esgi10q20100930.htm

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PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets
(Unaudited) as of September 30, 2010 and December 31, 2009	3

Statements of Operations
(Unaudited) for the Three and nine Months Ended September 30, 2010 and 2009 and from inception of exploration stage to September 30, 2010	4

Statements of Cash Flows (Unaudited)
for the nine Months Ended September 30, 2010 and 2009 and from inception of exploration stage to September 30, 2010	5

Notes to Financial Statements (Unaudited)	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	8

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	9

Item 4. Controls and Procedures	9

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	10

Item 1A. Risk Factors	10

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	10

Item 3. Defaults Upon Senior Securities	10

Item 4. (Removed and Reserved)	10

Item 5. Other Information	10

Item 6. Exhibits and Reports on Form 8-K	10

Signatures	11

	September 30,			December 31,
	2010			2009
ASSETS	(Unaudited)			(Audited)

Current Assets
Cash	$	284,679		$	-
Prepaid Expense		7,000			-

Total Current Assets		291,679			-

Investment in mining rights project		105,000			-

Total Other Assets		105,000			-

Total Assets	$	396,679		$	-


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Trade accounts payable	$	43,232		$	8,686
Proceeds for common stock to be issued		560,000			-
Accrued liabilities		3,810			14,738

Total Current Liabilities		607,042			23,424

Stockholders' Equity (Deficit)
Common stock - $0.001 par value; 100,000,000 shares authorized; 28,485,341 and 26,035,341 shares issued and outstanding		28,485			26,035
Additional paid-in-capital		24,707,281			23,266,514
Accumulated deficit		(23,315,973	)		(23,315,973	)
Exploration stage deficit		(1,630,156	)		-

Total Stockholders' Equity (Deficit)		(210,363	)		(23,424	)

Total Liabilities and Stockholders' Equity (Deficit)	$	396,679		$	-

	For the Three Months Ended September 30						For the Nine Months Ended September 30						From Inception of Exploration Stage January 1, 2010 through September 30,
	2010			2009			2010			2009			2010

Sales	$	-		$	-		$	-		$	-		$	-

Cost of Sales		-			-			-			-			-

Gross Profit		-			-			-			-			-

Expenses:

Mining Project Expense		56,803			4,856			72,565			115,555			72,565

General and Administrative		1,253,188			4,856			1,559,089			115,555			1,559,089

Interest Expense		-			25,573			-			76,548			-

Total Expenses		1,309,991			30,429			1,631,654			192,103			1,631,654

Operating Loss		(1,309,991	)		(30,429	)		(1,631,654	)		(192,103	)		(1,631,654	)

Interest Income		617			-			1,498			-			1,498

NET LOSS	$	(1,309,374	)	$	(30,429	)	$	(1,630,156	)	$	(192,103	)	$	(1,630,156	)


NET (LOSS) PER SHARE:	$	(0.05	)	$	(0.06	)	$	(0.06	)	$	(0.72	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED in PER SHARE CALCULATION		28,235,884			511,074			27,880,945			266,812

	For the Nine Months Ended September 30,						From Inception of Exploration Stage January 1, 2010 through September 30,
	2010			2009				2010
Cash Flows from Operating Activities:
Net (Loss)	$	(1,630,156	)	$	(192,103	)	$	(1,630,156	)
Adjustments to Reconcile Net (Loss) to Net Cash used by Operating Activities:
Common stock issued for services		1,017,417			100,000			1,017,417
Changes in Operating Assets and Liabilities:
Prepaid Expenses		(7,000	)		-			(7,000	)
Trade accounts payable		34,546			7,381			34,546
Accrued liabilities		(10,928	)		76,445			(10,928	)
Net Cash (Used) by Operating Activities		(596,121	)		(8,277	)		(596,121	)

Cash Flows from Investing Activities:
Investment in mining rights project		(105,000	)		-			(105,000	)
Net Cash (Used) by Investing Activities:		(105,000	)		-			(105,000	)

Cash Flows from Financing Activities:
Proceeds from issuance of notes payable		-			8,277			-
Proceeds from exercise of warrants for common stock to be issued		560,000			-			560,000
Purchase treasury stock		(60,000	)		-			(60,000	)
Proceeds from issuance of common stock		485,800			-			485,800
Net Cash Provided by Financing Activities:		985,800			8,277			985,800

Net Increase in Cash		284,679			-			284,679
Cash, Beginning of Period		-			-			-
Cash, End of Period	$	284,679		$	-		$	284,679

Organization – On October 16, 2000, iShopper.com, Inc. changed its name to Ensurge, Inc., which is referred to herein as the Company. On January 1, 2002, the Company began liquidation of its assets. During 2009, the Company started a new phase of operations. Accordingly, the accompanying financial statements are presented on a GAAP basis of accounting rather than on a liquidation basis of accounting.

