Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported):

January 31, 2008

FORGEHOUSE, INC.

(Exact name of registrant as specified in Charter)

Nevada		333-124304		20-1904354
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

1575 Northside Drive NW, Building 300, Suite 375

Atlanta, Georgia, 30318

(Address of Principal Executive Offices)

(770) 923-7765

(Issuer Telephone number)

Milk Bottle Cards, Inc.

127 East 18th Ave.

Vancouver, British Columbia, V5V 1E4 Canada

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Share Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Share Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Share Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

See Item 2.01 for a description of the Agreement and Plan of Exchange (the “Exchange Agreement”), dated January 31, 2008, among Milk Bottle Cards, Inc. (now known as ForgeHouse, Inc.; the “Company”) and three members of ForgeHouse, LLC (“ForgeHouse”). The terms “we,” “our,” and “us” shall have the same meaning as the “Company”; further, for post-RTO Closing matters, such terms shall collectively and individually include ForgeHouse.

Item 2.01. Completion of Acquisition or Disposition of Assets.

Equity Exchange Transaction

The actions described herein were taken in connection with the Exchange Agreement and the Interest Purchase Agreement (“Interest Purchase Agreement”), dated January 31, 2008, among the Company and four members of ForgeHouse , who, collectively, with the three members who were parties to the Exchange Agreement, constituted all of the members of ForgeHouse (collectively, the “ForgeHouse Members”). Pursuant to the terms of the Exchange Agreement and the Interest Purchase Agreement, on January 31, 2008 (the “RTO Closing”), we sold and issued 10,500,000 shares of our common stock and paid $171,500 to the parties thereto in exchange for all of the membership interests in ForgeHouse. At the RTO Closing, ForgeHouse became a wholly-owned subsidiary of the Company.

Related Transactions

Preferred Stock Financing

The RTO Closing was conditioned upon, among other things, the closing of a private placement (the “Preferred Stock Financing”) of the Series A Convertible Preferred Stock, the issuance of which itself was conditioned upon the filing with the Secretary of State of the State of Nevada of (i) Amended and Restated Articles of Incorporation that, among other things, authorized a class of 10,000,000 shares of preferred stock and (ii) a Certificate of Designation to designate the relative rights and preferences of the series of 2,000,000 shares of Series A Convertible Preferred Stock.

Concurrently with the RTO Closing, in the Preferred Stock Financing, we sold and issued 2,000,000 of our securities (consisting of 2,000,000 shares of Series A Convertible Preferred Stock and 2,000,000 warrants exercisable for an equivalent number of shares of common stock), private placement to certain accredited investors (the “Investors”) in exchange for gross proceeds of $2,100,000. The warrants vested immediately, are exercisable at a price of $1.00 per share, and expire on January 31, 2010. We are required to file a registration statement registering the common stock into which the preferred stock can be converted and the common stock underlying the warrants within 120 days of RTO Closing, and such registration statement must be effective within 210 days of RTO Closing.

Proceeds from the Preferred Stock Financing were used as follows: (i) approximately $250,000 to pay in full ForgeHouse’s outstanding promissory note in favor of North Atlanta Bank; (ii) $171,500for the acquisition of ForgeHouse’s membership interests, as described above; (iii) $240,000 for accrued interest and fees in respect of ForgeHouse’s loan transactions (the “Arngrove Debt”) with Arngrove Group Holdings Ltd. (“Arngrove”); (iv) $128,500 for accrued management fees due to Arngrove (which the Company has accounted for as additional interest expense); (v) $50,000 in connection with the Stock Repurchase Agreement, dated January 31, 2008, between our former president and us; (vi) $300,000 for repayment of loans made to us so that we could lend an equivalent sum to ForgeHouse prior to the RTO Closing; (vii) $250,000 for certain costs of the acquisition and Preferred Stock Financing transactions; and (viii) approximately $600,000 for the Company’s operating capital needs during the six-month period following the RTO Closing.

Repurchase Agreement

Simultaneously with the RTO Closing, Ms. Milkovich agreed to resign as an officer of the Company. She and we also closed the transaction contemplated by the Stock Repurchase Agreement, as a result of which we purchased from her 35 million shares of our common stock in consideration of a payment by us of $50,000.00 in cash and the transfer to her of all of our historical operating assets.

Corporate Name Change

Pursuant to the terms of the Exchange Agreement, we changed our name to “ForgeHouse, Inc.,” which was accomplished through the filing of our Amended and Restated Articles of Incorporation, as described below.

Incentive Plan

Prior to RTO Closing, we implemented the 2008 Incentive Plan (the “Plan”), which was adopted by our board of directors (“Board”) and consented to by our majority stockholder. For information regarding the Plan, see “2008 Incentive Plan,” below.

Reasons for the Transactions

In reaching its decision to approve the Exchange Agreement and all related transactions, our Board considered numerous factors pertaining to our pre-RTO Closing business model and operations, including the facts that (i) we had generated only $476 in revenue since inception and incurred $41,273 in expenses through October 31, 2007; (ii) we were issued an opinion by our auditors that raised substantial doubt about our ability to continue as a going concern based on our financial position; and (iii) we believed we would have to had raise additional monies through sales of our equity securities or through loans from banks or third parties to continue our business plan. Our Board considered numerous potential benefits and material factors pertaining to the equity exchange transaction, including the following:

	·	the belief that, after reviewing our ongoing financial condition, results of operations and business and earning prospects, and notwithstanding the concerted efforts of management and our Board to scale our business and increase revenues and profitability, remaining an independent operating company focusing on our remaining businesses was not reasonably likely to create greater value for our stockholders than the prospects presented by the equity exchange transaction;
	·	the belief that the equity exchange transaction with ForgeHouse represented the most favorable alternative reasonably available for our stockholders in the short-term;
	·	the belief that the benefits to us contemplated in connection with the transactions contemplated by the Exchange Agreement, including the funds that were expected to be made available by the Investors in connection with the Preferred Stock Financing, were likely to be achieved within a reasonable time frame; and
	·	the due diligence and negotiation process undertaken by us and the ForgeHouse Members in connection with the negotiation of the Exchange Agreement.

Our Board also considered a number of potentially negative factors in reaching its decision to approve the transactions contemplated by the Exchange Agreement, including the possible dilution to our common stockholders and the following:

	·	the risk that the potential benefits of such transaction may not be realized, in part or at all;
	·	the significant costs involved in consummating such transaction and related transactions; and
	·	the potential negative effect on our stock price as a result of the public announcement of the consummation of such transaction and related matters.

Regulatory Approvals

There were no material federal or state regulatory approvals required for completion of the transactions contemplated by the Exchange Agreement or related transactions, other than the approval of certain actions by our stockholders under the corporate law of the State of Nevada, which actions were approved.

Beneficial Ownership and Operations Following the RTO Closing

Following the RTO Closing, our principal business will be that carried on by ForgeHouse. See “Security Ownership of Certain Beneficial Owners and Management” and “Description of Business” below for more information.

Concurrently with the RTO Closing, ForgeHouse’s management team assumed various management positions with us and will assume the position of chairman of our Board. Also, Messrs. John Allen Britchford-Steel and Jose M. Alonso, ForgeHouse’s indirect majority owners, entered into employment agreements with us that took effect as of the RTO Closing. See “Employment Agreements” below.

Accounting Treatment

For accounting purposes, the acquisition was treated as a recapitalization of ForgeHouse with ForgeHouse as the accounting acquirer (a reverse acquisition). Our historical financial statements prior to the acquisition are those of ForgeHouse. Historical stockholders’ equity of ForgeHouse prior to the RTO Closing were retroactively restated (a recapitalization) for the equivalent number of shares received in the exchange transaction. Loss per share for the periods prior to the exchange transaction are restated to reflect the number of equivalent shares received by ForgeHouse. As a result of the RTO Closing, our fiscal year-end has been changed to December 31, the fiscal year-end of ForgeHouse, as the accounting acquirer.

Certain pre-RTO Closing members of ForgeHouse own 37.5% of our common stock (or 35% if all of the Series A Convertible Preferred Stock is converted into common stock and, in either case, assuming that none of the outstanding options or warrants is exercised). The holders of our common stock have the right to elect two members to our Board, as do the holders of the Series A Convertible Preferred Stock. The fifth member of our Board is initially to be agreed upon by the other four directors; therefore, no block of stockholders has the ability to appoint a voting majority of our directors. ForgeHouse was determined to be the accounting acquirer based upon a determination that the former ForgeHouse Members (1) are the largest minority stockholder group, (2) represent all members of senior management, and (3) paid a premium for our equity interests over their market value.

Material Federal Income Tax Consequences

ForgeHouse was treated as a partnership for federal income tax purposes. Federal income taxes are not payable, or provided for, by ForgeHouse. The ForgeHouse Members report their proportionate share of ForgeHouse’s income or losses. ForgeHouse’s income or losses are allocated among the ForgeHouse Members in accordance with its Amended and Restated Operating Agreement and Georgia state law.

Neither ForgeHouse, the ForgeHouse Members, nor we expect that the transaction contemplated by Exchange Agreement will qualify as a tax-free or tax-deferred reorganization, as defined in the Internal Revenue Code of 1986, as amended. The ForgeHouse Members incurred a tax liability by virtue of such transaction. However, we have been advised by the ForgeHouse Members that the amount of gain that each of them recognized by virtue of such transaction was less than or equal to the amount of their respective suspended losses generated by ForgeHouse’s losses that were, in the aggregate, greater than their respective capital bases in ForgeHouse. Our stockholders did not exchange their common stock in the equity exchange transaction and, accordingly, did not recognize any taxable gain or loss as a result of the equity exchange transaction.

Arngrove and After All

At the RTO Closing, we purchased the membership interests in ForgeHouse owned of record and beneficially by certain affiliates of Arngrove for the aggregate sum of US$171,000. The Arngrove Debt was restructured so that, from and after the RTO Closing, the Arngrove Debt will accrue simple interest at a rate of six percent per annum. The repayment terms of the Arngrove Debt were amended as follows: (i) at the RTO Closing, we paid to Arngrove $240,000 for accrued interest and fees; (ii) commencing on December 31, 2008, and continuing on the last day of the two immediately succeeding June’s and December’s thereafter, we shall pay the principal of the Arngrove Debt to Arngrove in five payments of $280,000 each; (iii) all accrued and unpaid interest on the Arngrove Debt shall be paid on December 31, 2010, concurrently with the fifth and final principal payment; and (iv) as mandatory pre-payments, we shall pay to Arngrove an amount equivalent to 20% of the net funding received by us from any future equity or debt financings after the RTO Closing.

The debt (“After All Debt”) currently owed to After All Limited (“After All”) was restructured so that, from and after the RTO Closing, the After All Debt will accrue simple interest at a rate of six percent per annum. The repayment terms of the After All Debt were amended as follows: (i) commencing on December 31, 2008, and continuing on the last day of the two immediately succeeding June’s and December’s thereafter, we shall pay the principal of the After All Debt to After All in five payments of $40,000 each; (ii) all accrued and unpaid interest on the After All Debt shall be paid on December 31, 2010, concurrently with the fifth and final principal payment; and (iii) as mandatory pre-payments, we shall pay to After All an amount equivalent to 20% of the net funding received by us from any future equity or debt financings after the RTO Closing.

The Arngrove Debt and the After All Debt is subordinate to the $2,100,000 in investment capital provided to us at the RTO Closing by the Investors.

We also provided to Arngrove and After All acceptable assurances that the current ForgeHouse software shall not be transferred to an unaffiliated third-party until the Arngrove Debt and the After All Debt have been repaid in full. As of the RTO Closing, all rights in and to such software owned or held by Arngrove were transferred to ForgeHouse, such that ForgeHouse has all of such rights vis-à-vis Arngrove.

Lock-Up

The common stock issued pursuant to the Exchange Agreement, the options granted under the Employment Agreements, and the common stock underlying such options are all subject to a two-year restriction on any sale, transfer, assignment, pledge or other derivation of economic value by the holders thereof. If, during such two-year period, a member of our management who owns such securities is dismissed for “cause” or terminates employment without “good reason” (as those terms are defined in the Exchange Agreement), then such securities owned by such individual will be subject to a right of first refusal in favor of all other members of our management and, in respect of such securities remaining unpurchased, thereafter in favor of the holders of the Series A Convertible Preferred Stock. Notwithstanding the term of such lock-up, if the holder is an employee and is terminated without cause or terminates his or her employment for good reason, such holder may, during each calendar quarter of the lock-up, sell, pledge, hypothecate, or otherwise derive economic value from an amount of such shares equivalent to not more $25,000, as particularly stated in the holder’s Lock-Up Agreement.

