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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-31.1 - CERTIFICATION OF PRESIDENT AND TREASURER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. - United American Petroleum Corp.forgehouseex311.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the quarterly period ended June 30, 2010

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 Number: 000-51465
 
FORGEHOUSE, INC.
(Exact name of small business issuer as specified in its charter)

Nevada
20-1904354
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

1906 Berkeley Avenue, Los Angeles, CA 90026
(Address of principal executive offices)

(323) 868-2002
(Issuer’s Telephone Number)
   

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. x Yes o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes  o No

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
 
Accelerated filer
o
Non-accelerated filer       
o
(Do not check if a smaller reporting company)
Smaller reporting company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes x No
 
 
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
31,500,000 shares of common stock issued and outstanding at August 16, 2010.



 
1

 

 


FORGEHOUSE, INC.
FORM 10-Q
QUARTERLY PERIOD ENDED JUNE 30, 2010

INDEX

A Note About Forward Looking Statements
3
   
PART I - FINANCIAL INFORMATION
 
   
Item 1 - Financial Statements of ForgeHouse, Inc.:
F-1 
   
Balance Sheets (unaudited) as of June 30, 2010 and December 31, 2009
F-2
   
Statements of Operations (unaudited) for each of the Six-Month Periods Ended June 30, 2010 and 2009
F-3
   
Statements of Cash Flows (unaudited) for each of the Six-Month Periods Ended June 30, 2010 and 2009
F-4
   
Notes to the Financial Statements (unaudited)
F-5
   
Item 2 – Management’s Discussion and Analysis of Financial Condition or Results of Operations
4
   
Item 4 - Controls and Procedures
6
   
PART II - OTHER INFORMATION
 
   
Item 6 – Exhibits
7
   
Signatures
10


 

 
2

 

 

 A Note About Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s current expectations. These statements may be identified by their use of words like “plans,” “expect,” “aim,” “believe,” “projects,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other expressions that indicate future events and trends. All statements that address expectations or projections about the future, including statements about our business strategy, expenditures, and financial results, are forward-looking statements. We believe that the expectations reflected in such forward-looking statements are accurate. However, we cannot assure you that such expectations will occur.

Actual results could differ materially from those in the forward looking statements due to a number of uncertainties including, but not limited to, those discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations.  Factors that could cause future results to differ from these expectations include general economic conditions; further changes in our business direction or strategy; competitive factors; market uncertainties; and an inability to attract, develop, or retain consulting or managerial agents or independent contractors.  As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements. You should not unduly rely on these forward-looking statements, which speak only as of the date of this Quarterly Report. Except as required by law, we are not obligated to release publicly any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events.
 

 
3

 
ForgeHouse, Inc.
 
Index to the Financial Statements
As of June 30, 2010 and December 31, 2009 and
For Each of the three-month periods ended March 31, 2010 and 2009


 
 
Financial Statements of ForgeHouse, Inc. (a Nevada Corporation):
   
    Balance Sheets as of June 30, 2010 (unaudited) and
    December 31, 2009 
  F-2
    Statements of Operations for each of the three-month
    periods ended June 30, 2010 and 2009 (unaudited) 
  F-3
    Statements of Cash Flows for each of the three-month
    periods ended June 30, 2010 and 2009 (unaudited) 
  F-4
Notes to the Financial Statements    F-5
 


 
F-1

 
ForgeHouse, Inc.
 
Balance Sheets
 

ASSETS
 
   
As of June 30,
2010
    As of December 31, 2009  
    (unaudited)         
Current assets:
           
    Cash    $ 400     66,126  
        Total current assets     400       66,126  
                 
Oil and Gas interests (full cost method)
- unevaluated
    22,810       22,810  
                 
Total assets   $ 23,210     $ 88,936  
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
Current liabilities:             
    Accounts payable and accrued expenses    $ 103,743     29,036  
    Unsecured demand notes payable and accrued interest     58,610       56,130  
    Dividend payable      73,938       73,938  
      Total current liabilities     236,291       159,104  
                 
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 at June 30, 2010 and December 31, 2009, respectively.
       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 
  $ 2,000     $ 2,000  
    Common stock, $0.001 par value, 100,000,000 shares authorized, 42,289,834 shares issued and 29,500,000
       outstanding at June 30, 2010 and December 31, 2009
    29,500       29,500  
    Additional paid in capital      6,881,234       6,881,234  
    Accumulated deficit      (7,125,815 )     (6,982,902 )
                 
Total stockholders' deficit   $ (213,081 )   $ (70,168 )
Total liabilities and stockholders' deficit   $ 23,210     $ 88,936  

The accompanying notes are an integral part of the financial statements.
 
 
F-2

 
ForgeHouse, Inc.
 
