also not be able to liquidate their investment readily or may be forced to sell at depressed prices due to low volume trading.  If high spreads between the bid and ask prices of our common stock exist at the time of a purchase, the price of the common stock would need to appreciate substantially on a relative percentage basis for an investor to recoup an investment in our shares.  Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock.  No assurance can be given that an orderly and active market in our common stock will develop or be sustained.  If an orderly and active market does not develop, holders of our common stock may be unable to sell their shares, if at all.
 
 
11

 
 
Investors’ interests in us will be diluted and investors may suffer dilution in net book value per share if we issue additional shares or raise funds through the sale of equity securities.
 
In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors’ interests in us will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other stockholders.  Further, any such issuance may result in a change in our control.
 
We do not anticipate paying cash dividends on our common stock.
 
We do not anticipate paying any cash dividends on our common stock in the foreseeable future.
 
Item 2.  Properties.
 
We do not currently own any property, other than certain oil and gas properties located near Anchorage, Alaska, owned by our newly acquired subsidiary.  Production on the properties has not commenced and there can be no assurance that any hydrocarbons will be economically recoverable, if at all; however, pre-production activities, such as a multi-phase exploration program of trenching, sampling, geophysical surveys and test drilling have commenced.
 
Item 3.  Legal Proceedings.
 
We are not currently a party to any material legal proceedings.
 
Item 4.  Submission of Matters to a Vote of Security Holders.
 
No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this Annual Report.
 
 
12

 
 
PART II
 
Item 5.  Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.
 

Our common stock, par value $.001, has been quoted on the OTC Bulletin Board under the symbol “FOHE” since November 7, 2005, and, prior to that, under the symbol “MBTL” since January 5, 2006; however, our common stock did not commence virtually any trading until subsequent to our acquisition of FH LLC on January 31, 2008.  The following table sets forth the high and low bid prices for our common stock for the periods indicated, as reported by Pink OTC Markets, Inc.  Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.
 
   
Bid
 
   
High
   
Low
 
Year ended December 31, 2009:
 
 
   
 
 
First Quarter
  $ 0.25     $ 0.25  
Second Quarter
    0.25       0.07  
Third Quarter
    0.08       0.04  
Fourth Quarter
    0.05       0.02  
Year ended December 31, 2008:
               
First Quarter
    1.60       1.10  
Second Quarter
    1.97       1.30  
Third Quarter
    1.25       0.55  
Fourth Quarter
    0.55       0.25  
 
On May 14, 2010, we had approximately 10 stockholders of record.
 
We have never declared or paid any cash dividends on our common stock.  For the foreseeable future, we expect to retain any earnings to finance the operation and expansion of our business.
 
 
13

 
 
Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
THE FOLLOWING PRESENTATION OF OUR MANAGEMENT’S DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION INCLUDED ELSEWHERE IN THIS REPORT.
 
The independent registered public accounting firm’s report on our financial statements as of December 31, 2009, and for each of the years in the two-year period then ended, includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.  Management’s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 2 to the financial statements.
 
The following discussion of the financial condition and results of operation of the Company should be read in conjunction with the financial statements and the notes to those statements included herein.  This discussion includes forward-looking statements that involve risk and uncertainties.  Actual results may differ materially from those anticipated in the forward-looking statements.
 
Industry Overview
 
  The petroleum industry is highly competitive and subject to significant volatility due to numerous market forces.  Crude oil and natural gas prices are affected by market fundamentals such as weather, inventory levels, competing fuel prices, overall demand, and the availability of supply.

  Worldwide oil prices reached historical highs during the last half of 2008, before tumbling amid worldwide economic crisis.  Oil prices stabilized during 2009 and remain stable through the early part of 2010.  Future economic instability could impact demand, caused by a consumer shift to alternative fuel sources and/or supply, driven largely by concerns regarding the economic viability of extracting natural resources, thus affecting crude oil prices.

  Oil prices have significantly affected profitability and returns for upstream producers. Oil prices cannot be predicted with any certainty.  During the past ten years the industry has experienced wide fluctuations in prices.  While local supply/demand fundamentals are a decisive factor affecting domestic natural gas prices over the long term, day-to-day prices may be more volatile in the futures markets, such as on the NYMEX and other exchanges, making it difficult to forecast prices with any degree of confidence.

 
14

 
 
For the Year Ended December 31, 2009 in Comparison to the Year Ended December 31, 2008.
 
    Between January 31, 2008, and December 16, 2009, we were solely engaged in our Prior Business of developing and selling physical security industry application and software.  We supplemented that business on that date with the acquisition of Northern Future Energy Corp. engaged in the oil and gas business.  As of December 29, 2009, we sold all of the property and assets associated with the Prior Business and, as of December 31, 2009, we sold all of our membership interests in ForgeHouse LLC.

        Exclusive of the discontinued operations of our Prior Business, we had no net revenues from operations in either the current or the prior fiscal year.  For the year ended December 31, 2009, we had an operating loss of $86,000, as compared to an operating loss of $135,000 for the prior year.  In respect of the discontinued operations of our Prior Business, we incurred a loss from those operations of $1,121,000 (less an income tax benefit of $453,000) for a net loss of $668,000 in the year ended December 31 ,2009, as compared to a net loss from operations of $2,719,000 in the prior year.  In the current year, we had a gain on restructuring of debt, net of income tax of $880,000, as compared to a gain of $366,000 in the prior year.  Overall, for the year ended December 31, 2009, we recorded net income of $125,000, as compared to a net loss of $2,489,000 for the prior year.
 
Liquidity and Capital Resources
 
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis.  At December 31, 2009, we had a cash balance of $66,000 and a working capital deficit of $93,000.  Our balance sheet at December 31, 2009 reflects a note payable of $415,000.
 
       Net cash flows provided by operating activities for the year ended December 31, 2009, amounted to ($2,500) and were comprised of positive and negative accounts, substantially all of which related to the Prior Business and its disposition.  Net cash flows used in investing activities for the year ended December 31, 2009, were ($69,000), all in respect of cash used in our current operations.  Net cash flow provided by financing activities for the year ended December 31, 2009, were nil.
 
       At December 31, 2009, we had cash of $66,000, which cash balance represented an increase of $66,000 in comparison with our cash balance at December 31, 2008.  We have no currently planned material commitments for capital expenditures; however, we will need operating capital to continue our current business operations, although presently have no alternative source of operating capital.  Although we are considering various debt or equity financings, there can be no assurance that any financing will be available to us on terms acceptable to us or at the time that we would require such financing, or at all.  Failure to obtain any such financing will result in our inability to effectuate our business plan.  As of the date of this Annual Report, we have not entered into any agreements and have not received any commitments to obtain any such financing.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements at December 31, 2009.
 
Item 8.  Financial Statements and Supplementary Data.
 
Our financial statements required to be included in Item 8 are set forth in the Index to Financial Statements set forth on page F-1 of this Annual Report.


 
15

 
ForgeHouse, Inc.
 
Index to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
Financial Statements of ForgeHouse, Inc. (a Nevada Corporation):

 
Report of the Registered Independent Public Accounting Firm                          17
 
 
 
Balance Sheets as of December 31, 2009 and 2008                             18
 
 
 
Statements of Operations for Each of the Years Ended December 31, 2009 and 2008                 19
 
 
 
Statements of Cash Flows for Each of the Years Ended December 31, 2009 and 2008              22
 
 
Notes to the Financial Statements                                      24

 
16

 
ForgeHouse, Inc.
 
Index to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of ForgeHouse, Inc.

We have audited the accompanying balance sheets of ForgeHouse, Inc as of December 31, 2009 and 2008 and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2009. ForgeHouse, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ForgeHouse, Inc. as of December 31, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the financial statements, the Company has no revenue from continuing operations and has an accumulated deficit of $6,982,902 at December 31, 2009. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Kelly & Company
Costa Mesa, California
May 14, 2010



 
17

 
ForgeHouse, Inc.
 