Post-RTO Closing (Symbol Change; CUSIP Number; Fiscal Year-End)

Effective February 4, 2008, in connection with the change of our name, our trading symbol changed from “MBTL” to “FOHE” And our CUSIP number relating to our common stock changed to 346299 10 0. Furthermore, the transaction contemplated by the Exchange Agreement was treated as a “reverse merger”; therefore, in accordance with reverse merger accounting, our fiscal year-end was changed from January 31 to December 31, which is the fiscal year end of ForgeHouse.

PART I

Item 1. Description of Business.

See Forward Looking Statements below.

General

The Company is a corporation that was formed in Nevada on November 19, 2004. The Company’s wholly-owned subsidiary, ForgeHouse, is a limited liability company that was organized in Georgia on June 24, 2002. Our principal place of business is at 1575 Northside Drive NW, Building 300, Suite 375, Atlanta, Georgia 30318. We develop, market, sell, and distribute software for both the commercial and governmental marketplace.

Products

Our products include a web-based software application product called “OneVision®” (referred to herein as “OneVision”), which offers solutions for clients requiring compliance standards to automate best practices, policies, and procedures.

OneVision is a software application that acts as a virtual command and control system for security, safety, and maintenance operations. The architecture of OneVision enables minute-by-minute monitoring of policies and procedures across the entire organization, with constant monitoring and process improvement. OneVision is highly configurable and scaleable and is suited for the government, the military, critical infrastructures, Fortune 1000 corporations, and commercial markets. OneVision is highly flexible and can be configured for facilities and organizations with single and multiple sites world-wide.

We have also developed software that enables access and data collection to the OneVision application via mobile technologies (“PDA”). This software, known as MORe, enables security officers, maintenance engineers, and other field operatives to download and undertake mobile tours and inspections scheduled in OneVision and to report directly into the OneVision server from internet enabled PDAs for incident reporting and compliance.

Sales, Marketing, and Distribution

We are a customer-oriented business. To this end, we plan to build internal sales and support capabilities through a direct sales force to implement our go-to-market strategies and tactical implementation plans for new account acquisition, existing partner growth, and marketing “best practices.” As we establish our modes of selling, we will seek to build an indirect sales channel through key distributors, value-added resellers, and original equipment manufacturers. Currently, we are working to enhance the capabilities of our software platform to meet additional needs as identified or requested by our customers. These additional feature-sets will be included in new version releases, which are currently not available. Once they are available, our direct sales force, and eventually our indirect sales force, will assist with distributing the new product to current and new customers.

Real Property

We sublease property at 1575 Northside Drive NW, Building 300, Suite 375, Atlanta, Georgia, 30318. The fair market value for our office space is $2,450 per month. While our office space has been adequate for us in the past, we anticipate moving in the near-term to satisfy our on-going and expected future needs.

Legal Proceedings

We are not a party to any pending legal proceeding.

Competition

The software development industry is highly competitive. The principal areas of competition are price, delivery time, customer service, and ability to meet customer needs. Our products compete with a wide range of products produced by a relatively large number of manufacturers, most of which have substantially greater financial, marketing, and distribution resources than we do.

As consolidation in the software industry continues, fewer companies dominate particular markets, changing the nature of the market and potentially providing consumers with fewer choices. Also, many of these companies offer a broader range of products than ours, so we may not be able to compete effectively against these competitors. Furthermore, we may use strategic acquisitions, as necessary, to acquire technology, people and products for our overall product strategy. The trend toward consolidation in this industry may result in increased competition in acquiring these technologies, people or products, resulting in increased acquisition costs or the inability to acquire the desired technologies, people or products. Any of these changes may have a material adverse effect on future revenues and operating results.

Price competition is often intense in the software market, especially for security software products. Many of our competitors have significantly reduced the price of their products. Price competition may continue to increase and become even more significant in the future, resulting in reduced profit margins. Competitive pressures in the security software category could also cause our products to be unable to gain or lose market-share or result in price erosion, which could have a material adverse affect on business and results.

To date, our significant competition includes the following companies: D3 Security Management Systems, Tiscor, PPM 2000, Siebel Field Service (Oracle), Flexguard, Send Word Now.

Our unique software solution offers a comprehensive security and safety software platform. Most of the companies providing security software focus on incident management, broadcast alert, and/or tour verification. We have created a solution that combines seamless incident management/mobile reporting and tour verification, and, in addition, we added a task scheduler, officer guidance through incidents, threat level management, automatic emergency alert notification, tenant services, procedure management, extensive reports, and trend analysis into one software platform. The competitors generally offer only a portion of OneVision’s following features:

	·	Departmentalized regional management, customizable even on a per-site basis from global to local management;
	·	Threat level management from global to local sites;
	·	Direct-automated emergency alerts to key personnel (versus alerts sent by dispatcher);
	·	Compliance-driven alert if task is not completed, with user, time and date stamp;
	·	Alternate schedules functionality (threat level management);
	·	Managing by exceptions (incomplete and irregularities found by officers while on tour are reported automatically);
	·	Built-in task scheduler with confirmation;
	·	Integration with smart cameras, sensors, access control, and other legacy systems;
	·	Managers have one login to review all security and maintenance issues throughout their sites or clients;
	·	Best practices and compliance platform; and
	·	Sold as a hosted or enterprise solution.

Dependence on One Major Customer

Effective as of April 15, 2007, we entered into a three-year Service and Software License Agreement (the “Software License”) with Securitas Security Services USA, Inc., pursuant to which Securitas became a licensee of certain of our software. The Software License is exclusive with respect to private sector security guard companies in the United States; however, it is non-exclusive with respect to governmental entities and to companies that utilize third-party vendors to provide their security guard services. The Software License is subject to early termination upon the “Default” of either party, which is defined as any of a bankruptcy proceeding, a dissolution, an inability to pay obligations as they come due (in conjunction with a written acknowledgement thereof), or a material breach under the Software License. The Software License consisted of a non-transferable limited license in favor of Securitas to use the licensed software at specified locations solely for the purpose of Securitas providing facility security services to its customers. Pursuant to the terms of the Software License, Securitas is to pay certain fees to us, consisting of a base monthly service fee and additional annual service fees, as required. During the nine months ended September 30, 2007, we derived sufficient revenues resulting from the Software License for us no longer to be considered to be a “development stage” company. Notwithstanding such change in accounting treatment, we cannot provide any assurance that the Software License will be expanded nor that we will receive sufficient revenues therefrom to effectuate our business plan or to generate profitable operations. Further, during the nine-month period ended September 30, 2007, the Software License constituted the source of substantially all of our revenues.

Intellectual Property

We have been granted patents in India, Australia, and South Africa. We also have patents pending in the United States, Canada, Israel and Europe.

COUNTRY	APPLICATION # /	PATENT No. /
UNITED STATES Provisional App.	60/377,013	EXPIRED
INTERNATIONAL PCT APPLICATION	PCT/US03/13434	N/A
UNITED STATES National Stage App.	10/526,319	Publication # 2006/0064305
AUSTRALIA National Stage App.	2003234303	Patent # 60/377,013
CANADA National Stage App.	2483598	N/A
EUROPEAN UNION National Stage App.	1504394	N/A
INDIA National Stage App.	200400605	Patent # 203148
SOUTH AFRICA National Stage App.	200409642	Patent # 200409642
ISRAEL National Stage App.	164870D	N/A

Furthermore, we have registered trademarks with the United States Patent and Trademark Office for the following:

	·	OneVision®
	·	ForgeHouse®

Regulation

We are subject to various state and local statutes and regulations, including those relating to the export of technology outside the United States. Compliance with these provisions has not had, and we do not expect such compliance to have, any material adverse effect upon our capital expenditures, net income, or competitive position. Regulatory guidelines, however, are constantly changing, and there can be no assurance that our products will be able to comply with ongoing government regulations. We acknowledge ongoing litigation in the intellectual property arena. If adverse decisions are handed down, compliance may have an effect on our capital expenditures, net income, or competitive position

Government mandates and new legislation are driving enterprises to improve the security of their networks. Mandates and laws affecting systems security include:

• Executive Order 13231: Critical Infrastructure Protection in the Information Age, October 2001 - This order directs a senior executive branch board to work with State and local governments, industry and others to create and manage systems for cyber security threat warning and incident analysis.

• Title III of the 2002 E-Gov Act - The Federal Information Security Management Act (“FISMA”) mandates that each government agency perform a risk assessment of the security of their information systems and mitigate the risk of attack.

• Presidential Directive 63 (PDD 63), May 1998 - This White Paper explains key elements of the Clinton Administration’s policy on critical infrastructure protection.

• Health Insurance Portability And Accountability Act Of 1996 (“HIPAA”) - Certain provisions of HIPAA require the organizations protect the privacy of the patient data.

• Security of Federal Automated Information Systems, November 2000 - This OMB memorandum is issued as a reminder to Federal agencies and Departments of their responsibilities for the security of their respective automation resources.

• Sarbanes-Oxley Act of 2002 - Section 404 of the act requires that auditors of public companies assess the effectiveness of management’s assessment of internal controls. A part of internal controls is the security against loss of data or unauthorized access to data.

• Gramm Leach Bliley Act of 1999 (“GLB”) includes provisions to protect consumers’ personal financial information held by financial institutions.

Research & Development

Our research and development expenses for the fiscal years 2005 and 2006 amounted to approximately $82,101 and $208,489, respectively. Research and development is paramount for us as a method to maintain a competitive advantage. None of our research and development costs were borne directly by our customers.

Employees

We currently has seven employees, all of whom are full-time. None of our employees are covered by a collective bargaining agreement, nor are they represented by a labor union. We have not experienced any work stoppages, and we consider relations with our employees to be good.

Risk Factors

Various risk factors relating to our operations are included under the heading “Risk Factors” below.

This Current Report and the documents accompanying or incorporated by reference into this Current 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 (“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.

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.

RISK FACTORS

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 Current 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 as a provider of security software products. As a result, it is difficult to evaluate our business and prospects.

ForgeHouse was formed in 2002, and, therefore, has a 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. 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.

ForgeHouse has incurred net losses each fiscal year since its formation in 2002. For the three months ended September 30, 2007, it recorded a net loss of approximately $248,035, as compared to a net loss of approximately $322,378 for the three months ended September 30, 2006. Its accumulated deficit through September 30, 2007, was approximately $2,607,913.

ForgeHouse’s recurring losses from operations, its limited cash resources and continued negative cash flow from operations, and its accumulated deficit, among other factors, raised substantial doubt about its ability to continue as a going concern and led its independent registered public accounting firm to include an explanatory paragraph related to its ability to continue as a going concern in their report for the year-ended December 31, 2006.

ForgeHouse had a net loss of $3,044,360 from inception to December 31, 2006, and a net loss of $827,531 for the nine months ended September 30, 2007. ForgeHouse believes that a substantial part of the loss in each period relates to the costs associated with forming its business and developing its business plan. Nonetheless, its losses from operations since inception and lack of sufficient capital resources led its auditors to include an explanatory paragraph related to its ability to continue as a going concern in their report accompanying ForgeHouse’s financial statements for the fiscal year ended December 31, 2006.

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 ForgeHouse’s independent registered public accounting firm and its financial statements and unaudited pro forma financial information before making any investment decision.

Our quarterly operating results may fluctuate in future periods, and we may fail to meet expectations.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors. In future quarters, our operating results may be below the expectations of public market analysts and investors, and the price of our common stock may fall. Factors that could cause quarterly fluctuations include:

	·	the timing and volume of orders for our software. Customers typically order our products and services only after other vendors have provided the infrastructure for their network. There can be delays in that process. It is therefore difficult for us to predict the timing of orders for products and services by customers;
	·	the ability of our customers to expand their operations and increase their subscriber base, including their ability to obtain financing;
	·	Changes in our pricing policies or competitive pricing by our competitors;
	·	the timing of releases of new products by manufacturers of equipment with which our products operate; and
	·	the timing of product introductions by competitors.

We have difficulty predicting the volume and timing of orders from new customers.

Due to the foregoing factors, ForgeHouse believes that quarter-to-quarter comparisons of operating results are not a good indication of our future performance.

Our lengthy sales cycle makes it difficult to anticipate the timing of sales, and revenue may vary from period to period.

The sales cycle associated with the purchase or license of our products is lengthy, and the time between the initial proposal to a prospective customer and the signing of a license agreement can be as long as one year. Our products involve a commitment of capital, time and internal resources that may be significant to the customer. In addition, market conditions have lengthened the sales cycles associated with our products. These delays may reduce our revenue in a particular period without a corresponding reduction in our costs, which could hurt our results of operations for that period.