Statements of Operations
(Unaudited)
 
 
 
    For the Three Months Ended     For the Six Months Ended  
    June 30, 2010     June 30, 2009     June 30, 2010     June 30, 2009  
                         
Operating expenses:                         
    General and administrative    $ 8,801     $ 2,217     $ 9,101     $ 3,826  
    Professional fees      113,126       -       131,334       -  
       Total operating expenses      121,297       2,217       140,435       3,826  
                                 
Loss from operations      (121,927     (2,217 )     (140,435 )     (3,826 )
                                 
    Interest expense      1,245       34,283       2,478       67,200  
                                 
Loss from continuing Operations    $ (123,172 )     (36,500 )     (142,913 )     (71,026 )
    Discontinued Operations:                                 
Loss from operations of discontinued Onevision business      -       (282,945 )     -       (573,102 )
                                 
Net loss    $ (123,172 )   $ (319,445 )    $ (142,913 )   $ (644,128 )
                                 
Dividend Applicable to preferred stock       (20,000      (20,000      (40,000     (40,000
                                 
Net loss applicable to common stockholders'     (143,172    (339,445    (182,913    (684,128
                                 
Loss per share:                                 
                                 
Loss from continuing operations, basic and diluted    $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Loss from discontinued operations, basic and diluted    $ -     $ (0.01 )   $ -     $ (0.02 )
                                 
Net loss per share, basic and diluted    $ (0.00 )   $ (0.01 )   $ (0.00 )   $ (0.02 )
                                 
Weighted average number of common shares outstanding (diluted)      29,500,000       28,289,834       29,500,000       28,289,834  
 
 
 
 
The accompanying notes are an integral part of the financial statements.
 
F-3

 
ForgeHouse, Inc.
 
Statements of Cash Flows
 
 
 
    For the six-month period ended June 30,  
    2010     2009  
Cash flows provided by (used in) operating activities:            
    Net loss   $ (142,913   $ (644,128 )
    Adjustments to reconcile net loss to cash flows used in
    operating activities:
               
       Depreciation       -        5,041  
       Amortization of software development costs       -        17,333  
       Amortization of stock based charges       -        170,167  
    Decrease (increase) in assets:                 
       Accounts receivable - trade       -        59,478  
       Prepaid expenses and other current assets       -        3,477  
       Inventory       -        (24,580
    Increase (decrease) in liabilities:                 
       Accounts payable and accrued expenses       77,187        334,044  
       Deferred revenue       -        58,882  
       Related party payable       -        23,000  
                 
Cash used in operating activities     (65,726     (2,714 )
Cash flows used in investing activities:                
    Payment of capital lease       -        (2,337
    Acquisition of equipment       -        (721
Cash provided by investing activities     -       (3,058
Net decrease in cash     (65,726     (344
Cash at beginning of period     66,126       1,705  
Cash at end of period   $ 400     1,361  
 
Discontinued Operations:
 
Amounts related to discontinued operations are included in the June 30, 2009 cash flow statement.
 
Supplemental Disclosure of Cash Flow Information
 
    For the six-month period ended June 30,  
    2010     2009  
Cash paid during the fiscal years for:             
    Interest    $ -     $ -  
    Income taxes    $ -     $ -  
 
The accompanying notes are an integral part of the financial statements.

 
F-4
 
 

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of June 30, 2010 and December 31, 2009 and
For each of the three and six-month periods ended June 30, 2010 and 2009
 


 
1.       Description of the Company's Business
 
Nature of Operations
 
ForgeHouse, Inc. (the Company, we, or our) was incorporated under the laws of the state of Nevada in 2004.  In December 2009, the Company acquired Northern Future Energy Corporation (NFEC), a Nevada energy exploration company with oil and gas interests in Alaska.  At June 30, 2010 and December 31, 2009, the Company's balance sheet is comprised of the assets and liabilities of NFEC's oil and gas operations.  The Company's statements of operations for the three and six month periods ended June 30, 2010 and 2009 reflect corporate and NFEC operating expenses. Operating results of the discontinued OneVision® subsidiary are presented as a single line item (Discontinued Operation) for the three and six-month period ending June 30, 2009.
 
Basis of Presentation
 
These condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The condensed financial statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments necessary for a fair statement of the condensed results for the interim periods. Operating results for the three and six-month period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.  We made certain reclassifications to prior-period amounts to conform to the current presentation
 
 
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 the Former Officers.  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 disposition 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; 10,789,834 shares of our common stock valued at a par value of $10,790.  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.
 