Balance Sheets
December 31, 2009 and 2008


ASSETS
 
    As of December 31, 2009     As of December 31, 2008  
Current assets:
           
    Cash    $ 66,126       -  
    Current assets of discontinued operation      -     $ 91,551  
        Total current assets     66,126       91,551  
                 
Oil and Gas interests      22,180       -  
Long term assets of discontinued operation      -       71,667  
                 
Total assets   $ 88,936     $ 163,218  
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
Current liabilities:             
    Accounts payable and accrued expenses    $ 29,036       -  
    Notes payable and accrued interest      56,130     $ 51,131  
    Dividend payable      73,938       73,938  
    Current liabilities of discontinued operation      -       2,674,327  
      Total current liabilities     159,104       2,799,396  
                 
Commitments and contingencies (note 7)                 
                 
Stockholders' deficit:                 
    Preferred stock, par value $0.001 with 10,000,000 shares authorized                 
       Series A Convertible Preferred stock, par value $0.001, 2,000,000 shares authorized,
       2,000,000 shares issued and outstanding. Senior as to all other equity instruments,
       voting and with a dividend rate of 4% of the stated liquidation preference amount
       of $2,000,000 convertible on a one for one basis into common stock 
  $ 2,000     $ 2,000  
    Common stock, $0.001 par value, 100,000,000 shares authorized, 29,500,000 and 28,289,834 shares issued and outstanding      29,500       28,290  
    Additional paid in capital      6,881,234       4,441,799  
    Accumulated deficit      (6,982,902 )     (7,108,267 )
                 
Total stockholders' deficit   $ (70,168 )   $ (2,636,178 )
Total liabilities and stockholders' deficit   $ 88,936     $ 163,218  

The accompanying notes are an integral part of the financial statements.
 
 
18

 
ForgeHouse, Inc.
 
Statements of Operations
For Each of the Years Ended December 31, 2009 and 2008

 

 
    For the Year Ended December 31,  
    2009     2008  
Operating expenses:             
    Payroll related expenses      2,500       -  
    General and administrative      5,627       76,189  
    Professional fees      73,210       57,947  
       Total operating expenses         81,337       134,136  
                 
Loss from operations      (81,337 )     (134,136 )
                     
    Interest expense      5,000       1,130  
                 
Loss from continuing operations before extraordinary item      (86,337 )     (135,266 )
                 
Discontinued operation:                 
    Loss from operations of discontinued OneVision business      1,120,884       2,718,387  
    Income tax (benefit)      (453,070 )     800  
    Loss on discontinued operation      667,814       2,719,187  
                 
Loss before extraordinary item      (754,151 )     (2,854,453 )
                 
Gain on restructurings of debt, net of income tax      879,156       365,834  
                 
Net income (loss)    $ 125,365     $ (2,488,619 )
 

The accompanying notes are an integral part of the financial statements.
 
 
19

 
ForgeHouse, Inc.
 
Statements of Operations
For Each of the Years Ended December 31, 2009 and 2008



 
Income (loss per share:             
    Loss per share from continuing operations: 
 
           
       Basic    $ 0.00     $ 0.00  
       Diluted    $ 0.00     $ 0.00  
    Loss per share from discontinued operation: 
 
               
       Basic    $ (0.02 )   $ (0.10 )
       Diluted    $ (0.02 )   $ (0.10  
    Per share effect of gain on restructurings of debt, net of income tax: 
 
               
       Basic    $ 0.03     $ 0.01  
       Diluted    $ 0.03     $ 0.01  
    Net income (loss) per share 
 
               
       Basic    $ 0.00     $ (0.09 )
       Diluted    $ 0.00     $ (0.09 )
    Weighted average shares outstanding: 
 
               
       Basic      28,723,862       27,059,045  
       Diluted      32,366,810       28,746,327  
 
 


 
The accompanying notes are an integral part of the financial statements.
 
 
20

 
ForgeHouse, Inc.
 
Statements of Members' Deficit
For Each of the Years Ended December 31, 2009 and 2008

 
    Preferred Stock     Common Stock                          
   
 
 
Shares
   
 
Amount
   
 
 
Shares
   
 
Amount
   
Additional
Paid In
Capital
   
ForgeHouse Accumulated
Deficit
   
VIE
Accumulated
Deficit
   
 
 
Total
 
Balance, December 31, 2007     -             15,000,000       15,000       1,248,978       (4,619,648 )     (69,358 )     (3,425,028 )
    Sale of preferred A shares      2,000,000       2,000       -        -       2,098,000       -       -       21,000,000  
    Shares issued in the recapitalization of the Company      -       -       13,000,000       13,000       (243,290 )     -       -       (230,290 )
    Disposition of VIE at the time of the recapitalization of the Company      -       -       -       -       (73,302 )     -       69,358       (3,944 )
    Common shares issued for debt      -       -       45,812       46       45,754       -       -       45,800  
    Common shares issued for cash      -       -       244,022       244       290,144       -       -       290,388  
    Company expenses paid by corporate officers      -       -       -       -       1,420       -       -       1,420  
    Stock based charges      -       -       -       -       1,148,033       -       -       1,148,033  
    Dividend declared      -       -       -       -       (73,938 )     -       -       (73,938 )
    Net loss      -       -       -       -       -       (2,488,619 )     -       (2,488,619 )
                                                                 
Balance, December 31, 2008    

2,000,000
    $ 2,000       28,289,834       28,290     $ 4,441,799     $ (7,108,267 )   $ -     $ (2,636,178  
    Acquisition of an operating subsidiary for common shares      -       -       12,000,000       12,000       63,332       -       -       -  
    Sale of discontinued operation to related parties      -       -       (10,789,834 )     (10,790 )     1,912,787       -       -       -  
    Stock based charges      -       -       -       -       398,316       -       -       -  
Company expenses paid by common shareholder      -       -       -       -       62,000       -       -       -  
    Net income      -       -       -       -       -       125,365       -       -  
                                                                 
Balance, December 31, 2009     2,000,000     $ 2,000       29,500,000     $ 29,500 )   $ 6,881,234     $ (6,982,902 )   $ -     $ 70,168 )
                                                                 
 
 
 
 
 

 
The accompanying notes are an integral part of the financial statements.
 
21

 
ForgeHouse, Inc.
 
Statements of Cash Flows
For Each of the Years Ended December 31, 2009 and 2008

 
 
    For the Year Ended December 31,  
    2009     2008  
Cash flows used in operating activities:            
    Net income (loss)    $ 125,365     $ (2,488,619 )
    Gain on debt restructure      879,516       365,834  
    Loss from discontinued operation      (667,814 )     (2,719,187 )
       Loss from continuing operations      (86,337 )     (135,266 )
    Adjustments to reconcile net income (loss) to net cash (used in) operating activities:                
       Amortization of stock based charges      398,316       1,148,033  
       Expenses paid by shareholder      62,000       1,420  
       Increase (decrease) in liabilities:                 
          Accounts payable - trade      15,932       -  
          Accrued interest on debt      4,999       -  
                 
Cash from (used in) operating activities - continuing operations      606,612       (1,339,166 )
Cash used in operating activities - discontinued operation      (609,112 )     (321,820 )
Cash used in operating activities     (2,500 )     (1,660,986 )
Cash flows from (used in) investing activities:                
    Acquisition of operating subsidiary      68,626       -  
    Recapitalization of Milk Bottle Cards Inc. - reverse merger      -       (8,860 )
Cash from (used in) investing activities - continuing operations      68,626       (8,860 )
Cash from (used in) investing activities - discontinued operation      -       (20,050 )
Cash from (used in) investing activities     68,626       (28,910 )
Cash flows from financing activities:                
    Proceeds from notes payable      -       50,000  
    Proceeds from sale of preferred A stock      -       2,100,000  
    Issuance of common shares for cash      -       290,388  
    Purchase and retirement of stock      -       (50,000 )
    Dissolution of variable interset entity      -       (73,302 )
Cash from financing activities - continuing operations      -       2,317,086  
Cash used in financing activities - discontinued operation      -       (627,190 )
Cash provided by financing activities     -       1,689,896  
Net increase in cash     66,126       -  
Cash at beginning of period     -       -  
Cash at end of period   $ 66,126       -  

 

 
The accompanying notes are an integral part of the financial statements.
 