We have not achieved profitability on an annual basis and expect to continue to incur net losses in future quarters.

In order to become profitable, we must increase our revenues or decrease expenses. We may not be able to increase or even maintain our revenues, and we may not achieve sufficient revenues or profitability in any future period. We could continue to incur net losses for the foreseeable future.

We will need to generate additional revenues from the sales of our products and services or take steps to further reduce operating costs to achieve and maintain profitability. We expect that we will face increased competition, which will make it more difficult to increase our revenues. Even if we are able to increase revenues, we may experience price competition that will lower our gross margins and our profitability. Any increase in the percentage of our revenues attributed to indirect channels and services, both of which generally have lower margins, will lower our gross margins.

If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis.

We face intense competition from companies that may have greater resources than we do, and if we are unable to compete with them effectively, our business may suffer.

The market for our products is very competitive. Many of our current and future competitors may have advantages over us, including:

	·	longer operating histories;
	·	larger customer bases;
	·	substantially greater financial, technical, sales and marketing resources; and
	·	greater name recognition.

This may enable our competitors to:

	·	develop and expand their delivery infrastructure and service offerings more quickly;
	·	adapt better to new or emerging technologies and changing client needs;
	·	take advantage of acquisitions and other opportunities more readily;
	·	devote greater resources to the marketing and sale of their services; and
	·	adopt more aggressive pricing policies.

Our current and potential competitors have established, and may continue to establish in the future, cooperative relationships among themselves or with third parties that would increase their ability to compete with us. In addition, competitors may be able to adapt more quickly than we can to new or emerging technologies and changes in customer needs, or to devote more resources to promoting and selling their products. Furthermore, some of our competitors may also be able or willing to provide their clients with additional benefits at lower overall costs. If we fail to adapt to market demands and to compete successfully with existing and new competitors, our business and financial performance would suffer.

Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing expenditures and our ability to select the right markets and media in which to advertise.

Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing expenditures, including our ability to:

	·	create greater awareness of our brand;
	·	identify the most effective and efficient level of spending in each market, media and specific media vehicle;
	·	determine the appropriate creative message and media mix for advertising, marketing and promotional expenditures;
	·	effectively manage marketing costs (including creative and media) in order to maintain acceptable customer acquisition costs;
	·	select the right market, media and specific media vehicle in which to advertise; and
	·	convert prospect inquiries into actual orders.

Our planned marketing expenditures may not result in increased revenue or generate sufficient levels of brand name and program awareness. We may not be able to manage our marketing expenditures on a cost-effective basis whereby our customer acquisition cost may exceed the contribution profit generated from each additional customer.

If we do not increase market awareness of our products, our business may not grow.

We sell our software products primarily through our direct sales force. Our financial success and our ability to increase revenues in the future may depend considerably upon the productivity of our direct sales force. Our ability to increase revenues significantly will suffer if we fail to attract and retain qualified sales personnel.

If we do not continue to improve our software products and develop new software products that keep pace with competitive product introductions and technological developments, satisfy diverse and rapidly evolving customer requirements and achieve market acceptance, we may be unable to maintain existing customers and/or attract new customers.

We have in the past experienced delays in releasing new software products and product enhancements and may experience similar delays in the future. These delays or problems in the installation or implementation of our new releases may cause customers to forego purchasing or licensing our software products.

If we are unable to attract additional customers beyond our current limited number, our future success could be limited or adversely affected.

A substantial portion of our revenues has been, and is expected to continue to be, generated from a limited number of customers with large financial commitments. As a result, if a large contract is cancelled or deferred or an anticipated contract does not materialize, our business would be harmed. Our future success will depend on our ability to attract additional customers beyond our current limited number. The growth of our customer base could be adversely affected by one or more of the following:

	·	customer unwillingness to implement our software products;
	·	any delays or difficulties that we may incur in completing the development and introduction of our planned products or product enhancements;
	·	our customers’ inability to raise capital to finance their business plans and capital expenditures;
	·	new product introductions by our competitors;
	·	any failure of our products to perform as expected;
	·	any difficulty we may incur in meeting customers’ delivery requirements; or
	·	the market perception of our financial condition and/or current stock price.

We depend on Securitas Security Services USA, Inc. for a significant portion of our revenues and if we lose this relationship, our revenues would decline.

Recently, a substantial portion of our net sales has been derived from sales to Securitas Security Services USA, Inc. For the nine-months ended September 30, 2007, 82% of our net sales were to Securitas. Securitas could look to another source for the software we provide. If Securitas were to reduce its orders of our software or if Securitas were to choose another software provider, it could harm our business, financial condition and results of operations substantially.

We must obtain orders from new and existing customers on an ongoing basis to increase our net sales and grow our business. We are continuing our efforts to reduce dependence on a limited number of customers; however, net sales attributable to Securitas are expected to continue to represent a substantial portion of our net sales for the foreseeable future. The loss of Securitas, a significant reduction in sales we make to them, a reduction in the pricing of our products sold to them, or any problems collecting accounts receivable from them would reduce our net income.

An increasing number of contracts we enter into are multiple years in length and include recurring fees related to licensing and services. If our customers exercise early termination provisions or experience a decline or lack of volume, our revenue could be harmed.

An increasing number of our contracts with new customers are multi-year agreements and include recurring license and service fees. Some of our contracts for new customers could include a recurring licensing and services component that may vary based on usage and volume throughout the duration of the contract. Also, some of our contracts include early termination clauses that enable customers to terminate those contracts without cause. If our customers exercise early termination or experience a decline or lack of volume, our revenue could be harmed.

Fixed-price services engagements can impact our profitability if we fail to complete them within the estimated budget.

We perform some of our professional services engagements on a fixed price basis. If the project requires more labor or products than was estimated by us in determining the fixed price agreed to with the customer, our margins and profitability could be adversely affected. In addition, failure to complete services as required or to obtain written acceptance of completed milestones may result in deferral of revenue until such completion or acceptance occurs and may cause revenues to be recognized in periods other than as initially expected or forecasted.

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 freely operate our business.

We may not successfully manage our growth.

Our success will depend upon the expansion of our operations and the effective management of our growth, which will place a significant strain on our management and administrative, operational, and financial resources. To manage this growth, should there be growth, we must expand our facilities, augment our operational, financial and management systems, and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business would be harmed. There is no assurance that we will be able to expand our operations or effectively manage our 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. We will have employment agreements with each of our executive officers, but we do not have key person insurance on their lives.

We may be unable to attract and retain, or have access to, qualified personnel in our markets, which could adversely affect our results of operations by impairing our ability to grow and provide competitive services.

Our ability to provide our customers with competitive services and grow partially depends on our ability to attract and retain highly motivated people with the skills to serve our customers in a cost-effective way. If we are unable to hire or otherwise obtain cost-effective access to skilled personnel in our markets, our operations may suffer. Furthermore, we expect to continue hiring sales, support, marketing and administrative personnel as needed. We may not be able to attract, assimilate or retain highly qualified personnel in the future. In particular, our financial success and our ability to increase revenues in the future depend considerably upon the productivity of our direct sales force that has historically generated a majority of our license revenues. This productivity will depend to a large degree on our success in recruiting, training and retaining qualified direct salespeople. Our business will be harmed if we fail to hire or retain qualified personnel, or if newly hired employees, particularly salespeople, fail to develop the necessary sales skills or develop these skills slower than anticipated.

Changes in technology in our industry could cause our business to lose money or could require us to invest additional capital in new technology.

The markets for our software change rapidly because of technological innovation, new product and service introductions, and changes in customer requirements, among other things. New products and services and new technology often render existing information services or technology infrastructure obsolete, costly, or otherwise unmarketable. As a result, our success will depend on our ability to timely innovate and integrate new technologies into our service offerings. We cannot assure you that product developments and technology innovations by others will not adversely affect our competitive position or that we will be able to successfully anticipate or adapt to changing technology, industry standards or customer requirements on a timely basis.

If we fail to modify or improve our software products in response to evolving industry standards, our software products could rapidly become obsolete, which would harm our business.

Future versions of hardware and software platforms embodying new technologies and the emergence of new industry standards could render our products obsolete. Our future success will depend upon our ability to develop and introduce a variety of new products and product enhancements to address the increasingly sophisticated needs of our customers.

Our products are designed to work on a variety of hardware and software platforms used by our customers. However, our products may not operate correctly on evolving versions of hardware and software platforms, programming languages, database environments, accounting, and other systems that our customers use. We must constantly modify and improve our products to keep pace with changes made to these platforms and to back-office applications and other Internet-related applications. This may result in uncertainty relating to the timing and nature of new product announcements, introductions, or modifications, which may harm our business.

We cannot be certain that our research and development activities will be successful.

While management is committed to enhancing our current product offerings and introducing new products, we cannot be certain that our research and development activities will be successful. Furthermore, we may not have sufficient financial resources to identify and develop new technologies and bring new products to market in a timely and cost effective manner, and we cannot ensure that any such products will be commercially successful if and when they are introduced.

We depend on our intellectual property, and litigation regarding our intellectual property could harm our business.

Unauthorized use or misappropriation of our intellectual property could seriously harm our business. Our intellectual property includes our proprietary technology, our trade secrets, patents, copyrights in our software products, and our trademarks. Our copyrights and patents are important to the protection of our software, and our trademarks are important to the protection of our company and product names. These copyrights, patents and trademarks discourage unauthorized use of our software and our company and product names and provide us with a way to enforce our rights in the event that this unauthorized use occurs. Third parties may infringe upon our intellectual property rights, and we may be unable to detect this unauthorized use or effectively enforce our rights. In addition, any legal action that we may bring to protect our intellectual property rights could be expensive and distract management from day-to-day operations.

Failure to protect our trade secrets, copyrights and other intellectual property and know-how could put us at a competitive disadvantage.

We may not have confidentiality agreements with all of our employees, consultants and third-parties, and cannot guarantee that the confidentiality agreements that are in place with our employees, consultants and third parties will not be breached, that we will have adequate remedies for a breach, or that our trade secrets will not become known to or be independently developed by our competitors. Although we are not currently aware of any parties currently intending to pursue any infringement claims against us, the loss of trade secret protection for technologies or know-how could adversely affect our business.

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.

Claims by others that we infringe their proprietary technology could divert our resources, result in unexpected license fees, and harm our business.

Third parties could claim that our current or future products or technology infringe their proprietary rights. An infringement claim against us could be costly even if the claim is invalid and could distract our management from the operation of our business. Furthermore, a judgment against us could require us to pay substantial damages and could also include an injunction or other court order that could prevent us from selling or licensing our product offering. If we faced a claim relating to proprietary technology or information, we might seek to license technology or information, or develop our own, but we might not be able to do so. Our failure to obtain the necessary licenses or other rights or to develop non-infringing technology could prevent us from selling or licensing our products and could seriously harm our business.

If our software contains errors or our software product development is delayed, our business will suffer.

We face possible claims and higher costs as a result of the complexity of our software products and the potential for undetected errors. Due to the importance of our products to our customers’ operations, undetected errors are of particular concern. Computer software such as ours always contains undetected errors. The implementation of our products, which we accomplish through our services division, typically involves working with sophisticated software, computing, and communications systems. If we experience difficulties with an implementation or do not meet project milestones in a timely manner, we could be obligated to devote more customer support, engineering and other resources to a particular project and to provide these services at reduced or no cost. If our software contains significant undetected errors or we fail to meet our customers’ expectations or project milestones in a timely manner, we could experience loss of or delay in revenues, loss of customers, injury to our reputation, legal actions by customers against us, and increased service and warranty costs.

Our license agreements with our customers generally contain provisions designed to limit our exposure to potential product liability claims, such as disclaimers of warranties and limitations on liability for special, consequential and incidental damages. In addition, our license agreements generally cap the amounts recoverable for damages to the amount paid by the licensee to us for the product or service, giving rise to the damages. However, all domestic and international jurisdictions may not enforce these limitations. We may encounter product liability claims in the future. Product liability claims, whether or not successful, brought against us could divert the attention of management and key personnel, could be expensive to defend, and may result in adverse settlements and judgments.

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, our 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.

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 eight million preferred shares are authorized for issuance at the discretion of our Board, which, if issued, could represent approximately 20 percent 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 increased the size of our Board to five members, 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 will initially be agreed upon by the other four directors.

Resales by stockholders of their common stock underlying their preferred stock and/or warrants may depress the market price of our common stock.