 
F-5
 
 

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of June 30, 2010 and December 31, 2009 and
For each of the three and six-month periods ended June 30, 2010 and 2009
 



The following is a summary of the net liabilities sold disposed of at the closing date of December 29, 2009:
 
   
December 29,
2009
 
Cash    $ 73,805  
Accounts receivable      96,476  
Inventory      34,657  
Prepaid insurance      1,967  
    Current assets of discontinued operation      206,905  
Equipment, net of accumulated depreciation of $47,894 and $37,739      15,277  
Software development costs, net of accumulated amortization of $164,667 and $130,000      8,667  
Deposits      3,623  
    Total assets of discontinued operation    $ 234,472  
         
Liabilities        
Notes payable in default      -  
Accounts payable    $ 740,049  
Related party payable      53,087  
Accrued payroll and related expenses      731,825  
Accrued expenses      7,939  
Capital lease      -  
Deferred revenue      168,570  
Note payable      415,000  
    Total liabilities of discontinued operation      2,116,470  
  Net liability of discontinued operation   1,881,998  
 

 

 
F-6
 
 

 
ForgeHouse, Inc.
 
Notes to the Financial Statements
As of June 30, 2010 and December 31, 2009 and
For each of the three and six-month periods ended June 30, 2010 and 2009
 

The accompanying table presents the details of the discontinued operations as reported on the face of the Statements of Operations for the six-month period ended June 30, 2009:
   
For the three-month period ended June 30,
    For the six-month period ended June 30,   
    2009      2009  
Revenues:               
    Service contract revenue    $ 58,226      110,144  
    Product revenue      12,190        86,448  
       Net revenues      70,416        196,592  
Costs and expenses:                 
    Costs of revenues      24,941       125,381  
    General and administrative      42,917        82,070  
    Software and development costs      3,275        5,815  
    Payroll related expenses      172,787        344,454  
    Depreciation and amortization      11,188        22,375  
    Stock based charges      85,082        170,164  
    Professional fees      12,763        18,104  
    Interest expense      408        1,317  
    Other expense      -        14  
Loss from operations of discontinued OneVision   (282,945 )    (573,102
 
3.       Summary of Significant Accounting Policies
 
Recent Accounting Pronouncements
 
Management does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
 
4.    Going Concern Matters
 
The accompanying financial statements as of June 30, 2010 have been prepared assuming the Company will continue as a going concern. The Company has experienced recurring losses and negative cash flows from operations, has no revenue and has an accumulated deficit of $7,125,815 at June 30, 2010.  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.  There is no assurance that its plan 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.
 
F-7
 

 
 
5.       Equity Transactions
 
Warrant Activity
 
A summary of warrant activity from December 31, 2008 through June 30, 2010 is presented below:
 
 
      Number of Warrants     Weighted Average Exercise Price  
               
  Outstanding, December 31, 2008 and 2009     2,000,000     $ 1.00  
      Issued      -       -  
      Exercised      -       -  
      Expired      (2,000,000 )   $ 1.00  
  Outstanding and exercisable June 30, 2010     -     $ -  
 
On January 31, 2010, 2,000,000 2-year warrants with an exercise price of $1.00 expired. There was no unrecognized share-based compensation as of June 30, 2010.
 
Shares Reserved for Future Issuance
 
The Company has reserved shares for future issuance upon conversion of preferred stock:
 
 
Conversion of Preferred stock        2,000,000
 
Reserved shares at June 30, 2010     2,000,000
 
6.
Loss Per Share
 
Basic and diluted loss per share is computed using the weighted-average number of common shares outstanding.  Since there was a net loss in each period presented, the effect of potentially dilutive common shares is not considered as their effect would be anti-dilutive. The impact of 2,000,000 warrants and 2,000,000 of preferred stock was omitted from the calculation of diluted earnings per share as inclusion would have been anti-dilutive
 
7.
Subsequent events
 
In July 2010, we received notification to convert the outstanding preferred stock into equity. As a result, we issued 2,000,000 shares of our common stock in connection with the conversion. In connection with the conversion of the preferred stock, the preferred stock dividend was forgiven by the holders. The forgiveness of the preferred stock dividend was accounted for as a capital transaction and did not impact the income statement.


 
F-8
 
 

 
  
 
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Forward-Looking Statements
 
The following discussion may contain certain forward-looking statements.  Such statements are not covered by the safe harbor provisions.  These statements include the plans and objectives of management for future growth of the Company, including plans and objectives related to the consummation of acquisitions.  The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties.  Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.  Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
 
The words “we,” “us,” and “our” refer to the Company.  The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements.”  Actual results could differ materially from those projected in the forward looking statements as a result of a number of risks and uncertainties, including but not limited to: (a) limited amount of resources devoted to achieving our business plan; (b) our failure to implement our business plan; (c) our strategies for dealing with negative cash flow; and (d) other risks that are discussed in this report or included in our previous filings with the Securities and Exchange Commission.
 
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.
 
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 foreseeable future.
 
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.

 

 
For the three months Ended June 30, 2010 in Comparison to the three months Ended June 30, 2009
 
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 with the acquisition of Northern Future Energy Corp. and 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.
 
Revenues

Exclusive of the discontinued operations of our Prior Business, we had no net revenues from operations in either the current quarter or the corresponding period in the prior year. 