22

 
ForgeHouse, Inc.
 
Statements of Cash Flows
For Each of the Years Ended December 31, 2009 and 2008


Supplemental Disclosure of Cash Flow Information
 
    For the Year Ended December 31,  
    2009     2008  
Cash paid during the fiscal years for:             
    Interest    $ -     $ 368,571  
    Income Taxes    $ -     $ 800  
 
Non-Cash Investing and Financing Transactions
Purchase of Northern Future Energy Corp with shares:            
    Purchased cash    $ 68,626       -  
    Oil and gas interests    $ 22,810       -  
    Accrued expenses    $ (13,104 )     -  
    Common stock    $ (12,000 )     -  
    APIC    $ (66,332 )     -  
                 
Sale of assets and transfer of liabilities to Enforce Global, LLC:                 
    Current assets of discontinued operation    $ (206,904 )     -  
    Long-term assets of discontinued operation    $ (27,566 )     -  
    Current liabilities of discontinued operation    $ 2,136,467       -  
    Common stock    $ 10,790       -  
    APIC    $ (1,912,787 )     -  
Dividend on Series A preferred stock:                 
    Dividend payable     -      73,938  
    Dividend     -     $ (73,938
 
 
 

 
The accompanying notes are an integral part of the financial statements.
 
23

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
1.       Description of the Company's Business
 
Basis of Presentation and Nature of Operations
 
ForgeHouse, Inc. (the Company, we, or our) was incorporated under the laws of the state of Nevada in 2004.  The Company engaged in the development and ongoing enhancement to OneVision®, its proprietary software system, and its sale, until December 2009.  The OneVision® system is a web based application that offers a virtual command and control system for certain private industry and governmental compliance, physical security and maintenance applications.  In December 2009, the Company sold its assets and liabilities associated with the OneVision® software to Enforce Global LLC, a Georgia Company owned by certain of the Company's former officers who were significant shareholders. The former officers resigned their positions held with the Company on December 29, 2009 (Note 2).  Earlier in December 2009, the Company acquired Northern Future Energy Corporation (NFEC), a Nevada energy exploration company with oil and gas interests in Alaska (Note 4).  At December 31, 2009, the Company balance sheet is comprised of the assets and liabilities of NFECs oil and gas operations.  The Company's statement of operations for the years ended December 31, 2009 and 2008 presents general and administrative expenses unrelated to OneVision®'s operating results and expenses of NFEC from the date of acquisition through the end of the year. Operating results of the discontinued OneVision® subsidiary are presented as a single line item (Discontinued Operation) for the years ending December 31, 2009 and 2008.
 
On December 16, 2009, the Company acquired Northern Future Energy Corporation (Note 4), an oil and gas Company, which consisted of a net asset of $78,332, in exchange for 12,000,000 shares of the Company's common stock.
 
On December 29, 2009, the Company's former officers, who were significant shareholders, acquired the OneVision® operations (Note 2), which had a book value net liability of $1,881,998 in exchange for their 10,789,834 shares of Company's common stock valued at a par value of $10,790.
 
Reclassification of Accounts
 
Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position.
 


 
 
24

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



2.       Discontinued Operation
 
On December 29, 2009, the Company entered into an asset purchase agreement with Enforce Global Solutions, LLC (Enforce), a Georgia limited liability company owned by certain of the Company's former officers, who were also significant shareholders.  Under the agreement, Enforce bought all of the assets of the OneVision business, including the intellectual properties, and assumed all of the OneVision liabilities.  The purchase resulted in a sale by the Company of a net liability of $1,881,998.  As consideration for the transaction, the former officers delivered to us all of the shares they owned in the Company; a total of 10,789,834 shares of our common stock.  The Company has recorded those shares as received into treasury and cancelled.  Simultaneously with the close of the asset purchase agreement, all of the other OneVision employees of the Company resigned.  The operating results of the OneVision business are presented as a discontinued operation.
 
 
The following is a summary of the net liabilities sold, as of December 31, 2008 and as finally reported on the closing date of December 29, 2009:
 
   
December 29,
2009
   
December 31,
2008
 
Cash    $ 73,805     $ 1,705  
Accounts receivable      96,476       80,168  
Inventory      34,657       -  
Prepaid insurance      1,967       9,678  
    Current assets of discontinued operation      206,905       91,551  
Equipment, net of accumulated depreciation of $47,894 and $37,739      15,277       24,711  
Software development costs, net of accumulated amortization of $164,667 and $130,000      8,667       43,333  
Deposits      3,623       3,623  
    Total assets of discontinued operation    $ 234,472     $ 163,218  
                 
Liabilities                
Notes payable in default      -     $ 1,400,000  
Accounts payable    $ 740,049       908,121  
Related party payable      53,087       29,067  
Accrued payroll and related expenses      731,825       255,611  
Accrued expenses      7,939       27,510  
Capital lease      -       4,398  
Deferred revenue      168,570       49,621  
Note payable      415,000       -  
    Total liabilities of discontinued operation      2,116,470       2,674,328  
  Net liability of discontinued operation   1,881,998     $ 2,511,110  
 

 
 
 
25

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
The accompanying table illustrates the reporting of the discontinued operation on the face of the Statements of Operations for the years ended December 31, 2009 and 2008:
 
   
For the Year
Ended December 31,
 
    2009     2008  
Revenues:             
    Service contract revenue    $ 371,501     $ 219,556  
    Product revenue      212,012       82,830  
       Net revenues      583,513       302,386  
Costs and expenses:                 
    Costs of revenues      269,897       96,701  
    General and administrative      174,509       222,396  
    Software and development costs      15,435       131,147  
    Payroll related expenses      625,319       861,448  
    Depreciation and amortization      44,822       44,264  
    Stock based charges      398,313       1,148,034  
    Professional fees      73,651       338,077  
    Interest expense      106,166       178,237  
    Other expense (income)      (3,717 )     469  
Loss from discontinued operation before taxes      (1,120,882 )     (2,718,387 )
    Income tax (benefit)      (453,070 )     800  
Loss from discontinued operation    $ (667,812     $ (2,719,187 )
 
 
 
3.       Summary of Significant Accounting Policies
 
Recent Accounting Pronouncements
 
In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162,” and also issued Accounting Standards No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105-10), which establishes the FASB Accounting Standards Codification (the “Codification” or “ASC”) as the official single source of authoritative U.S. generally accepted accounting principles (“GAAP”). All guidance contained in the Codification carries an equal level of authority.  All existing accounting standards are superseded.  All other accounting guidance not included in the Codification will be considered non-authoritative.  The Codification also includes all relevant SEC guidance organized using the same topical structure in separate sections within
 


 
 
26

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
the Codification.  The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented.  The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  Except for the disclosure requirements, the adoption of this statement did not have an impact on the determination or reporting of the Company’s financial statements.  The Company is providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.  The Codification does not change current US GAAP, but is intended to simplify user access to all authoritative US GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. As it relates to the Company, the Codification is effective July 1, 2009 and will require future references to authoritative US GAAP to coincide with the appropriate section of the Codification. Accordingly, this standard will not have an impact on the Company’s results of operations or financial condition.
 
 
In December 2007, the FASB issued ASC 805, which changed how business acquisitions are accounted for and ASC 810-10-65, which changed the accounting and reporting for minority interests, which will be recharacterized as non-controlling interests and classified as a component of equity.  The Company adopted both as of January 1, 2009 and neither pronouncement has a material impact on the Company’s financial statements.
 
 
In May 2009, the FASB established general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this statement sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This statement is effective for interim or annual periods ending after June 15, 2009 and we adopted it on April 1, 2009. This statement is not expected to have any impact on our financial position or results of operations.
 
 
In June 2009, the FASB issued guidance regarding the accounting for transfers of financial assets which amends the derecognition guidance and eliminates the exemption from consolidation for qualifying special-purpose entities. This statement is effective for financial asset transfers occurring after the beginning of an entity’s first fiscal year that begins after November 15, 2009. This statement does not have any impact on our financial position or results of operations.
 