We will be required to register for public resale the shares of common stock issued underlying the Series A Convertible Preferred Stock and the shares underlying warrants. Future resales of these shares of common stock, or the perception that such sales could occur, could adversely affect the market price of our common stock. We cannot assure you as to when, and how many of, those shares will be resold and the effect those sales may have on the market price of our common stock.

Over the last 18 months, there has been only one trade in our common shares, and there can be no assurance that an orderly trading market will commence and be maintained.

Over the last 18 months, we are only aware of one public trade in our common shares. Although quotations for our common shares appear on the Over-the-Counter Bulletin Board (“OTC Bulletin Board”), the absence of a material amount of transactions in the shares indicates that there is no established trading market for the shares. There is no assurance that any established trading market will develop and, if it does not, our shares may have no value to their holders.

If a trading market for our common shares does develop, trading prices may be volatile.

In the event that a trading market develops 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 a market for our shares develops, 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 ForgeHouse 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 ForgeHouse 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.

Our common shares may be considered a “penny stock” and may be difficult to sell.

The Securities and Exchange Commission has adopted regulations that generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our shares, if an active trading market develops, may be less than $5.00 per share and, therefore, our stock may be designated as a “penny stock” according to the Commission’s rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser, and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our shares and may affect the ability of investors to sell their shares.

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 Sheets, which could affect our stockholders’ ability to access trading information about our common stock.

The OTC Bulletin Board and the Pink Sheets are each separate and distinct from the Nasdaq Stock Market and any national stock exchange, such as the New York Stock Exchange or the American Stock Exchange. Although the OTC Bulletin Board is a regulated quotation service operated by the National Association of Securities Dealers, 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 Sheets’ 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 Sheets. 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.

We do not intend to pay dividends; you will not receive funds without selling shares.

We have never declared or paid any cash dividends on our equity interests and do not intend to pay dividends in the foreseeable future. We intend to invest our future earnings, if any, to fund our growth. Therefore, you will not receive any funds without selling your shares.

SELECTED FINANCIAL DATA

You should read the summary financial data set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition or Plan of Operations” and our financial statements and the related notes included elsewhere in this report. We derived the financial data for the period from January 1, 2006, to December 31, 2006, from our audited financial statements included in this report. The historical results are not necessarily indicative of the results to be expected for any future period.

	For the Period from January 1, 2006 to December 31, 2006
Net sales	$	68,245

Cost of Sales		19,906

Gross Profit		48,339

Operating expenses		1,034,706

Loss from operations		(966,461	)

Other income (expense)		(286,961	)

Total other expense		(390,715	)

Net Loss	$	(1,357,176	)

	As of December 31, 2006
Balance Sheet Data:
Current Assets	$	22,550
Total Assets		137,892
Total Liabilities		2,173,217
Total Members’ deficiency	$	(2,035,325	)

Footnotes

See “Accounting Treatment” above.

Item 2. Managements Discussion and Analysis of Plan of Operation.

The following discussion should be read in conjunction with the financial information included elsewhere in this Form 8-K, including the Company’s audited financial statements for the periods ending December 31, 2006, and December 31, 2005, as well as the interim financials, and related notes. Because of the reverse acquisition, the following discussion relates to the separate financial statements of ForgeHouse, and reference to the Company and to “we,” “our,” and similar words refer to ForgeHouse.

A Note About Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on current management’s 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. Our management believes that the expectations reflected in such forward-looking statements are accurate. However, management 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 this section. 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, oil and gas exploration uncertainties, and an inability to attract, develop, or retain technical, consulting, 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 management assumes 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 Current Report. Except as required by law, management is 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.

Overview

We are an incident management, alerting and business workflow automation software company that has not yet generated or realized any material amounts of revenues from our planned business operations. During the fiscal year ended December 31, 2006, we financed our operations in the form of capital contributions from our interest-holders, bank loans and private debt and equity funding sources, which we used for the on-going development of our software platform - OneVision. Management’s plan is to continue to add to the functionality of our software platform, as well as to initiate and ramp-up our sales and marketing efforts into our primary markets - Security, Healthcare, Government and Education.

There is limited historical financial information available upon which to base an evaluation of our performance. We were a development stage company through the end of our 2006 fiscal year and have not generated any material amounts of revenue as a result of our planned operations. We cannot guarantee we will be successful in our core business or in any business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.

We have no assurance that future financing, as needed, will be available on acceptable terms, if at all. If financing is not available on satisfactory terms or on a timely basis, we may be unable to continue with our current business plan. If equity or convertible debt financing is available to us on acceptable terms, it could result in additional dilution to our stockholders.

Results of Operations for the Fiscal Years Ended December 31, 2006 and 2005

For the fiscal years ended December 31, 2006, and 2005, we were a development-stage company and had a net loss of $1,357,176 and $934,028, respectively. Revenues increased from $37,433 to $68,245, primarily from the expansion of a pilot customer’s services, as new features to the software were developed. Our expenses relate largely to operating expenses, including software development costs, payroll related costs, professional fees, and administrative costs. Software development costs increased from $82,101 for the year ended December 31, 2005 to $208,489 for the year ended December 31, 2006, largely due to acceleration of development efforts for the OneVision software from a beta version to a version suitable for mass use across multiple industries. In addition to utilizing all of our internal development resources, we also used outsourced software development resources. Professional fees decreased from $159,725 in 2005 to $105,888 in 2006 due to lower legal fees. Higher legal fees were incurred in the previous year related to the Arngrove debt and equity financings. As a result of the increased debt borrowing, interest expense increased from $77,836 in 2005 to $286,961 in 2006.

Result of Operations for Three-Month and Nine-Month Periods Ended September 30, 2007 and 2006

Commencing in our current fiscal year, we are no longer a development stage company. For the three-month and nine-month periods ended September 30, 2007, we had net losses of $248,035 and $827,531 respectively, compared to the same periods in 2006 of $322,378 and $1,058,336 respectively. Revenues increased in the nine month period for 2007 in comparison with 2006 due to the acquisition of a significant customer and the execution of a licensing agreement with it. Product development expense changed in the respective three-month and nine-month periods in 2006 to 2007 from $52,714 and $144,081 to $46,872 and $248,840, respectively, due to acceleration of development efforts to add functionality to the OneVision software. Payroll expense decreased for the nine-month period in 2007 in comparison with 2006 from $297,746 to $163,533 as the two members of management waived compensation in order to conserve our cash reserves.

Liquidity and Capital Resources

As of September 30, 2007, our the total assets were $114,031, which included current assets of $26,071. Our total liabilities were $2,721,944, all of which were current, resulting in negative working capital of $2,695,873.

Despite our negative cash flows from operations of $842,318 and $795,653 for the 2006 and 2005 fiscal years, respectively, and further negative cash flows from operations of $281,936 for the nine-month period ended September 30, 2007, we have financed our operations in the form of capital contributions from our members, bank loans and private debt and equity funding sources. Management’s plan includes the continued development and implementation of our business plan primarily focused toward sales and marketing of OneVision. As a result of the closing of the RTO transaction, the Company was able to obtain approximately $600,000 in working capital.

No assurances can be given that we will be able to obtain sufficient working capital through the sale of our common stock and borrowing or that the development and implementation of our business plan will generate sufficient revenues in the future to sustain ongoing operations. These factors raise substantial doubt with our auditor about our ability to continue as a going concern.

Plan of Operation for the Next Twelve Months

During the next twelve months, we plan to focus on building our sales and marketing capabilities directly and through channel partners that have established relationships within the target markets, both domestically and internationally. We also plan to introduce new functionality and enhance the capabilities of the current OneVision software platform to increase the value proposition to the customers in our current target markets, as well as to expand into additional vertical markets.

Since inception, we have financed our operations in the form of capital contributions from our members, bank loans and private debt and equity funding sources. Although we expect that, during the next 12 months, our operating capital needs will be met by our current economic resources and, if required, by additional private equity transactions, there can be no assurance that funds required will be available on terms acceptable to us or at all. If we are unable to raise sufficient funds on terms acceptable to us or on a timely basis, we may be unable to continue with our business plan. If equity or convertible debt financing is available to us on acceptable terms, it could result in additional dilution to our stockholders.

Off-Balance Sheet Arrangements

We have no off balance sheet arrangements as of September 30, 2007.

Our audited historical financial statements as of and for the years ended January 31, 2007 and 2006 and three- and nine-month periods ended October 31, 2007, are incorporated by reference into this Current Report from our filings with the Securities and Exchange Commission.

The following are historical audited and unaudited financial statements of ours as of and for the years ended December 31, 2006 and 2005 and the three- and nine-month periods ended September 30, 2007 and 2006, together with a discussion and analysis provided by our management relating to our financial statements and plan of operation.

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

F-1

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Index to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

Independent Auditors' Report	F-3

Consolidated Financial Statements of ForgeHouse, LLC (A Georgia Limited Liability Company) (An Entity in the Development Stage):

Consolidated Balance Sheet as of December 31, 2006	F-4

Consolidated Statements of Operations for Each of the Two Years in the Period Ended December 31, 2006 and for the Period from June 24, 2002 (Inception) to December 31, 2006	F-5

Consolidated Statements of Members' Deficit for the Period from June 24, 2002 (Inception) to December 31, 2006	F-7

Consolidated Statements of Cash Flows for Each of the Two Years in the Period Ended December 31, 2006 and for the Period from June 24, 2002 (Inception) to December 31, 2006	F-8

Notes to Consolidated Financial Statements	F-9

F-2

Independent Auditors' Report

To the Members of

ForgeHouse, LLC

We have audited the accompanying balance sheet of ForgeHouse, LLC (a Georgia Limited Liability Company) (An Entity in the Development Stage) as of December 31, 2006, and the related statements of operations, members’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2006 and for the period from June 24, 2002 (inception) to December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, LLC as of December 31, 2006, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2006 and for the period from June 24, 2002 (inception) to December 31, 2006 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 discussed in Note 2 Development Stage Operations and Management’s Plan to the financial statements, the Company has sustained continued losses while operating as an entity in the development stage. At December 31, 2006, the Company had a net working capital deficiency and member deficit, both of which amounted to $2,035,325. Those 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 these uncertainties.

In Note 6 Debt, and Note 11 Event subsequent to the date of the report of the independent auditor (unaudited), the two notes payable that were in default as of December 31, 2006 remained in default through February 3, 2008, as a result of the continued breaches of multiple non-financial covenants. On February 4, 2008, concurrent with the merger transaction as described in Note 11 (unaudited), one of the notes was paid in full and the other was restructured and brought into compliance with its respective loan agreement.

As described in Note 11, in July 2007 the Company entered into a Nonbinding Letter of Intent with a non-operating public shell corporation whereby the Company's Members were to exchange their Membership interests for non-operating public shell corporation common stock and cash. On January 31, 2008 the non-operating public shell corporation and the Members of the Company concluded negotiations and entered agreements that resulted in the exchange of all Company Members’ interest for non-operating public shell corporation common stock and cash.

