The Nano Forge is an experimental piece of technology created by using Nanotechnology, used and tested for deconstructing enviroment. Ultor tested the Nano Forge on many things. The Nano Forge engineers microscopic robots, called nanites, that deconstruct the molecular structure of objects (such as a wall) and/or any lifeform it touches. Ultor injected this experiment into a weapon, and formed their creation known as the Nanorifle.
Red Faction: Guerrilla
After the Ultor Corporation's defeat, the Nanorifle was salvaged in most of the collapsed labs of Ultor by the Earth Defense Force. In 2128, the Ultor Nanorifle was captured and used by the Red Faction, during the Red Faction - EDF war. The Nano Forge should be used with care, as it can even kill it's user very easily. The Nano Forge can be found in the Comm Room of the Ultor Facility near Capek's Inner Sanctum. It is put in a somewhat shrine for the Nano Forge. A theory of the skull on the shrine of the Nano Forge is that it's Capek's skull genetically engineered to be larger
Red Faction: Armageddon
The Nano Forge's capabilities seem to be vastly improved in the upcoming Red Faction: Armageddon. Mentioned abilites in the official trailers and on the official website suggest increased strength, the ability to turn invisible, and to reconstruct matter as well as deconstruct it. How the Nano Forge is able to have these upgrade is unknown as of this time.