 
 
27

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



In June 2009, the FASB issued guidance which amends the consolidation guidance applicable to variable interest entities. The amendments affect the overall consolidation analysis. This statement is effective as of the beginning of the first fiscal year that begins after November 15, 2009. This statement does not have any impact on our financial position or results of operations.
 
Revenue Recognition
 
The Company recognizes revenue only when all of the following criteria have been met:
 
·  
Persuasive evidence of an arrangement exists;
·  
Delivery has occurred or services have been rendered;
·  
The fee for the arrangement is fixed or determinable; and
·  
Collectability is reasonably assured.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent obligations in the financial statements and accompanying notes. Our most significant assumptions relate to the discontinued operation and valuation reserve related to our tax asset. The estimation process requires assumptions to be made about future events and conditions, and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.
 
Oil and Gas Properties
 
The Company follows the full cost method of accounting for its investments in oil and gas properties. Under the full cost method, all costs associated with the exploration of properties are capitalized into appropriate cost centers within the full cost pool.  Internal costs that are capitalized are limited to those costs that can be directly identified with acquisition, exploration, and development activities undertaken and do not include any costs related to production, general corporate overhead, or similar activities.  Cost centers are established on a country-by-country basis.
 
Capitalized costs within the cost centers are amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred.  The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry.
 


 
 
28

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
For each cost center, capitalized costs are subject to an annual ceiling test, in which the costs shall not exceed the cost center ceiling.  The cost center ceiling is equal to i) the present value of estimated future net revenues computed by applying current prices of oil and gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions;  plus ii) the cost of properties not being amortized; plus iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less iv) income tax effects related to differences between the book and tax basis of the properties.  If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the cost center ceiling, the excess is charged to expense and separately disclosed during the period in which the excess occurs.
 
Fair Value of Financial Instruments
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
 
We utilize the market approach to measure fair value for our financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
 
Level 1:  Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
 
Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
 
Level 3:  Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
 


 
 
29

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as the consideration of counterparty credit risk in its assessment of fair value.
 
The adoption of this statement did not have a material impact on our results of operations and financial condition. The carrying values of our cash, cash equivalents and marketable securities, carried at fair value as of December 31, 2009, are classified in the table below in one of the three categories described above:
 
 
Fair Value Measurements At December 31, 2009
 
      Level 1     Level 2     Level 3     Total  
  Cash & Equivalents    $ 66,126       -       -     $ 66,126  
  Escrowed Funds      -       -       -        -  
  Cash, Cash Equivalents and Escrowed Funds    $ 66,126       -       -     $ 66,126  
                                   
 
Basic and Diluted Earnings (Loss) Per Share
 
Basic net earnings (loss) per common share is computed by dividing net income (loss) applicable to common shareholders by the weighted-average number of common shares outstanding during the period.  Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of warrants to purchase common shares.  In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
 
Upon resignation of certain of the Company's officers and the OneVision employees (Note 2), employee options to purchase 1,652,000 shares of the Company's common stock were terminated.  As of December 31, 2009, the Company had issued and outstanding common stock equivalents comprised of common stock warrants and convertible preferred stock that could have been converted into 4,000,000 shares of common stock.
 
Cash and Cash Equivalents
 
The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. As of December 31, 2009, the Company had cash of $66,126.
 
Concentration of Credit Risk
 
At December 31, 2009, the Company did not have funds on deposit that exceeded United States (FDIC) federally insurance limit of $250,000 per bank.
 


 
 
30

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
Leases
 
The Company reviews all leases for capital or operating classification at their inception. The Company uses its incremental borrowing rate in the assessment of lease classification and defines the initial lease term to exclude lease extension periods.
 
Impairment of Long-Lived Assets
 
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined based on the estimated discounted future cash flows expected to be generated by the asset. The factors considered by management in performing this assessment include current operating results and trends and prospects, as well as the effects of obsolescence and economic factors.
 
Income Taxes
 
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
 


 
 
31

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
4.       Acquisition of Operating Subsidiary
 
On December 16, 2009, the Company acquired Northern Future Energy Corporation (NFEC), an oil and gas Company.  Under the terms of the purchase agreement, the Company issued 12,000,000 shares of the Company's common stock in exchange for all outstanding equity of NFEC. NFEC was incorporated under the laws of the State of Nevada on October 22, 2009. On November 20, 2009, NFEC acquired an 87.5% net revenue interest in a certain oil and gas lease in the state of Alaska. NFEC is an exploration stage company involved in the oil and gas exploration business.
 
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The purchase price allocation herein is based on management’s assessment of the fair value of both the assets acquired and liabilities assumed.
 
     
December 16,
2009
 
  Cash    $ 68,626  
      Total current assets    $ 68,626  
  Oil and gas interest      22,810  
     Total assets      91,436  
  Accrued expenses      13,104  
     Total liabilities      13,104  
  Net asset at acquisition   $ 78,332  
           
 
 
The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisition of NFEC had occurred at January 1, 2009:
 


 
F-16
 
32

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
      For the year ended December 31, 2009  
      As Reported     NFEC     Pro Forma  
  Payroll related expenses    $ 2,500     $ 2,500     $ 5,000  
  General and administrative      5,627       64       5,691  
  Professional fees      73,210       19,104       92,314  
      Total operating expenses      81,337       21,668       103,005  
  Loss from operations      (81,337 )     (21,668 )     (103,005 )
      Interest expense      5,000       -       5,000  
  Loss from continuing operations      (86,337 )     (21,668 )     (108,005 )
  Loss on discontinued operation      667,814       -       667,814  
  Loss before an extraordinary item      (754,151 )     (21,668 )     (775,819 )
  Gain on restructuring of debt, net      879,516       -       879,516  
  Net income    $ 125,365       (21,668 )   $ 103,697  
  Loss per share from continuing operations, basic and diluted    $ 0.00     $ 0.00     $ 0.00  
  Loss per share from discontinued operation, basic and diluted    $ (0.02 )   $ 0.00     $ (0.02 )
  Per share effect of gain on restructurings of debt, net of income tax:                         
      Basic    $ 0.03     $ 0.00     $ 0.03  
      Diluted    $ 0.03     $ 0.00     $ 0.03  
  Net income (loss) per share                         
      Basic    $ 0.00     $ 0.00     $ 0.00  
      Diluted    $ 0.00     $ 0.00     $ 0.00  
                           
 
The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.
 

 
33

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
 
5.         Oil and Gas Interests
 
On December 16, 2009, the Company acquired Northern Future Energy Corporation, which owned an oil and gas lease in Anchorage, Alaska, with a fair value of $22,810.  Production on the properties has not commenced and there can be no assurance that any hydrocarbons will be economically recoverable, if at all; however, pre-production activities, such as a multi-phase exploration program of trenching, sampling, geophysical surveys and test drilling have commenced.
 
6.        Debt
 
Debt is comprised of the following:
 
 
      December 31,
2009
   
December 31,
2008
 
 
Two $25,000 unsecured demand notes,
interest is payable upon demand of payment of the principal,
bear interst at a rate of 10% per annum. 
  $ 50,000     $ 50,000  
 
    
    Short Term Notes payable 
  $ 50,000     $ 50,000  
 
 
Short Term Bridge Financing
 
In October 2008, the Company obtained short term financing from an investor group in the form of two $25,000 demand notes.  The loans were necessary to sustain the ongoing operations of the Company.  The loans are unsecured and interest is payable upon demand of payment of the principal.  The loans are still outstanding at December 31, 2009 and bear interest at a rate of 10% per annum.
 
Extraordinary Item - Debt Restructurings
 
On September 30, 2009, the Company entered into a Debt Forgiveness Agreement with Insurance Medical Group Limited (f/k/a After All Limited), Bryan Irving, and Ian Morl, pursuant to which $785,000 (plus accrued and unpaid interest and any penalties of $80,141) of the Company's outstanding obligations in favor of Arngrove Group Holdings were forgiven and all $200,000 (plus accrued and unpaid interest and any penalties of $23,418) of the Company's outstanding obligations in favor of After All Group, Limited, was forgiven. Gain on these two debt restructurings was a gross of $1,088,559 for the year ended December 31, 2009.
 