/s/ Kelly & Company

Kelly & Company

Costa Mesa, California

December 12, 2007

(except for Note 11, as to

which the date is February 6, 2008)

F-3

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Balance Sheet

December 31, 2006

ASSETS

Current assets:
Accounts receivable - trade	$	21,760
Prepaid insurance		790
Total current assets		22,550
Equipment, net of accumulated depreciation of $25,558		2,675
Software development costs, net of accumulated amortization of $60,667		112,667
Total assets	$	137,892
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Notes payable in default	$	1,456,342
Accrued interest on note in default		276,342
Cash overdraft		26,968
Accounts payable - trade		143,798
Accrued payroll and related expenses		6,704
Accrued expenses		45,310
Note payable		217,753
Total current liabilities		2,173,217
Commitments and contingencies
Members' deficit:
ForgeHouse, LLC		(2,010,802	)
Variable interest entity		(24,523	)
Total Members' deficit		(2,035,325	)
Total liabilities and Members' deficit	$	137,892

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

F-4

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Statements of Operations

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

							For the
							Period From
							June 24, 2002
							(Inception) to
	For the Year Ended December 31,						December 31,
	2006			2005			2006
Net revenues	$	68,245		$	37,433		$	182,627
Operating expenses:
Costs of revenues		19,906			22,358			54,902
Software development costs		208,489			82,101			407,942
Payroll related expenses		386,872			374,535			1,033,213
Professional fees		105,888			159,725			371,826
Depreciation and amortization		48,158			34,327			151,338
General and administrative		265,393			209,676			740,928
Total operating expenses		1,034,706			882,722			2,760,149
Loss from operations		(966,461	)		(845,289	)		(2,577,522	)
Other expense:
Interest expense		(286,961	)		(77,836	)		(364,913	)
Accretion of loan discount		(103,719	)		(10,903	)		(114,622	)
Loss on disposal of fixed assets		-			-			(25,899	)
Other expense		(35	)		-			(1,077	)
Total other expense		(390,715	)		(88,739	)		(506,511	)
Loss from consolidated operations		(1,357,176	)		(934,028	)		(3,084,033	)
Net income of Variable Interest Entity from inception to December 31, 2004		-			-			39,673
Net loss	$	(1,357,176	)	$	(1,357,176	)	$	(3,044,360	)

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

F-5

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Statements of Members' Deficit

For the Period from June 24, 2002 (Inception) to December 31, 2006


	Member					Accumulated
	Units		Capital			Deficit			Total
Balance, June 24, 2002 (inception)	-		-			-			-
Member contributed capital		100,000	$	547,718			-		$	547,718
Net loss from inception to December 31, 2004		-		-		$	(792,829	)		(792,829	)
Balance, December 31, 2004		100,000		547,718			(792,829	)		(245,111	)
Value of net asset of the Variable Interest Entity as of January 1, 2005		-		7,363			39,673			47,036
Member contributed capital		42,857		454,926			-			454,926
Member distribution		-		(200,000	)		-			(200,000	)
Net loss		-		-			(934,028	)		(934,028	)
Balance, December 31, 2005		142,857		810,007			(1,687,184	)		(877,177	)
Member contributed capital		-		199,028			-			199,028
Net loss		-		-			(1,357,176	)		(1,357,176	)
Balance, December 31, 2006		142,857	$	1,009,035		$	(3,044,360	)	$	(2,035,325	)

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

F-6

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Statements of Cash Flows

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

							For the
							Period From
							June 24, 2002
							(Inception) to
	For the Year Ended December 31,						December 31,
	2006			2005			2006
Cash flows from operating activities:
Net loss	$	(1,357,176	)	$	(934,028	)	$	(3,044,360	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Net income of Variable Interest Entity from June 24, 2002 (inception) to December 31, 2004		-			-			-
Depreciation		1,989			5,844			90,672
Amortization		34,666			26,000			60,666
Loss on disposal of assets		-			-			25,899
Amortization of loan costs		11,503			2,483			-
Accretion of loan discount		103,719			10,903			114,622
Decrease (increase) in assets:
Accounts receivable - trade		(17,877	)		36,492			(21,760	)
Prepaid expenses and other current assets		(18	)		(772	)		(790	)
Increase (decrease) in liabilities:
Accounts payable - trade		94,612			8,289			143,798
Accrued interest on debt		257,213			36,883			276,342
Accrued expenses		29,051			12,253			52,014
Cash used in operating activities		(842,318	)		(795,653	)		(2,302,897	)
Cash flows used in investing activities:
Acquisition of equipment		-			(4,956	)		(119,246	)
Increase in capitalized software development costs		-			-			(173,333	)
Cash used in investing activities		-			(4,956	)		(292,579	)
Cash flows provided by (used in) financing activities:
Opening capital balance of VIE		-			-			7,363
Proceeds from the issuance of debt		650,000			750,000			1,856,000
Payments on debt		(41,310	)		(87,404	)		(181,905	)
Member contributed capital		199,028			340,304			1,087,050
Member distribution		-			(200,000	)		(200,000	)
Net increase (decrease) in bank overdrafts		26,968			(19	)		26,968
Cash provided by financing activities		834,686			802,881			2,595,476
Net increase (decrease) in cash		(7,632	)		2,272			-
Cash at beginning of period		7,632			5,360			-
Cash at end of period	$	-		$	7,632		$	-

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

F-7

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Consolidated Statements of Cash Flows

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

Supplemental Disclosure of Cash Flow Information
						For the
						Period From
						June 24, 2002
						(Inception) to
	For the Year Ended December 31,					December 31,
	2006		2005			2006
Cash paid during the fiscal years for:
Interest	$	40,994	$	31,531		$	170,728
Income taxes		-		-			-

Schedule of Non-Cash Items

Fair value allocation of Arngrove transaction proceeds:
Increase in Members' contributed capital		-	$	114,622			-
Decrease in note payable to record debt discount		-	$	(114,622	)		-

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

F-8

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

1. Description of the Company's Business

ForgeHouse, LLC (a Georgia Limited Liability Company) (the "Company") was formed in the state of Georgia in June 2002 and was a marketing and sales company in the development stage through December 31, 2006. The Company is engaged in the development and sale of OneVision^®, a proprietary software product. OneVision^® is a web based application which serves as the virtual control and command system for compliance, security and maintenance operations. The Company has only one class of membership units. The Company has elected to be treated as a partnership for income taxation purposes and does not have a finite life. No Member is liable for any liabilities, indebtedness, duties or obligations of the Company in excess of the sum of (a) the Members' capital contributions actually made to the Company, which have not been returned or refunded; or (b) all amounts for which the Member is entitled to a distribution, which have not yet been distributed to the Member.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of GS Security Group, LLC ("GS Security"), a related party (Note 3, Variable Interest Entities). The Company has evaluated the borrowing relationship with GS Security and determined that it is the primary beneficiary of GS Security's access to borrowed funds. As required by Financial Accounting Standards Board ("FASB") Interpretation No. 46 Revised ("FIN 46R"), Consolidation of Variable Interest Entities, the Company consolidates GS Security in its Consolidated Financial Statements. Intercompany transactions and balances are eliminated in consolidation. The necessity for the Company to consolidate GS Security was eliminated in February 2008 upon payment in full of GS Security's borrowed funds (Note 11, Event Subsequent to the Date of the Report of Independent Auditor (unaudited)).

Development Stage Operations and Management's Plan

The Company is an entity that was in the development stage and primarily engaged in the development of its sole operating software system OneVision^®. The focus to date of the Company’s computer software research and development efforts has been in the development and marketing of the OneVision^® software system into the physical security industry. The Company has limited experience in managing ongoing software development efforts and marketing the OneVision^® software package, and there is no assurance that the OneVision^® software adaptation efforts will not encounter problems. The Company’s

F-9

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Development Stage Operations and Management's Plan, Continued

success will depend in part on its ability to obtain patents (one is now pending) and product license rights, maintain trade secrets, and operate without infringing on the proprietary rightsof others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, or circumvented, or that the rights granted there under will provide proprietary protection or competitive advantages to the Company.

For the years ended December 31, 2006 and 2005 and for the period from June 24, 2002 through December 31, 2006 revenues of $68,245, $37,433, and $182,627 resulted from limited OneVision^® revenue. The Company has no significant operating history and from June 24, 2002, (inception) to December 31, 2006, has generated a net loss of $3,044,360.

The year ended December 31, 2007 is the first year the Company will be considered an operating entity and no longer an entity in the development stage. This is the result of the Company's implementation of its business plan when management entered into a licensing agreement with a licensee who has a significant share of the physical security industry in the United States.

The accompanying financial statements as of December 31, 2006 and for each of the two years ended December 31, 2006 and for the period from June 24, 2002 (inception) to December 31, 2006 have been prepared assuming the Company will continue as a going concern (see Note 11 - Event subsequent to the date of the report of the independent auditor (unaudited)). The Company, over time, has experienced recurring losses and negative cash flows from operations, and as of December 31, 2006, the Company’s current liabilities exceeded its current assets by $2,150,667 and its total liabilities exceeded its total assets by $2,035,325. These factors raise substantial doubt about the Company's ability to continue as a going concern. During the remainder of the year 2007 and during 2008, management intends to raise additional debt and/or equity financing to fund future operations, ongoing software development costs, and to provide other Company working capital needs. The Company’s marketing plan is to assist its OneVision^® North American licensee in expanding acceptance and use of the product and to develop additional applications with significant anticipated demand requirements. Management believes that its plans will contribute towards achieving profitability. However, there is no assurance that such plans will be consummated or result 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

F-10

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Development Stage Operations and Management's Plan, Continued

working capital through borrowings from the related party and lending institutions 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 11 (unaudited), the Company was able to obtain additional working capital in connection with the reverse acquisition in February 2008.

Revenue Recognition

The Company recognizes revenue from the monthly access fees to its OneVision^® software, technical support fees and applications programming and training services. The Company recognizes revenue from the monthly access fees and related services in accordance with the American Institute of Certified Public Accountants’ Statement of Position ("SOP") 97-2, Software Revenue Recognition and SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions. Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred or services have been rendered, and the fee is determinable and collectability is probable.

Software Development Costs

The Company accounts for development costs related to software products to be sold, leased, or otherwise marketed in accordance with FASB SFAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. The Company's software was available July 1, 2003 for general release approximately seven months after the establishment of technological feasibility and, accordingly, the Company has capitalized certain software development costs incurred during that period. SFAS No. 2, Accounting for Research and Development Costs, establishes accounting and reporting standards for research and development. During the years ended December 31, 2006 and

F-11

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Software Development Costs, Continued

2005, the Company did not capitalize any software development costs. The Company has capitalized $173,333 in software development costs for the period from June 24, 2002 (inception) through December 31, 2006. The Company has expensed $208,489, $82,101 and $407,942 as research and development expense during the years ended December 31, 2006 and 2005 and the period from June 24, 2002 (inception) through December 31, 2006.

In accordance with SFAS No. 2, the costs the Company incurs to enhance its existing products are expensed in the period they are incurred and included in product development costs in the statements of operations.

Amortization of capitalized software development costs begins when the product is available for general release. Amortization is provided on a product-by-product basis on the straight-line method over the software products economic useful life. Unamortized capitalized software development costs determined to be in excess of net realizable values of the product are expensed immediately. During the years ended December 31, 2006 and 2005, and for the period from June 24, 2002 (inception) through December 31, 2006, amortization of product development costs totaled $34,667, $26,000, and $60,667, respectively.

Management has concluded that the software development costs have no residual value and a 5 year period of amortization, with the amortization period starting with the first general sale of the product after the beta site. This occurred in April 2005.

Future amortization of the software development costs is as follows for the years ended December 31:

2007	$	34,667
2008		34,667
2009		34,667
2010		8,666
2011 and thereafter		-

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of

F-12

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Use of Estimates, Continued

contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods and are their best estimates. Actual results could differ from those estimates. The most significant estimates relate to the estimate not to provide an allowance for uncollectible accounts receivable, the determination of useful lives used in calculating depreciation, intangible asset valuations and intangible useful lives, the value of services provided for which Member equity interests were part of the consideration and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Accounts Receivable - Trade and Allowance for Doubtful Accounts

Accounts receivable - trade are stated at the amount the Company expects to collect. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on its historical accounts receivable - trade collection experience and a review of the current status of accounts receivable - trade. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Based on the Company's status through December 31, 2006 and for the period from June 24, 2002 (inception) through December 31, 2006, as a development stage company and the insignificant level of sales activity, the Company has not experienced any accounts receivable - trade that could not be realized, and as such, the allowance for doubtful accounts is zero at December 31, 2006. As the Company's business plan and resultant ongoing operations expand, it anticipates the need to value the allowance for doubtful accounts to an amount above zero.

Prepaid insurance

The Company's prepaid insurance represents amounts paid for annual insurance contracts in excess of the specific policy expense. The amounts are expensed ratably over the term of the contract.

Equipment

Equipment is recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally, accelerated depreciation methods) for tax purposes where appropriate. Repairs and maintenance are expensed as incurred. When equipment is retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in.

F-13

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Equipment, Continued

operations. During the years ended December 31, 2006 and 2005, the Company did not dispose of any equipment, however, for the period from June 24, 2002 (inception) through December 31, 2006, the Company disposed of equipment with a cost of $86,773, resulting in a loss of $25,899. The estimated useful lives of computer and office equipment are as follows:

	Estimated
	Useful
	Lives
Computer equipment	3 years
Office equipment	7 years

Leases

The Company reviews all leases for capital or operating classification at their inception under the guidance of the Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases, as amended. The Company uses its incremental borrowing rate in the assessment of lease classification and defines the initial lease term to exclude lease extension periods.

For leases that contain rent escalations, the Company records the total rent payable during the lease term, as defined above, on a straight-line basis over the term of the lease.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment, and intangible assets subject to amortization 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, trends and prospects, as well as the effects of obsolescence and economic factors.

F-14

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Deferred Financing Costs

Costs relating to obtaining financing are capitalized and amortized over the term of the related debt using the straight-line method. The remaining deferred financing costs during 2006 were charged to operations as interest expense. The related debt is now in default and is classified as a current liability.