Operating Expenses

During this period, operating expenses increased to $121,927 from $2,217 in 2009.  Expenses consisted of professional fees, and general and administrative fees.  The professional fees increased, to a large extent, due to our auditors and legal counsel for preparation of our registration statement and quarterly filings.  A majority of our professional fees at June 30, 2009 were attributable to our discontinued OneVision business and are included in discontinued operations.

Interest Expense

During the three months ended June 30, 2010 and 2009 we recorded interest expense of $1,245 and $34,283, respectively.  The decrease of $33,038 was a result of the Company restructuring its debt on its notes payable on September 30, 2009.    

Net Operating Loss

 For the three months ended June 30, 2010 and 2009, we had a net operating loss of $123,172 and $319,445, respectively.  The decrease in our net loss for the three month period ended June 30, 2010 of $196,273 is primarily attributable to the Company discontinuing its OneVision business resulting in a discontinued operations loss of  $282,945.
 
For the six months Ended June 30, 2010 in Comparison to the six months Ended June 30, 2009
 
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 with the acquisition of Northern Future Energy Corp. and 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.
 
Revenues

Exclusive of the discontinued operations of our Prior Business, we had no net revenues from operations in either the current quarter or the corresponding period in the prior year. 

 

 

Operating Expenses

During this period, operating expenses increased to $140,435 from $3,826 in 2009.  Expenses consisted of professional fees, and general and administrative fees.  The professional fees increased, to a large extent, due to our auditors and legal counsel for preparation of our registration statement and quarterly filings.  A majority of our professional fees at June 30, 2009 were attributable to out discontinued OneVision business and are included in discontinued operations.

Interest Expense

During the six months ended June 30, 2010 and 2009 we recorded interest expense of $2,478 and $67,200, respectively.  The decrease of $64,722 was a result of the Company restructuring its debt on its notes payable on September 30, 2009.    

Net Operating Loss

 For the quarter ended June 30, 2010 and 2009, we had a net operating loss of $142,913 and $644,128, respectively.  The decrease in our net loss for the six month period ended June 30, 2010 of $501,215 is primarily attributable to the Company discontinuing its OneVision business resulting in a discontinued operations loss of  $573,102.
  
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 June 30, 2010, we had total assets of $23,210, of which current assets consisted of $400 in cash.  Total current liabilities at June 30, 2010, were $236,291.
 
At June 30, 2010, we had a cash balance of $400 and a working capital deficit of approximately $236,000.  At December 31, 2009, we had a cash balance of  approximately $66,000 and a working capital deficit of approximatley $93,000.
 
Net cash flows used in operating activities for the quarter ended June 30, 2010, amounted to $65,726 and were comprised primarily of trade payables and our net loss for the quarter.  Net cash flows used in investing and financing activities for the quarter ended June 30, 2010, were nil.
 
At June 30, 2010, we had cash of $400, which represented a decrease of approximately $66,000 in comparison with our cash balance at December 31, 2009.  At June 30, 2009, we had cash of approximately $1,360 and an decrease of  approximately $340 in comparison with our cash balance 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 Current Report, we have not entered into any agreements and have not received any commitments to obtain any such financing.  The notes to our financial statements at June 30, 2010 disclose our uncertain ability to continue as a going concern.
 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements.
 
 

 

 
ITEM 4. CONTROLS AND PROCEDURES
 
    The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2010, due to a lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.
 
    In response to this conclusion, we have applied compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the period covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the years and periods then ended


There has been no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2010, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 
 

 

 PART II - OTHER INFORMATION

ITEM 6. EXHIBITS.

 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 (incorporated by reference to Exhibit 2.4 of the Company’s Annual Report on Form 10-K, filed May 14, 2010).
     
2.5
 
Asset Purchase Agreement by and between Enforce Global Solutions, LLC and the Company, dated as of December 29, 2009 (incorporated by reference to Exhibit 2.5 of the Company’s Annual Report on Form 10-K, filed May 14, 2010).
     
2.6
 
Membership Interest Purchase Agreement by and between the Company and John Britchford-Steel, dated as of December 31, 2009 (incorporated by reference to Exhibit 2.6 of the Company’s Annual Report on Form 10-K, filed May 14, 2010).
     
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 (incorporated by reference to Exhibit 3.5 of the Company’s Annual Report on Form 10-K, filed May 14, 2010)
     
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 (incorporated by reference to Exhibit 3.6 of the Company’s Annual Report on Form 10-K.
     
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.

 
 

 

 

 SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
FORGEHOUSE, INC.
   
   
 
By:
/s/ CHRISTIAN NEGRI
   
Christian Negri
   
President, Secretary, Treasurer
(Principal Executive, Financial and Accounting Officer)
     
   
Date:  August 20, 2010

 
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