 
 
34

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



In December 2009, the Company entered into agreements with two of its vendors to reduce the amounts owed to the vendors in exchange for upfront payments.  Gain on the restructure of amounts owed to the two vendors was $244,041.
 
These amounts are presented in the statement of operations net of income taxes of $453,084 for a net extraordinary gain on debt restructuring of $879,516.
 
 
After All Group Debt
 
In August 2006, ForgeHouse, LLC (ForgeHouse) borrowed $200,000 from a group ("After All") that consisted of some of the same owners of Arngrove Group Holdings, Ltd (who were, at the time, members of ForgeHouse). The loan was unsecured and interest accrued at a rate of 20% per annum, which was calculated monthly and rolled into the principal balance of the loan. The loan term was six months from the issuance date and was been extended on a month-to-month basis at the discretion of After All.  This note payable was restructured on January 31, 2008 and all accrued interest was forgiven, which is included in the gain on the restructuring of debt in the statement of operations.  The restructured note was at an interest rate of 6% per annum, with scheduled principal payments of $40,000 to be made starting December 31, 2008, and every six months thereafter, up to and including December 31, 2010.  The payment due December 31, 2008 was not made and a notice of default was received in February 2009. The default interest rate was 8%.  The Company incurred interest expense during the years ended December 31, 2009 and 2008 of $12,404 and $11,014, all of which was charged to operations.   Accrued interest on this note payable was $23,418 immediately preceding the restructuring of the note on September 30, 2009 by the aforementioned Debt Forgiveness Agreement.  As a result of the Debt Forgiveness Agreement, a gain on debt restructuring of $223,418 was recognized for the year ended December 31, 2009.
 
Arngrove Group Holdings Ltd. Debt
 
In May 2005, ForgeHouse entered into a combination debt, sale of Members' equity and services agreement transaction (the "Agreement") with Arngrove Group Holdings Ltd (a United Kingdom entity) ("Arngrove"). The Agreement provided ForgeHouse with a line-of-credit facility (the "Loan Agreement") that called for Arngrove to advance ForgeHouse as requested up to $100,000 per month, with a maximum aggregate principal amount not to exceed $1,200,000 over the twelve month period ending May 2006. The Loan Agreement was evidenced by a note payable with a not-to-exceed face amount of $1,200,000 with a fixed interest rate of 10.0% per annum.  The Loan Agreement for financial reporting purposes was discounted at inception to reflect an effective interest rate yield of 29.7% (as of the date the Loan Agreement promissory note was created); its initial discount recognized was $114,622. The discount was being accreted ratably over the initial life of the Loan Agreement promissory note. The required annual interest only payments were to commence as of June 1, 2006, but were not made.  As such, in 2006, the Loan Agreement's restrictive covenants went into default and all of the unaccreted discount was expensed.
 


 
 
35

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008


 
The Agreement also included a services contract that provided for Arngrove to provide certain consulting services and to receive a fee (the "Fee") of approximately $120,000 each year, payable monthly within 7 days of each month-end. The Fee was a required portion of the Agreement. It is being treated by ForgeHouse as additional interest. ForgeHouse determined that the nature of the consultancy services called for in the Agreement were investor's due diligence procedures or were not provided to ForgeHouse at all.  ForgeHouse did not make any Fee payments to Arngrove as provided for in the service contract until the agreement was restructured at January 31, 2008, at which time payments totaling $368,571 were made to satisfy all accrued interest and management fees on the Arngrove and After All notes.  This resulted in a 2008 gain on the restructuring of debt of $365,834.
 
ForgeHouse restructured the debt in January 2008 at an interest rate of 6% per annum, with scheduled principal payments of $240,000 to be made starting December 31, 2008 and every six months thereafter, up to and including December 31, 2010.  Interest accrued at 8% beyond maturity and in default.  The payment due December 31, 2008 was not made and a notice of default was received in February 2009.  The Company incurred interest expense during the years ended December 31, 2009 and 2008 of $72,121 and $66,082, all of which was charged to operations.  Accrued interest on this note payable was $80,141 immediately preceding the restructuring of the note on September 30, 2009 by the aforementioned Debt Forgiveness Agreement.  As a result of the Debt Forgiveness Agreement, a gain on debt restructuring of $865,141 was recognized during the year ended December 31, 2009.
 
In connection with the Debt Forgiveness Agreement, on September 30, 2009, the Company entered into a new Promissory Note, in favor of Bryan Irving and Ian Morl, in the initial principal amount of $415,000.  This new Promissory Note was included in the liabilities assumed in the asset purchase agreement discussed in Note 2 and the Company has no obligation regarding this note payable at December 31, 2009.
 
7.       Commitments and Contingencies
 
Financial Results, Liquidity and Management's Plan
 
The Company was unable to expand its OneVision® product license holders and related revenue and sold all assets and liabilities associated with the OneVision® business. The Company's new business activities are related to the development and acquisition of oil and gas interests.  Oil and gas interests in Alaska were acquired in December 2009, but it is unknown if the interests are viable to sustain operations.
 

 
36

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
The accompanying financial statements as of December 31, 2009 have been prepared assuming the Company will continue as a going concern. The Company, over time, has experienced recurring losses and negative cash flows from operations, and as of December 31, 2009, the Company’s current liabilities exceeded its current assets by $92,978 and its total liabilities exceeded its total assets by $70,168.  These factors raise substantial doubt about the Company's ability to continue as a going concern. Management intends to raise additional debt and/or equity financing to fund future oil and gas operations.  Management believes that its plans will contribute towards achieving profitability but there is no assurance that they can be implemented; or that the results will be of a sufficient level necessary to meet the Company’s ongoing cash needs.  No assurances can be given that the Company can obtain sufficient working capital through borrowings or that the continued implementation of its business plan will generate sufficient revenues in the future to sustain ongoing operations.
 
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.  As discussed in Note 2, the Company was able to dispose of significant liabilities on December 29, 2009 related to the OneVision® business.
 
Legal Actions
 
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
 
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
 
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
 

 
37

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
Operating Leases
 
The Company's facilities lease associated with the discontinued operation was transferred with the other assets and liabilities of the OneVision® business as part of the asset purchase agreement in Note 2.  At December 31, 2009, the Company does not have any leases.
 
8.       Equity Transactions
 
Sale of Units
 
On January 31, 2008, the Company sold 2,000,000 units; each unit consisted of one share of the Company's Series A Convertible Preferred stock and one warrant to purchase a share of the Company's common stock.  The total proceeds from this transaction were $2,100,000.  Each of the Series A Preferred shares is convertible into the Company's common stock on a one-to-one basis.  The Series A Preferred Shares are senior as to all other equity instruments, voting, and have a dividend rate of 4% of the stated liquidation preference amount of $2,000,000.  The warrants have an exercise price of $1.00 and expire 2 years from the grant date.
 
Dividend Payable
 
The Company declared a 4% annual dividend on the Series A Preferred Shares for the year ended December 31, 2008. The amount of the dividend, $73,425, was never paid because the Company has an accumulated deficit. The dividend remains unpaid and is shown as dividend payable at December 31, 2009 for $73,938.  The Company did not declare a dividend for 2009.
 
Shares Issued for Cash
 
In June 2008, the Company issued 244,022 shares of the Company’s common stock to eight individuals for cash proceeds of $290,388, which is $1.19 per share.  The share price represented a 30% discount to the 10-trading-day volume weighted average closing price of the common stock, with May 29, 2008, as the 10th trading day.  As stipulated in the restructured Arngrove note payable agreement that was then in effect, the Company was required to remit 20% of all funds raised to Arngrove to be applied first to the then outstanding principal balance of the note payable and second to any interest accrued thereon.
 