Deferred Revenue - Amounts Billed in Advance

The Company recognizes revenues as earned. Amounts billed in advance of the period in which service is rendered will be recorded as a liability under “Deferred revenue.” The Company did not have any deferred revenue at December 31, 2006.

General and Administrative Expense

General and administrative expense includes the cost of maintaining the infrastructure of the Company that is not directly related to delivery services. Also included in this category would be the provision for doubtful accounts receivable.

Software Development Expense

The Company includes in software development expense those costs related to the following software development activities:

·	conceptual formulation and design of possible product or process alternatives;
·	testing in search for or evaluation of product or process alternatives;
·	modification of the formulation or design of a product or process; and
·	engineering activity required to advance the design of a product to the point that it meets specific functional and economic requirements and is ready for production

Income Taxes

The Company is treated as a partnership for federal income tax purposes. Federal income taxes are not payable, or provided for, by the Company. Members report their proportionate share of the Company's income or losses. The Company's income or losses are allocated among the Members in accordance with its Members' Agreement and Georgia state law.

F-15

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Disclosures about Fair Values of Financial Instruments

The estimated fair value of all financial instruments on the Company's December 31, 2006 balance sheet has been determined using available information and appropriate valuation methodologies. Because considerable judgment is required in developing the estimates of fair value, these estimates are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. None of the Company's financial instruments have been held or issued for trading purposes. The Company does not have any off balance sheet financial instruments.

The following methods were used by the Company in estimating fair value disclosures for these financial instruments:

Current Assets and Certain Current Liabilities

The carrying amounts of accounts receivable - trade, prepaid insurance, bank overdraft, accounts payable - trade and certain other current liability amounts approximate fair value due to the short term maturities of these instruments.

Notes Payable in Default

The fair value of the two notes payable in default at December 31, 2006 are their face value. The note payable that had a note payable discount has the discount fully accreted. The loan acquisition fees of the other note payable have also been fully amortized.

Recent Accounting Pronouncements

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires recognition of tax benefits that satisfy a greater than 50% probability threshold. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for the Company beginning January 1, 2008. The Company believes that adoption of FIN 48 will not have a material effect on its financial position, results of operations or cash flows.

F-16

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

2. Summary of Significant Accounting Policies, Continued

Recent Accounting Pronouncements, Continued

In September 2006, FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not require any new fair value measurements. The Company does not expect the adoption of this statement to have a material impact on its financial position, results of operations or cash flows.

In December 2007, FASB issued SFAS No. 141 (Revised 2007), Business Combinations ("SFAS 141R"). Under SFAS 141R, the acquiring entity is required to recognize all of the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R will change the accounting treatment for certain specific items, including:

·	Noncontrolling interests (formerly known as "minority interests" -- see SFAS 160 discussion below) are to be valued at fair value as of the acquisition date;
·	Acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies; and
·	In-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date.

The Company will adopt SFAS 141R as of January 1, 2009.

3. Variable Interest Entity

The Company, in 2002, received advances of funds from GS Security (the "Variable Interest Entity" or "VIE") to fund start-up working capital needs, the ongoing costs incurred in the development of its OneVision^® software system and the repayment of certain loans to a Member, who is also a related party of both entities (Note 8). The source of the funds provided by GS Security came from its own debt financing entered into in May 2002. The GS Security borrowing was in the form of a $456,000 Small Business Administration guaranteed loan (the "SBA loan") from the North Atlanta National Bank (the "lender"). Two individuals, that are the only Members of the Company’s managing Member, are also the only Members of GS Security (Note 8). GS Security over time wound down its day to day

F-17

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

3. Variable Interest Entity, Continued

operations, sold its operating business in 2004, used the proceeds from the business sale to in part fund the Company. GS Security since the business sale in 2004 does not have ongoing operations. GS Security as of December 31, 2006 had a net liability principally comprised of the unpaid SBA loan balance. GS Security is dependent upon the Company, which is not a guarantor of the SBA Loan, and its managing Member's two Members, who are guarantors on the SBA Loan, to make required SBA Loan payments.

The Company determined its debt servicing of the GS Security's SBA loan requires GS Security be recognized as a variable interest entity as defined in FIN 46R. The Company has concluded that it is the primary beneficiary and, as a result, the Company consolidated GS Security as of January 1, 2005. To date, the Company has expensed all of the funds it has advanced to service the SBA loan, as the eventual collection of these advances is considered unlikely. The results of GS Security's operations from the Company's inception through December 31, 2004 are reported as a separate line item in the Consolidated Statements of Operations (no tax consideration is required). There are no transactions other than GS Security since the Company’s adoption of FIN 46R that meet its criteria for reporting. . The consolidation of GS Security with the Company did not materially affect the Company’s operating results or its financial condition.

F-18

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

3. Variable Interest Entity, Continued

The consolidating balance sheets, statements of operations and statements of Members' deficit of ForgeHouse, LLC and the VIE for the year ended December 31, 2006 are as follows:

	GS Security
	ForgeHouse			VIE			Consolidated
Assets:
Current assets:
Accounts receivable - trade	$	21,760			-		$	21,760
Prepaid insurance		790			-			790
Total current assets		22,550			-			22,550
Equipment, net		2,675			-			2,675
Software development costs, net		112,667			-			112,667
Other assets ^a		(237,816	)		237,816			-
Total assets	$	(99,924	)	$	237,816		$	137,892
Liabilities and Members' deficit:
Current liabilities:
Notes payable in default, net	$	1,199,536		$	256,806		$	1,456,342
Accrued interest on note in default		276,342			-			276,342
Bank overdraft		26,968			-			26,968
Accounts payable - trade		138,265			5,533			143,798
Accrued expenses		52,014			-			52,014
Note payable		217,753			-			217,753
Total liabilities		1,910,878			262,339			2,173,217
Members' deficit		(694,939	)		16,790			(678,149	)
Net loss		(1,315,863	)		(41,313	)		(1,357,176	)
Total Members' deficit		(2,010,802	)		(24,523	)		(2,035,325	)
Total liabilities and Members' deficit	$	(99,924	)	$	237,816		$	137,892

^a reflects intercompany elimination

F-19

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

3. Variable Interest Entity, Continued

Statement of operations:

	ForgeHouse			VIE			Consolidated
Net revenues		68,245			-			68,245
Operating expenses:
Costs of revenues		19,906			-			19,906
Software development costs		208,489			-			208,489
Payroll related expenses		386,872			-			386,872
Professional fees		105,888			-			105,888
Depreciation and amortization		36,656			11,503			48,159
General and administrative expenses		265,272			120			265,392
Total operating expenses		1,023,083			11,623			1,034,706
Loss from operations		(954,838	)		(11,623	)		(966,461	)
Other expense:
Interest expense		(257,271	)		(29,690	)		(286,961	)
Amortization of loan amount		(103,719	)		-			(103,719	)
Loss on disposal of fixed assets		-			-			-
Other expense		(35	)		-			(35	)
Total other expense		(361,025	)		(29,690	)		(390,715	)
Loss from consolidated operations		(1,315,863	)		(41,313	)		(1,357,176	)
Net income of VIE from inception to December 31, 2004		-			-			-
Net loss		(1,315,863	)		(41,313	)		(1,357,176	)

F-20

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

3. Variable Interest Entity, Continued

Statement of Members' deficit:

	Member					Accumulated
	Units		Capital			Deficit			Total
Balance, June 24, 2002	-		-			-			-
Contributed capital		100,000	$	547,718			-		$	547,718
Net loss of ForgeHouse		-		-		$	(792,829	)		(792,829	)
Balance, December 31, 2004		100,000		547,718			(792,829	)		(245,111	)
Value of the net asset of the VIE as of January 1, 2005		-		-			39,673			39,673
Contributed capital		42,857		454,926			-			454,926
Member distribution		-		(200,000	)		-			(200,000	)
Net loss of ForgeHouse		-		-			(926,511	)		(926,511	)
Net loss of VIE		-		-			(7,517	)		(7,517	)
Balance December 31, 2005		142,857		802,644			(1,687,184	)		(884,540	)
Contributed capital		-		199,028			-			199,028
Net loss of ForgeHouse		-		-			(1,315,863	)		(1,315,863	)
Net loss of VIE		-		-			(41,313	)		(41,313	)
Balance, December 31, 2006		142,857	$	1,001,672		$	(3,044,360	)	$	(2,042,688	)

F-21

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

4. Accounts Receivable - Trade

Accounts receivable - trade is comprised of the following at December 31, 2006:

Accounts receivable - trade	$	21,760
Allowance for doubtful accounts receivable		-
Accounts receivable - trade, net	$	21,760

The Company did not provide for an allowance for doubtful accounts as of December 31, 2006. All of the accounts receivable - trade as of December 31, 2006 (and also those that arise from future operations) were pledged as security as part of the Company's loans with the private lender (Note 6).

5. Equipment

Equipment, net is comprised of the following at December 31, 2006:

Computer equipment	$	26,896
Office equipment		1,337
Total equipment		28,233
Less: accumulated depreciation		(25,558	)
Equipment, net	$	2,675

Depreciation expense amounted to $1,989, $5,844, and $25,558 for the years ended December 31, 2006 and 2005 and for the period from June 24, 2002 (inception) to December 31, 2006, respectively. All of the equipment was pledged as security in conjunction with either of the Company's loans with the bank or the private lender (Note 6).

6. Debt

Notes Payable in Default - Secured

North Atlanta National Bank - Small Business Administration Guaranteed Loan

On August 19, 2002 the Company's VIE entered into a loan agreement with North Atlanta National Bank (the "Lender") which was guaranteed by the Small Business Administration (the "SBA Loan"). The SBA loan at December 31, 2006 had a face value of $456,000 with a variable interest rate based on the Wall Street Journal prime rate plus 2.75% per annum. The SBA Loan requires monthly payments of $6,331 and originated in August 2002 with all unpaid principal and interest due at maturity in August 2010. The amount of the monthly SBA Loan payment is subject to annual adjustment each August so that the principal balance

F-22

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

6. Debt, Continued

Notes Payable in Default - Secured, Continued

is amortized ratably over the remaining term of the loan. The interest rates at December 31, 2006 and December 12, 2007 were 10.00% and 10.50%, respectively. The SBA loan's variable interest rate is subject to adjustment on a calendar quarter basis. The weighted-average interest rate for the years ended December 31, 2006, 2005, and for the period from June 24, 2002 (inception) to December 31, 2006 are 9.25%, 7.25% and 8.41%, respectively. The SBA loan is secured by substantially all of the assets (both tangible and intangible) of the Company and GS Security (Note 3, Variable Interest Entity). The unpaid balance of the SBA loan is $256,806 at December 31, 2006. The loan is in default due to violations of multiple loan agreement covenants, and as such, has been classified as a current liability and "in default" on the balance sheet. The Company has not been notified by the Lender that the SBA Loan's promissory note is all due and payable.

Specific costs related to the SBA Loan were capitalized upon issuance of the debt and were being amortized to interest expense using the effective interest rate method over the five-year term of the debt. During the year ended December 31, 2006, the remaining unamortized balance was expensed to amortization expense as the loan is in default.

Arngrove Group Holdings Ltd.

In May 2005, the Company entered into a combination debt, sale of Members' equity and services agreement transaction (the "Agreement") with Arngrove Group Holdings Ltd ("Arngrove") (a United Kingdom entity). The Agreement provided the Company with a line-of-credit facility (the "Loan Agreement") that called for Arngrove to advance the Company 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 entered into in May 2005. The note payable at December 31, 2006 has a face and fair value of $1,200,000 with a fixed interest rate of 10.0% per annum. The amount of stated interest related to this Loan Agreement was included in accrued interest on note in default and was $267,676 at December 31, 2006. 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. In 2006, the Loan Agreement's restrictive covenants went into default and all of the unaccreted discount was expensed. The accretion of the loan agreement discount

F-23

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

6. Debt, Continued

Notes Payable in Default - Secured, Continued

Arngrove Group Holdings Ltd., Continued

is reported in the statement of operations under other expense and amounted to $103,719, $10,903 and $114,622 for the years ended December 31, 2006 and 2005 and for the period from June 24, 2002 (inception) to December 31, 2006, respectively. The required annual interest only payments were to commence as of June 1, 2006. Neither the June 2006 nor June 2007 interest only payments have been made by the Company. In addition, the line of credit requires semi-annual principal payments of $240,000. The first principal payment is due in June 2008 and then each December and June thereafter through and including June 2010 when all unpaid principal and interest is due. The line of credit is secured by substantially all of the assets of the Company and holds a secondary position to the SBA loan.