Shares Issued in Satisfaction of Accounts Payable – Trade
 
In June 2008, the Company issued 45,812 shares of the Company’s common stock to two individuals for satisfaction of $45,800 of accounts payable – trade of the discontinued operation.
 

 
38

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
Options Activity
 
A summary of the option activity as of December 31, 2009 and 2008, and changes during the period then ended is presented below:
 
    Number of Options     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (Years)     Aggregate Intrinsic Value  
Outstanding at December 31, 2007         $ -      -      -  
Granted     1,877,000       1.00      -      -  
Exercised                  -      -  
Forfeited     (225,000 )          -      -  
Expired      -            -      -  
Outstanding at December 31, 2008     1,652,000       1.00       6.3     $ -  
Granted                        
 Exercised                        
 Forfeited     (1,652,000 )     1.00              
 Expired                        
Outstanding at December 31, 2009                        
Exercisable at December 31, 2009                        
 
 
On January 31, 2008, the Company granted options to purchase 251,000 shares of its common stock to the Company's Chief Executive Officer immediately following the Exchange Agreement as a condition for entering his employment agreement.  The options have an exercise price of $1.00, vest immediately and expire 10 years from the grant date.   The Company also granted options to purchase 90,000 shares of its common stock to the Company's Chief Operating Officer immediately following the Exchange Agreement as a condition for entering his employment agreement.  The options have an exercise price of $1.10, vest immediately and expire 5 years from the grant date.
 
 
On January 31, 2008, the Company granted options to purchase 186,000 shares of its common stock to the Company's Chief Operating Officer immediately following the Exchange Agreement as a condition for entering his employment agreement.  The options have an exercise price of $1.00, vest immediately and expire 10 years from the grant date.
 


 
F-23
 
39

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
On January 31, 2008, the Company granted options to purchase 75,000 shares of its common stock to both the Company's Chief Strategy Officer and the Chief Technology Officer immediately following the Exchange Agreement for entering their employment agreements.  The options have an exercise price of $1.00, vest immediately and expire in 5 years from the grant date.
 
On January 31, 2008, the Company granted options to purchase 225,000 shares of its common stock to each of two employees for past services immediately following Exchange Agreement.  The options have an exercise price of $1.00, vest evenly on each of the first three anniversaries of the grant date and expire 5 years from the grant date.
 
On February 15, 2008, the Company granted options to purchase 350,000 shares of its common stock to the Company's Chief Financial Officer for entering his employment agreement.  The options have an exercise price of $1.00, 50,000 vest immediately, and the remaining 300,000 vest evenly on each of the first three anniversaries of the grant date and expire 5 years from the grant date.  The Company also granted options to purchase 400,000 shares of its common stock to the Company's Chief Financial Officer for entering his employment agreement.  The options have an exercise price of $1.00 and vest evenly on each of the first three anniversaries of the grant date and expire 10 years from the grant date.
 
The assumptions used in the Black-Scholes option pricing model for the stock options granted during the year ended December 31, 2008 were as follows:
 
 
Risk-free interest rate
 2.78 to 3.83%
 
 
 
Expected volatility of common stock
 92%
 
 
 
Dividend yield
 $0.00
 
 
 
Expected life of options
 5-10 years
 
 
  Weighted average fair market value of options granted    $1.13   
 
Warrant Activity
 
A summary of the warrant activity as of December 31, 2009 and 2008, and changes during the period then ended is presented below:

 
40

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008


 

 
    Number of Warrants     Weighted Average Exercise Price  
Outstanding, December 31, 2008      2,000,000     $ 1.00  
    Issued       -       -  
    Exercised       -        -  
Outstanding, December 31, 2009      2,000,000     $ 1.00  
Exercisable, December 31, 2009      2,000,000     $ 1.00  
                 
 
        
On January 31, 2008, the Company sold 2,000,000 units, with each unit consisting of one share of the Company's Series A Convertible Preferred stock and one warrant to purchase a share of the Company's common stock.  The warrants have an exercise price of $1.00 and expire 2 years from the grant date.
 
Shares Reserved for Future Issuance
 
The Company has reserved shares for future issuance upon exercise of outstanding and conversion of preferred stock as follows:
 
 
  Warrants  2,000,000  
  Conversion of Preferred stock  2,000,000  
  Reserved shares At December 31, 2009   4,000,000  
 
 
 
                         
 
                  
 
           
 
9.       Deferred Income Taxes
 
The gain on debt restructuring resulted in unexpected income for the year ended December 31, 2009.  The Company utilized $178,052 of the net operating loss carryforwards from 2008 to offset 2009 income tax.  The Company did not record any deferred income tax provisions for the year ended December 31, 2008.  As a result of the sale of the discontinued subsidiary, the Company has not recorded any deferred income tax provision at December 31, 2009.  Significant components of the Company's deferred income tax assets at December 31, 2009 and 2008 are as follows:
 
 
    2009     2008  
Deferred tax assets:             
Net operating loss carryforwards        $ 875,194     $ 1,398,875  
Valuation allowance       (875,194 )     (1,398,875 )
                 
Net deferred tax assets    $ -     $ -  
 

 
41

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008




 
Reconciliation of the effective tax rate to the U.S. statutory rate is as follows:
 
 
      2009     2008  
  Tax benefit at U.S. statutory rate           (34.0 )%       (34.0 %
  Change in valuation allowance        34.0 %     34.0 %
  Effective income tax rate          - %     - %
 
 
The Company has federal net operating loss carryforwards of $875,194. The federal net operating loss carryforwards will begin to expire in 2028.  Based upon the disposal of the discontinued operation, exploration stage of the new venture and management's assessment of when operations are anticipated to generate taxable income, the Company has concluded that it is more likely than not that the net deferred income tax assets will not be realized through future taxable earnings and, accordingly, has established a full valuation allowance for them. The valuation allowance decreased by $523,681 during the year ended December 31, 2009 as a result of the current year’s net earnings.
 
 
10.
Earnings (Loss) Per Share
 
 
Basic and diluted loss before extraordinary item is computed using the weighted-average number of common shares outstanding.  Since there was a loss before extraordinary item in each period presented, the effect of potentially dilutive common shares is not considered as their effect would be anti-dilutive.  Basic net earnings per share is computed using the weighted-average number of common shares outstanding. The dilutive effect of potential common shares outstanding is included in diluted net earnings per share. The computations of basic and diluted loss before extraordinary item and basic net earnings (loss) per share and diluted net earnings (loss) per share for the years ended December 31, 2009 and 2008 are as follows:
 


 
F-26
 
42

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of December 31, 2009 and 2008 and
For Each of the Years Ended December 31, 2009 and 2008



 
    For the Year Ended December 31,  
    2009     2008  
Numerator:            
    Loss before extraordinary item   $ (754,151 )   $ (2,854,453 )
Net income (loss)   $ 125,365     $ (2,488,619 )
Denominator:                
Basic weighted-average shares     28,723,862       27,059,045  
 Effect of dilutive securities:                
Common stock options and warrants     3,642,948       -  
 Convertible preferred stock     -       -  
Dilutive potential common shares     32,366,810       27,059,045  
 Loss per share before extraordinary item:                
 Basic and diluted   $ (0.03 )   $ (0.11 )
Net earnings (loss) per share                
Basic   $ (0.00 )   $ (0.09 )
Diluted   $ (0.00 )   $ (0.09 )
                 
 
 
The following table sets forth potential shares of common stock that are not included in the diluted loss per share because to do so would be anti-dilutive since the Company reported losses in certain reporting periods:
 
 
    As of December 31,  
    2009     2008  
Options to purchase shares of common stock     -       1,877,000  
Warrants to purchase shares of common stock     -       2,000,000  
Convertible preferred stock     -       2,000,000  
Total     -       5,877,000  
 
 
 
 
43

 
 
Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
 
There have been no disagreements in the applicable period.
 
Item 9A(T).  Controls and Procedures.
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met.  Further, the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected.
 
Our Principal Executive Officer and Principal Financial Officer conducted a review to evaluate the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report.  Based on the foregoing, we concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
 
There has been no change in internal controls during the most recent fiscal year that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.
 
Item 9B.  Other Information.
 
There is no other information required to be disclosed during the fourth quarter of the fiscal year covered by this Annual Report.
 
 
44

 
 
PART III
 
Item 10.  Directors, Executive Officers and Corporate Governance.
 
The following table sets forth information concerning current executive officers and directors as of May 14, 2010:
 
Name
 
Age
 
Position
Christian Negri
 
41
 
President, Treasurer, Secretary, and Director
 
Christian Mann was appointed as President, Treasurer, and Secretary and as a member of the board of directors, effective March 12, 2010.  From 2004 to the present, Mr. Negri has been involved in the real estate industry and has possessed a California Real Estate salesperson license since 2004.  Mr. Negri is not an officer or director of any other reporting company.
 
Our directors are elected by the stockholders to a term of one year and serve until their successor is elected and qualified. Officers are elected by the Board to a term of one year and serve until their successor is duly elected and qualified, or until they are removed from office. There are no family relationships between our directors and executive officers.
 
Our Board has not had an audit committee, compensation committee, or nominating committee because, due to the Board’s composition and our relatively limited operations, the Board was able to effectively manage the issues normally considered by such committees.
 
Board Meetings
 
Our Board held three meetings during the 2009 fiscal year.
 
Board Nominations
 
We do not have a nominating committee charter.  The duties and responsibilities of our Board, which acts as the nominating committee, include (i) overseeing corporate governance matters and (ii) nominating new members to serve on the Board.
 
Our Board will consider board candidates recommended for consideration by our stockholders, provided the stockholders provide information regarding candidates as reasonably requested by us within the timeframe proscribed in Rule 14a-8 of Regulation 14A under the Exchange Act and other applicable rules and regulations.  Recommendation materials are required to be sent to the Board at our address listed in this Current Report. There are no specific minimum qualifications required to be met by a director nominee recommended for a position on the Board, nor are there any specific qualities or skills that are necessary for one or more of our Board to possess, other than as are necessary to meet any requirements under the rules and regulations applicable to us.  Our Board considers a potential candidate’s experience, areas of expertise, and other factors relative to the overall composition of the Board.
 
The Board considers and evaluates director candidates that are suggested by members of the Board, as well as management and stockholders.  Although it has not previously done so, the Board may also retain a third-party executive search firm to identify candidates.  The process for identifying and evaluating nominees for director, including nominees recommended by stockholders, involves reviewing potentially eligible candidates, conducting background and reference checks, interviews with the candidate and others as schedules permit, meeting to consider and approve the candidate, and, as appropriate, preparing and presenting an analysis with regard to particular recommended candidates.  The Board endeavors to identify director nominees who have the highest personal and professional integrity, have demonstrated exceptional ability and judgment, and, together with other director nominees and members, are expected to serve the long-term interest of our stockholders and contribute to our overall corporate goals.
 
Our stockholders may send communications to our board of directors by writing to ForgeHouse, Inc., 1906 Berkeley Avenue, Los Angeles, CA 90026, attention:  Christian Negri or any specified director.  Any correspondence received at the foregoing address to the attention of one or more directors is promptly forwarded to such director or directors.
 
 
45

 
 
Committees
 
We do not have standing audit, nominating or compensation committees of the board of directors, or committees performing similar functions, and, therefore, the entire board of directors performs such functions.  Our common stock is not currently listed on any national exchange and are we not required to maintain such committees by any self-regulatory agency.  Management does not believe it is necessary for the board of directors to appoint such committees because the volume of matters that currently and historically has come before the board of directors for consideration permits each director to give sufficient time and attention to such matters to be involved in all decision making.
 
We do not currently have an audit committee financial expert.  Management does not believe it is necessary to for the board of directors to designate an audit committee financial expert at this time due to our limited operating history and the limited volume of matters that come before the board of directors requiring such an expert.
 
Compensation Committee Interlocks and Insider Participation
 
Our Board of Directors performs the functions of a compensation committee.
 
Compliance with Section 16(a) of the Exchange Act
 
Section 16(a) of the Exchange Act requires officers, directors and persons who own more than 10% of any class of our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
 
Based solely on its review of copies of such reports, management believes that there was compliance with all filing requirements of Section 16(a) applicable to our officers, directors, and 10% shareholders during the year ended December 31, 2008.
 
 
46

 
 
Item 11.  Executive Compensation.
 
The Company does not currently compensate its directors in cash for their service as members of the board of directors. However, the Company does reimburse its directors for reasonable expenses in connection with attendance at board meetings.
 
The following table sets forth certain annual and long-term compensation paid to the Company’s former Chief Executive Officer and executive officers, each of whom resigned December 29, 2010.
 
Summary Compensation Table
 
Name & Principal Position
Year
Salary
($)
Bonus
($)
Stock Awards ($)
Option Awards ($)
Non-Equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation Earnings ($)
All Other Compensation ($)
Total
($)
John Britchford-Steel, CEO
2009
21,000
None
None
None
None
None
None
21,000
 
2008
109,417
None
None
395,849
None
None
None
505,266
 
2007
130,000
None
None
None
None
None
8,282
130,000
Jose M. Alonso, COO
2009
21,000
None
None
None
None
None
None
21,000
 
2008
109,417
None
None
217,248
None
None
None
326,665
 
2007
130,000
None
None
None
None
None
None
130,000
Jorge Vargas, CFO
2009
21,000
None
None
None
None
None
None
21,000
 
2008
94,500
None
None
281,253
None
None
None
375,753
 
Philip Mann, our Assistant Secretary as of December 31. 2009, did not receive any compensation during our fiscal year then ended.  Christian Negri, our current President, Treasurer, and Secretary, was not an executive officer during such fiscal year.
 
Employment and Consulting Agreements
 
There are no employment contracts or consulting agreements with our current directors or officers.
 
 
47

 
Compensation Policy
 
The Board will review and determine the compensation provided to our executive officer, including stock compensation.  In addition, the Board will review and make recommendations on stock compensation arrangements for all of our employees.
 
Our executive compensation policy is designed to enable it to attract, motivate and retain highly qualified executive officers.  The key components of the compensation program will be:
 
·  
base salary;
 
·  
annual incentive bonus awards; and
 
·  
stock options or other awards under the 2008 Incentive Plan.
 
In arriving at specific levels of compensation for executive officers, the Board will rely on:
 
·  
the recommendations of management;
 
·  
benchmarks provided by generally available compensation surveys;
 
·  
the experience of board members and their knowledge of compensation paid by comparable companies or companies of similar size or generally engaged in a similar industry; and
 
·  
the advice and counsel of experts and advisors with broad experience in the field of executive compensation.
 
The Board will seek to ensure that an appropriate relationship exists between executive pay and corporate performance.  Executive officers are entitled to customary benefits generally available to all Company employees, including group medical insurance. The Board may retain compensation consultants to assist the board in determining the compensation of the President or senior executive officers.  The Board may form and delegate authority to committees and may delegate authority to one or more designated members of the Board.
 
 
48

 
 
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
 
The following table sets forth certain information regarding the shares of common stock beneficially owned or deemed to be beneficially owned as of May 14, 2010, by:  (i) each person whom we know beneficially owns more than 5% of our common stock, (ii) our current directors, (iii) our current executive officers, and (iv) all of our directors and executive officers as a group.
 
Except as indicated by the footnotes below, management believes, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock that they beneficially own, subject to applicable community property laws.
 
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 15, 2010.  We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
 
Title of Class
 
Name and address of
beneficial owner
 
Amount and
nature of
beneficial ownership
 
Percent ofclass (1)
Common Stock
 
Christian Negri (sole director and named executive officer) (2)
 
12,000,000
 
40.68%
             
Series A Convertible Preferred Stock
 
Christian Negri (sole director and named executive officer) (2)
 
-
 
-
             
Series A Convertible Preferred Stock
 
Meriel Development, Inc. (3)
 
380,952
 
19.05%
Series A Convertible Preferred Stock
 
Cat Brokerage AG (4)
 
571,429
 
28.57%
Series A Convertible Preferred Stock
 
Hillside Provident Trust (5)
 
1,047,619
 
52.38%

 
(1)
Based on 29,500,000 shares of common stock and 2,000,000 shares of Series A Convertible Preferred Stock, as applicable, issued and outstanding as of May 14, 2010.
(2)
502 East John Street, Carson City, Nevada 89706.
(3)
Jasmine Court, 35A Regent Street, Belize City, Belize.
(4)
Gutenbergstrasse 10, 8027 Zurich, Switzerland.
(5)
Suite 500, 280 Nelson St., Vancouver, BC, Canada V6B 2E2.
 