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 the Company as additional interest. The Company determined that the nature of the consultancy services called for in the Agreement were investor's due diligence procedures or were not provided to the Company at all. The Fee is charged as interest expense as of operations. The Company has not made any Fee payments to Arngrove as provided for in the service contract, and the unpaid amount related to the consultancy fee of $176,139 is included in the accrued interest of note in default balance at December 31, 2006.

The Agreement included the sale of Member equity to four individuals related to Arngrove for $300,000 and a 30% interest in the Company (Note 9). This was a necessary provision to obtain the loan, which was why the Company accepted the invested at a discounted price. The Company, based on prior equity investments, estimated the fair value of the 30% equity interest at $600,000. The Company trifurcated the values of the loan, equity interest, and service contract based on the net cash received from the agreement, resulting in the recording of the equity investment at a value of $414,622 and a discount on the underlying loan of $114,622, to be amortized over the life of the loan.

As the Company has not made the necessary payments to stay current as required by the provisions of the loan and also violated other negative and affirmative loan covenants, the loan is classified as a Note in Default on the face of the balance sheet.

F-24

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

6. Debt, Continued

Unsecured Debt

In August 2006, the Company borrowed $200,000 from a group ("After All") that consisted of some of the same Members of Arngrove Group Holdings, Ltd. The loan was unsecured and interest accrues at a rate of 20% per annum, which is calculated monthly and rolled into the principal balance of the loan. The loan term was six months from the issuance date and has been extended on a month-to-month basis at the discretion of After All. The principal balance, including accrued interest, at December 31, 2006 is $217,753.

The Company incurred interest cost in the years ended December 31, 2006 and 2005 and for the period from June 24, 2002 (inception) through December 31, 2006 of $286,961, $77,836, and $364,912, respectively, all of which was charged to operations.

Notes Payable in Default

As a result of non-financial debt restrictions, the Company was unable to remain in compliance with covenants arising under its two long-term note agreements. The covenants that were in default as of December 31, 2006 and are still in default as of December 12, 2007 include the sale of certain assets restricted as to disposition by covenants, use of loan proceeds for other than identified purposes and the failure to make agreed upon debt service payments in accordance with the loan document terms. A total of $1,456,342 of long-term debt is subject to accelerated maturity and, as such, the creditors may, at their option, give notice to the Company that amounts owed are immediately due and payable. As a result, the full amount of the related long-term debt has been classified as a current liability in the accompanying Balance Sheet at December 31, 2006.

7. Commitments and Contingencies

Legal Actions

Certain conditions may exist as of the date the consolidated 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.

F-25

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

7. Commitments and Contingencies, Continued

Legal Actions

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 consolidated 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.

Operating Leases

The Company recognized rental expense of $41,828, $65,799, and $223,441 for the years ended December 31, 2006 and 2005, and for the period from June 24, 2002 (inception) to December 31, 2006, respectively. The Company occupied its Norcross, Georgia facility under a rental agreement that had a lease term that expired in March 2007. The Company is currently subleasing space from a third party on a month-to-month basis.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of the accounts receivable - trade. The Company operates in a market segment that is highly competitive and rapidly changing. Significant technological changes, shifting customer requirements, the emergence of competitive products with new capabilities and other factors could negatively impact the Company's operating results.

The Company had three customers that individually comprised more than 10% of the accounts receivable - trade balance, for a total of 96% of the accounts receivable - trade balance at December 31, 2006.

Three customers were individually responsible for more than 10% of the revenue for the year ended December 31, 2006, totaling 91% of the Company's sales during 2006. Two of these customers individually made up more than 10% of the Company's sales during 2005, totaling 100% of total sales during the year ended December 31, 2005. Two customers individually also made up more than 10% of the Company’s sales since inception, totaling 82% of sales from June 24, 2002 (inception) to December 31, 2006. Note that the concentration since inception discussed above excludes the sales and customers of the variable interest entity. The contracts of the variable interest entity were sold in August 2004, and the entity has been inactive since then with no sales.

F-26

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

7. Commitments and Contingencies, Continued

Concentration of Credit Risk, Continued

If the Company were to lose any of these customers, the impact on its consolidated financial statements would be unknown, but could be significant. The Company has not experienced any such loss of customers as of September 30, 2007.

8. Related Party Transactions

Member Loans

Two individuals, who are the only Members of the Company's managing Member, TWE, LLC (a Georgia Limited Liability Company) ("TWE") have from time to time and as required since the Company's inception in 2002, advanced funds to the Company to meet ongoing operational cash flow needs. All amounts advanced and unpaid through December 31, 2006 have been recorded as Member capital contributions (Note 9, Members' Equity Transactions). As of September 30, 2007, there is an amount due to one of the individuals for funds he advanced to the Company during 2007.

Personal Guarantees for the Benefit of GS Security

The two individuals who are TWE's Members have provided ongoing personal guarantees for the VIE's SBA loan (Note 6, Debt). The personal guarantees are for an amount not to exceed the SBA Loan principal balance plus costs and unpaid accrued interest. The inability of the Company to meet the ongoing debt service requirements of the SBA loan could require the two individuals to make the debt service payments. The impact of such an event on the Company is unknown at this time.

Contributed Services

An individual, who is a Member of the Company, provided software development services during the year ended December 31, 2006. The contributed services provided to the Company were recorded at a fair value of $54,836 and the Member did not receive additional Member units or capital participation (Note 9, Members' Equity Transactions).

F-27

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

9. Members' Equity Transactions

Members' Equity Issued for Cash

In June 2002, the Company's managing Member, TWE, LLC (a Georgia Limited Liability Company) ("TWE") contributed Members' capital of $52,936 for 84,000 Member units with a Members' capital and income and loss participation of 84%.

In June 2005, Arngrove related individuals contributed Members' capital of $300,000 in cash as part of a unit transaction with an allocated fair value of $414,622 for 42,857 Members' units with a Members' equity only participation of 30% (Note 6, Debt). This transaction resulted in the dilution of all but one of the other Members' equity participation percentages as of that date.

Additional Members' Capital Contributions

In the year ended December 31, 2005, TWE contributed additional Members' capital in cash of $40,304 and did not receive additional Member units, Members' capital or income or loss participation.

In the year ended December 31, 2006, TWE contributed additional Members' capital of $134,192 and did not receive additional member units, members' capital or income and loss participation.

Members' Equity Issued for Services

In June 2002, two individuals contributed a portion of future software programming services they were to provide under a services agreement related to the development of the OneVision^® software product to the Company. The individuals contributed portions of their services with a fair value based on the initial hours and current market rate for their services that was determined in the initial software development planning. This contributed members' equity had a fair value of $272,283 for which they received 15,000 Member units (the Members' equity participation equated to a 15% ownership position at the time of the agreement). Of this services agreement amount, $173,333 was eventually capitalized as software development cost and the remaining $98,950 was charged to operations as software development costs.

In the year ended December 31, 2006, a Company Member contributed to the Company as a capital contribution the amount due him by the Company for past software programming services related to the ongoing software system development of OneVision^®. The fair value of the contributed services was $54,836 and was based on the fair value of the services based

F-28

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

9. Members' Equity Transactions, Continued

Members' Equity Issued for Services, Continued

on the time spent and the hourly rate charged. The Member did not receive additional Member units or capital participation. The total amount was charged to operations as software development costs.

Member Distribution

In the year ended December 31, 2005, an individual who is a Member of TWE and a related party (Note 8, Related Party Transactions) received a $200,000 Member capital distribution. The capital distribution did not affect his Member units or Members' income and loss participation.

10. Subsequent Events

Start of Ongoing Operations

In April 2007, the Company entered into a licensing agreement with a national security industry provider (the "Licensee") by which the Company granted an exclusive license to the Licensee to use, market and distribute the Company's OneVision^® software through its internal security system and its customers throughout United States. The execution of this agreement marks the Company's transition from development stage to ongoing operations.

Accordingly, the Company's operations in 2007 and beyond will not reflect inception to date information nor will it be considered an entity in the development stage.

The agreement provides for the Licensee to pay the Company a base service fee of $10,000 per month along with an annual service fee payable at the beginning each service year that the Licensee utilizes the OneVision^® service. The annual user service fees are a minimum of $1,140 per year, with additional optional services and hardware available. The Company's per user service fee rates are subject to an upward rate adjustment if the licensee does not meet certain agreed-upon user participation levels. In order for the licensee to maintain the exclusivity rights in the United States, the Licensee must meet minimum user participation levels and have paid all fees due under the agreement.

F-29

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

11. Event Subsequent to the Date of the Report of Independent Auditor (unaudited)

Reverse Acquisition

In July 2007, the Company entered into a Nonbinding Letter of Intent with Milk Bottle Cards, Inc. (“Milk Bottle”) (a non-operating public shell corporation) whereby the Company's Members were to exchange their Membership interests for Milk Bottle common stock and cash. On January 31, 2008 Milk Bottle and the Members of the Company concluded negotiations and entered agreements (the exchange agreement) that resulted in the exchange of all Company Members’ interest for 10,500,000 shares of Milk Bottle common stock (the combined entity) (approximately 37.5% of all outstanding Milk Bottle common stock as of January 31, 2008) and cash of approximately $171,500.

For accounting purposes, the acquisition has been treated as a recapitalization of the Company; with the Company being treated as the acquirer (a reverse acquisition). The historical financial statements prior to the reverse acquisition will be retroactively restated (a recapitalization) to reflect the inclusion of the equivalent number of shares received by the Company in the exchange agreement. The Company’s loss per share for the periods prior to the exchange transaction will be restated to reflect the total number of equivalent shares outstanding immediately subsequent to the reverse acquisition.

The actions described in items i) through vi) below have been taken in connection with thereverse acquisition.

i) Milk Bottle changed its name to ForgeHouse, Inc.

ii) The Members of the Company have the right to appoint two of the ForgeHouse, Inc. Board of Director Members.

iii) Concurrently with the merger transaction, ForgeHouse, Inc entered into a private placement of Series A convertible preferred stock (the Preferred Stock Financing) resulting in net transaction proceeds of $1,850,000 (net of Preferred Stock Financing fees of $250,000) for the Series A units comprised of 2,000,000 shares of Series A convertible preferred stock and 2,000,000 warrants exercisable into an equivalent number shares of common stock. The Series A convertible preferred stockholders will have the right to appoint two additional board members. A fifth and final Member of the Board will be agreed upon by the majority of the four original directors; therefore no block of stockholders has the ability to appoint a voting majority of the Board Members. The recognition of the Company as the accounting acquirer in this transaction is based upon a determination that the ForgeHouse interest holders in Milk

F-30

ForgeHouse, LLC

(A Georgia Limited Liability Company)

(An Entity in the Development Stage)

Notes to the Consolidated Financial Statements

As of December 31, 2006,

For Each of the Two Years in the Period Ended December 31, 2006, and

For the Period from June 24, 2002 (Inception) to December 31, 2006

11. Event Subsequent to the Date of the Report of Independent Auditor (unaudited), Continued

Bottle (1) will be the largest minority stockholder group, (2) will represent all members of senior management, and (3) will have paid a premium for their equity interests over Milk Bottle's per merger transaction fair market value.

iv) On February 4, 2008, ForgeHouse, Inc. paid off the SBA loan which totaled $220,325; thereby satisfying the unpaid principal balance of $206,402, late charges of $12,780 and accrued interest of $1,143. As a result of the SBA loan repayment, the Company as of February 4, 2008 is no longer considered as having a variable interest entity.

v) On February 4, 2008, ForgeHouse, Inc. made payments totaling approximately $368,500 to Arngrove and After All as settlement for all accrued interest and fees on the Arngrove and After All notes payable.

vi) At closing of the reverse acquisition on January 31, 2008, Milk Bottle made payments totaling approximately $171,500 to the Arngrove investors who were 30% Members in the Company, in exchange for their Company membership interests.

F-31

ForgeHouse, LLC

(A Georgia Limited Liability Company)

Condensed Consolidated Financial Statements

As of September 30, 2007, and

For the Three-Month and Nine-Month Periods Ended September 30, 2007 and 2006

F-32

Forgehouse, LLC

(A Georgia Limited Liability Company)

Index to the Condensed Consolidated Financial Statements

As of September 30, 2007, and

For the Three-Month and Nine-Month Periods Ended September 30, 2007 and 2006

Condensed Consolidated Financial Statements of ForgeHouse, LLC (A Georgia Limited Liability Company) (An Entity in the Development Stage):

Condensed Consolidated Balance Sheet as of September 30, 2007	F-34

Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2007 and 2006	F-35

Condensed Consolidated Statements of Members' Capital for the Period from June 24, 2002 (Inception) to September 30, 2007	F-36

Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2007 and 2006	F-37

Notes to Condensed Consolidated Financial Statements	F-39

F-33

Current assets:
Accounts receivable - trade	$	17,259
Inventory for resale		8,812
Total current assets		26,071
Equipment, net of accumulated depreciation of $26,940		1,293
Software development costs, net of accumulated amortization of $86,667		86,667
Total assets	$	114,031
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Notes payable in default	$	1,420,792
Accrued interest on note in default		492,596
Cash overdraft		89,509
Accounts payable - trade		299,881
Related party loan payable		100,500
Accrued expenses		70,995
Note payable		247,671

Total liabilities		2,721,944

Commitments and contingencies

Members deficit:
ForgeHouse LLC		(2,561,871	)
Variable Interest Entity		(46,042	)

Total Members' deficit		(2,607,913	)

Total liabilities and Members' deficit	$	114,031

	For the Nine Month Periods Ended September 30,						For the Three-Month Periods Ended September 30,
	2007			2006			2007			2006
Net revenues	$	187,790			35,878		$	51,222		$	13,366
Operating expenses:
Costs of revenues		72,216			18,950			7,712			3,000
Product development		248,840			144,081			46,872			52,714
Payroll expense		163,533			297,746			70,986			80,960
Professional fees		81,527			94,629			36,386			40,944
Depreciation and amortization		27,382			29,390			9,748			9,287
General and administrative		152,688			206,461			38,615			67,316
Total operating expenses		746,186			791,257			210,319			254,221
Loss from operations		(558,396	)		(755,379	)		(159,097	)		(240,855	)
Other expense:
Interest expense		(269,135	)		(199,203	)		(88,938	)		(81,523	)
Accretion of loan discount		-			(103,719	)		-			-
Other expenses		-			(35	)		-			-
Total other expense		(269,135	)		(302,957	)		(88,938	)		(81,523	)
Loss before extraordinary item		(827,531	)		(1,058,336	)		(248,035	)		(322,378	)
Net income of Variable Interest Entity since inception		-			-			-			-
Net loss	$	(827,531	)		(1,058,336	)	$	(248,035	)	$	(322,378	)

	ForgeHouse			GS Security VIE			Consolidated
Assets:
Current assets:
Accounts receivable, trade	$	17,259			-		$	17,259
Inventory		8,812			-			8,812
Total current assets		26,071			-			26,071
Equipment, net		1,293			-			1,293
Software development costs, net		86,667			-			86,667
Other assets ^a		(180,836	)	$	180,836			-
Total assets	$	(66,805	)	$	180,836		$	114,031
Liabilities and Members' deficit:
Current liabilities:
Notes in default, net	$	1,199,536		$	221,256		$	1,420,792
Bank overdraft		89,509			-			89,509
Accounts payable - trade		294,259			5,622			299,881
Related party payable		100,500			-			100,500
Accrued expenses		70,995			-			70,995
Accrued interest		492,596			-			492,596
Note payable		247,671			-			247,671
Total current liabilities		2,495,066			226,878			2,721,944
Total liabilities		2,495,066			226,878			2,721,944
Members' deficit		(1,755,859	)		(24,523	)		(1,780,382	)
Net loss		(806,012	)		(21,519	)		(827,531	)
Total Members' deficit		(2,561,871	)		(46,042	)		(2,607,913	)
Total liabilities and Members' deficit	$	(66,805	)	$	180,836		$	114,031

Title of Class	Name and address of beneficial owner	Amount and nature of beneficial ownership		Percent of class (1)
Common Stock	TWE International, LLC (2)	8,820,000		31.5%
Common Stock	John A Britchford-Steel (2) (5)	5,663,000	(7)	19.98%
Common Stock	Jose Alonso (2) (5)	3,714,000	(8)	13.18%
Common Stock	Palmer Trust (3)	1,575,000	(7)	5.625%
Common Stock	Patrick Palmer (3) (6)	1,650,000	(9)	5.877%
Common Stock	Gina Palmer (3) (6)	1,650,000	(9)	5.877%
Common Stock	Keith Ebert (4)	-		-
Common Stock	Directors and executive officers as a group (3 persons)	9,377,000	(10)	32.87%
Series A Convertible Preferred Stock	John A Britchford-Steel (2)	-		-
Series A Convertible Preferred Stock	Jose Alonso (2)	-		-
Series A Convertible Preferred Stock	Keith Ebert (4)	-		-
Series A Convertible Preferred Stock	Meriel Development, Inc. (11)	380,952		19.05%
Series A Convertible Preferred Stock	Cat Brokerage AG (12)	571,429		28.57%
Series A Convertible Preferred Stock	Hillside Provident Trust (13)	380,952		19.05%
Series A Convertible Preferred Stock	Pashleth Investment Ltd. (14)	666,667		33.33%
Series A Convertible Preferred Stock	Directors and executive officers as a group (3 persons)	-		-

(1)	Based on 28,000,000 shares of common stock, and 2,000,000 shares of Series A Convertible Preferred Stock, as applicable, issued and outstanding as of February 5, 2008.
(2)	1575 Northside Drive NW, Building 300, Suite 375, Atlanta, Georgia, 30318.
(3)	13351-D Riverside Dr., #136, Los Angeles, California 91423
(4)	Suite 2901 - 1201 Marinaside Crescent, Vancouver, BC, V6Z 2V2
(5)	John Britchford-Steel (60%) and Jose Alonso (40%) are the beneficial owners and sole managers of TWE International, LLC. Their shares include their respective percentages of TWE International LLC’s shares.
(6)	Patrick Palmer and Gina Palmer are the co-trustees and sole beneficiaries of the Palmer Trust. Their shares include all of the shares of Palmer Trust.
(7)	Includes 341,000 shares underlying options granted effective as of the RTO Closing, exercisable within 60 days thereafter.
(8)	Includes 186,000 shares underlying options granted effective as of the RTO Closing, exercisable within 60 days thereafter.
(9)	Includes 75,000 shares underlying options granted effective as of the RTO Closing, exercisable within 60 days thereafter.
(10)	Includes the shares set forth in footnotes (7), (8), and (9).

(11)	Jasmine Court, 35A Regent Street, Belize City, Belize

(12)	Gutenbergstrasse 10, 8027 Zurich, Switzerland

(13)	Suite 500, 280 Nelson St., Vancouver, BC, Canada V6B 2E2

(14)	1626 Drummond Drive, Vancouver, BC, Canada V6T 1B6

	Member Units		Member Capital			Accumulated Deficit			Total
Balance, June 24, 2002 (inception)		-		-			-			-
Member contributed capital		100,000	$	547,718			-		$	547,718
Net loss from inception to December 31, 2004		-		-		$	(792,829	)		(792,829	)
Balance, December 31, 2004		100,000		547,718			(792,829	)		(245,111	)
Value of net asset of the Variable Interest Entity as of January 1, 2005		-		-			47,036			47,036
Member contributed capital		42,857		454,926			-			454,926
Member distribution		-		(200,000	)		-			(200,000	)
Net loss		-		-			(934,028	)		(934,028	)
Balance, December 31, 2005		142,857		802,644			(1,679,821	)		(877,177	)
Member contributed capital		-		199,028			-			199,028
Net loss		-		-			(1,357,176	)		(1,357,176	)
Balance, December 31, 2006		142,857		1,001,672			(3,036,997	)		(2,035,325	)
Member contributed capital		-		254,943			-			254,943
Net loss		-		-			(827,531	)		(827,531	)
Balance, September 30, 2007		142,857	$	1,256,615		$	(3,864,528	)	$	(2,607,913	)

	For the Nine-Month Periods Ended September 30,
	2007			2006
Cash flows from operating activities:
Net loss	$	(827,531	)	$	(1,058,336	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation		1,382			1,528
Amortization		26,000			26,000
Amortization of loan costs		-			1,862
Accrued interest on debt		246,171			169,272
Accretion of loan fees		-			103,719
Decrease (increase) in assets:
Accounts receivable - trade		(65,499	)		(11,406	)
Inventory for resale		(8,812	)		-
Prepaid expenses and other current assets		790			-
Increase (decrease) in liabilities:
Accounts payable - trade		156,084			102,934
Accrued expenses		18,979			7,994
Related party payables		100,500			-
Deferred revenue		70,000			-
Cash used in operating activities		(281,936	)		(656,433	)
Cash flows used in investing activities:
Acquisition of equipment		-			-
Capitalized software development costs		-			-
Cash used in investing activities		-			-
Cash flows provided by (used in) financing activities:
Proceeds from the issuance of debt		-			650,000
Payments on debt		(35,548	)		(33,379	)
Member contributed capital		254,943			5,212
Net increase in bank overdrafts		62,541			26,968
Cash provided by financing activities		281,936			648,801
Net decrease in cash		-			(7,632	)
Cash at beginning of period		-			7,632
Cash at end of period	$	-		$	-

	For the Nine-Month Periods
	Ended September 30,
	2007		2006
Cash paid during the fiscal years for:
Interest	$	21,429	$	7,463
Income taxes		-		-

Accounts receivable - trade is comprised of the following at September 30, 2007:
Accounts receivable	$	17,259
Allowance for doubtful accounts receivable		-
Accounts receivable - trade, net	$	17,259

Equipment is comprised of the following at September 30, 2007:
Computer equipment	$	26,896
Office equipment		1,337
Total equipment		28,233
Less: accumulated depreciation		(26,940	)
Equipment, net	$	1,293

Name	Age	Position
John A. Britchford-Steel	65	Chief Executive Officer, Director
Jose Alonso	42	Chief Operating Officer
Keith Ebert	42	Director
Patrick Palmer	39	Chief Technology Officer
Gina Palmer	41	Chief Strategy Officer

Name and Principal Position	Year		Salary	Bonus	Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Nonqualified Deferred Compensation Earnings		All other Compensation		Total
John A. Britchford-Steel	2006	$	125,583	-	-	-	-	-	$	8,282	$	133,865
John A. Britchford-Steel	2005	$	79,917	-	-	-	-	-	$	6,650	$	86,567
Jose Alonso	2006	$	120,500	-	-	-	-	-	$	13,975	$	134,475
Jose Alonso	2005	$	97,800	-	-	-	-	-	$	12,250	$	110,050

	· ·	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.

2006-2007 Fiscal Years	LOW		HIGH

Quarter ended April 28, 2006	$	.25	$	.20
Quarter ended July 31, 2006	$	.25	$	.25
Quarter ended October 31, 2006	$	.35	$	.25
Quarter ended January 31, 2007	$	.35	$	.35
Quarter ended April 30, 2007	$	.35	$	.35
Quarter ended July 31, 2007	$	.35	$	.35
Quarter ended October 31, 2007	$	.40	$	.35
Quarter ended December 31, 2007 (pre- 17.5-for-1 split)	$	3	$	.40
Quarter ended January 31, 2008 (post- 17.5-for-1 split)	$	1.15	$	1.10

Exhibit No.		Description

2.1*		Agreement and Plan of Exchange by and among Milk Bottle Cards, Inc., and certain members of ForgeHouse, LLC, dated January 31, 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

2.3*		Repurchase Agreement, by and between the Company and Nicole Milkovich, dated January 31, 2008

3.1*		Amended and Restated Articles of Incorporation, as filed with the Secretary of State of the State of Nevada, effective January 31, 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

3.4*		Articles of Exchange, as filed with the Secretary of State of the State of Nevada, effective January 31, 2008

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

10.3*		Form of Nonqualified Stock Option Award Agreement under the 2008 Incentive Plan

10.4*		Employment Agreement with John Britchford-Steel, dated as of January 31, 2008

10.5*		Employment Agreement with Jose Alonso, dated as of January 31, 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

10.7*		Form of Lock-Up Agreement, dated as of December 12, 2007, by and between the Company and each of certain beneficial stockholders.

10.8*		Form of Subscription Agreement, dated as of January 31, 2008, by and between the Company and each of certain preferred stockholders.

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.

10.10*		Promissory Note, in favor of Arngrove Group Holdings Ltd., dated as of January 31, 2008

10.11*		Promissory Note, in favor of After All Limited, dates as of January 31, 2008

10.12*		Subordination and Intercreditor Agreement, by and among the Company, ForgeHouse, and Paul Grootendorst, Bryan Irving, Brooks Mileson, and Ian Morl, dated as of January 31, 2008


	FORGEHOUSE, INC.

Date: February 6, 2008	By:	/s/ John Britchford-Steel
		John Britchford-Steel
		Chief Executive Officer