Item 13.  Certain Relationships and Related Transactions, and Director Independence.
 
Christian Negri is our President, Treasurer, and Secretary and serves as our sole director.
 
In connection with the acquisition of Northern Future Energy Corp., we issued to Christian Negri, the former beneficial owner thereof, 12,000,000 restricted shares of our common stock.  Christian Negri is the President, Treasurer, Secretary, and the sole director of the Company.  The issuance was made in reliance on Rule 506 of Regulation D, as promulgated by the Securities and Exchange Commission under the Securities Act of 1933.  We believe that the exemption was available because (i) no advertising or general solicitation was employed in offering the securities, (ii) the issuance of securities was made to one person, who was an accredited individual, (iii) transfer of the securities was restricted in accordance with the requirements of the Securities Act, (iv) the issuee was financially sophisticated or advised by someone who had the requisite acumen, and (v) the issuee was provided with the applicable disclosure materials or access thereto.
 
 
49

 
Item 14.  Principal Accountant Fees and Services.
 
For the years ended December 31, 2009 and 2008, Kelly & Co. (“Kelly”) audited our financial statements and provided tax return and tax related services.
 
The aggregate fees billed for professional services by Kelly for the years ended December 31, 2009, and 2008, were as follows:
 
   
2009
   
2008
 
             
Audit Fees
  $                 30,000     $ 50,000  
                 
Audit Related Fees (1)
  $      18,000     $ 29,865  
                 
Tax Fees
    -0-       -0-  
                 
All Other Fees
    -0-       -0-  
                 
Total
  $   48,000     $ 79,865  

 
(1)
First, Second, and Third quarter review fees for our 2009 fiscal year and Third quarter review for our 2008 fiscal year.
 
It is the Board’s policy and procedure to approve in advance all audit engagement fees and terms and all permitted non-audit services provided by our registered public accounting firm.  We believe that all audit engagement fees and terms and permitted non-audit services provided by our registered public accounting firm described in the above table were approved in advance by our Board.
 

 
50

 

PART IV
 
Item 15.  Exhibits, Financial Statement Schedules.
 
(a) Financial Statements.
 
    Included under Item 8. 
 
(b) Exhibits required by Item 601.
 

Exhibit                                Description of Exhibit
 
2.1
Agreement and Plan of Exchange by and among Milk Bottle Cards, Inc., and certain members of ForgeHouse, LLC, dated January 31, 2008 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
2.2
Capital Interest Purchase Agreement, by and among the Company and Paul Grootendorst, Bryan Irving, Brooks Mileson, and Ian Morl, dated January 31, 2008 (incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
2.3
Repurchase Agreement, by and between the Company and Nicole Milkovich, dated January 31, 2008 (incorporated by reference to Exhibit 2.3 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
2.4**
Agreement and Plan of Exchange by and between Northern Future Energy Corp. and NFE Acquisition Corp., dated December 16, 2009.
 
2.5*
Asset Purchase Agreement by and between Enforce Global Solutions, LLC and the Company, dated as of December 29, 2009.
 
2.6*
Membership Interest Purchase Agreement by and between the Company and John Britchford-Steel, dated as of December 31, 2009.
 
3.1
Amended and Restated Articles of Incorporation, as filed with the Secretary of State of the State of Nevada, effective January 31, 2008 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
3.2
Bylaws (incorporated by reference to Exhibit 3(ii) of the Company’s Registration Statement on Form SB-2, filed on April 15, 2005).
 
3.3
Certificate of Designation of Series A Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada, effective January 31, 2008 (incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
3.4
Articles of Exchange, as filed with the Secretary of State of the State of Nevada, effective January 31, 2008 (incorporated by reference to Exhibit 3.4 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
3.5**
Articles of Merger, as filed with the Secretary of State of the State of Nevada, effective December 16, 2009.
 
3.6**
Certificate of Correction to Articles of Merger, as filed with the Secretary of State of the State of Nevada, effective January 29, 2010.
 
 
 
51

 
 
10.1
2008 Incentive Plan (incorporated by reference to Exhibit B of the Company’s definitive Information Statement on Schedule 14-C, filed January 2, 2008).
 
10.2
Form on Incentive Stock Option Award Agreement under the 2008 Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.3
Form of Nonqualified Stock Option Award Agreement under the 2008 Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.4
Employment Agreement with John Britchford-Steel, dated as of January 31, 2008 (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.5
Employment Agreement with Jose Alonso, dated as of January 31, 2008 (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.6
Mutual Release, by and among the Company, ForgeHouse, and Paul Grootendorst, Bryan Irving, Brooks Mileson, and Ian Morl, dated as of January 31, 2008 (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.7
Form of Lock-Up Agreement, dated as of December 12, 2007, by and between the Company and each of certain beneficial stockholders (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.8
Form of Subscription Agreement, dated as of January 31, 2008, by and between the Company and each of certain preferred stockholders (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.9
Form of Common Stock Purchase Warrant, dated as of January 31, 2008, by and between the Company and each of certain preferred stockholders (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K, filed February 7, 2008).
 
10.10
Debt Forgiveness Agreement, dated September 30, 2009, among the Company, Insurance Medical Group Limited, f/k/a After All Limited, Bryan Irving, Ian Morl, and John Britchford-Steel (incorporated by reference to Exhibit 10.10 of the Company’s Quarterly Report on Form 10-Q/A, filed November 24, 2009).
 
10.11
Promissory Note, in favor of Bryan Irving and Ian Morl, dated September 30, 2009 (incorporated by reference to Exhibit 10.11 of the Company’s Quarterly Report on Form 10-Q/A, filed November 24, 2009).
 
10.12
Reserved.
 
10.13
Employment Agreement with Jorge Vargas, dated as of February 15, 2008 (incorporated by reference to Exhibit 10.13 of the Company’s Quarterly Report on Form 10-QSB, filed May 20, 2008).
 
10.14
Service and Software License Agreement, dated April 15, 2007, by and between the Company and Securitas Security Services USA, Inc. (incorporated by reference to Exhibit 10.14 of the Company’s Quarterly Report on Form 10-QSB, filed May 20, 2008).
 
10.15
Office Lease Agreement, by and between the Company and Wolff Atlanta Portfolio, LLC (incorporated by reference to Exhibit 10.15 of the Company’s Quarterly Report on Form 10-QSB, filed May 20, 2008).
 
21.1
NFE Acquisition Corp.
 
31.1*
Certification of President and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1*
Certification of President and Treasurer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 

 
*      Filed herewith.
**    To be filed by amendment.

 
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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
 
FORGEHOUSE, INC.
     
 
By:
/s/  CHRISTIAN NEGRI
 
Christian Negri
 
President (Principal Executive Officer)
 
 
/s/  CHRISTIAN NEGRI
 
Christian Negri
 
Treasurer (Principal Financial & Accounting Officer)
   
 
Date:  May 14, 2010
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
         
 
/s/ CHRISTIAN NEGRI
 
President, Treasurer, Secretary, and Director
 
 
May 14, 2010
Christian Negri
     

 

 
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INDEX TO EXHIBITS
                     
 
Exhibit  
 Description of Exhibit
 
 
2.5
Asset Purchase Agreement by and between Enforce Global Solutions, LLC and ForgeHouse, Inc., dated as of December 29, 2009.
 
2.6
Membership Interest Purchase Agreement by and between the Company and John Britchford-Steel, dated as of December 31, 2009.
 
31.1
Certification of President and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1
Certification of President and Treasurer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
54