Basis of Presentation – The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the Company’s annual financial statements and the notes thereto for the year ended December 31, 2009, included in the Company’s annual report on Form 10-K, especially the information included in Note 1 to those financial statements, “Summary of Significant Accounting Policies.” In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s financial position as of September 30, 2010, and its results of operations and cash flows for the nine months ended September 30, 2010 and 2009. The results of operations for the nine months ended September 30, 2010, may not be indicative of the results that may be expected for the year ending December 31, 2010.

Business Condition – The Company has suffered losses from operations; and the Company had working capital deficit in the amount $322,363 at September 30, 2010. During February and March 2010, the Company sold an aggregate of 2,100,000 shares of common stock for $525,000. During July 2010, the Company sold 4,000,000 warrants for $100 for the right to purchase 4,000,000 shares of common stock at $0.14 per share or $560,000. $560,100 was received in July for the warrants and the exercise of the warrants. The cash has been received, however the warrants have not been exercised thus the common stock has not been issued to the purchaser. The proceeds of the financing will be used to help the Company maintain operations and to fund the exploration for gold mines and/or acquisition of mining assets, either directly or through one or more partnerships or joint ventures in Brazil or elsewhere in South America. During this quarter the Company purchased back 2,000,000 shares of common stock for $60,000 from its previous President. The stock was subsequently cancelled.

Basic and Diluted Loss Per Share – Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is calculated to give effect to potentially issuable common shares which include stock options and stock warrants except during loss periods when those potentially issuable common shares would decrease loss per share. At September 30, 2010, the Company had received proceeds from selling 4,000,000 shares of the Company’s common stock. The shares have yet to be issued.

Recently Enacted Accounting Standards – In June 2009 the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact the Company’s financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards (“SFAS”) SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets—an Amendment of FASB Statement No. 140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R)”, and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” were recently issued. SFAS Nos. 166, 167 and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update (“ASU”) No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2010-26, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

In February 2010, the Company sold 2,100,000 shares of common stock as part of a Subscription Agreement. The agreement has an anti-dilution clause that states the following; if during the 12 months following the date of the agreement the Company sells Shares, or securities convertible into Shares, at a price per Share less than that paid by the Subscriber, then the Company shall issue additional Shares to the Subscriber in an amount such that the total number of shares issued to the Subscriber shall equal $25,000 divided by the price per share 20% lower than that paid by the new buyer of Shares.

During the month of July 2010, the Company issued 1,500,000 shares of common stock at a value of $0.14 to its Officers for a total value of $210,000 for services rendered. During the month of August, the Company issued 3,000,000 options at a price of $0.14 to its Officers for a total value of $688,417 for services rendered. This valuation is based on the black sholes model for SEC reporting purposes, however the exercise price was based on fair market value.

During July 2010, the Company sold 4,000,000 warrants for $100 for the right to purchase 4,000,000 shares of common stock at $0.14 per share or $560,000. $560,100 was received in July for the warrants and the exercise of the warrants. The cash has been received, however the warrants have not been exercised thus the common stock has not been issued to the purchaser. As part of this capital raising transaction, a fee of $39,200 was paid as a commission.

When used in this discussion, the words “expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, and are urged to carefully review and consider the various disclosures elsewhere in this Form 10-Q.

The Company is pursuing opportunities in the gold mining industry, with emphasis on opportunities in South America. Though several mining opportunities have been reviewed and rejected by the Company, research and investigation of mining opportunities continues. Currently, the Company has entered into an agreement to explore for recoverable reserves in tailings on a mine in Brazil.

In February, 2010, the Company sold 2,100,000 shares of common stock for an aggregate purchase price of $525,000. During July 2010, the Company sold 4,000,000 warrants for $100 for the right to purchase 4,000,000 shares of common stock at $0.14 per share or $560,000. $560,100 was received in July for the warrants and the exercise of the warrants. The Company used a portion of the proceeds to commence investigating gold mining claims and properties in South America in anticipation of entering into the gold mining industry.

On August 26, 2010 the Company entered into a Definitive Agreement with Mineracao Nova Esperanca (New Hope Mining Company) or NME, of Pocone, Mato Grosso, Brazil. Under provisions of this Agreement, Ensurge will provide technology and the capital equipment necessary to recover gold from tailings ponds created by NME over the past 20 years as well as recover gold from newly created process mill tailings. Also under terms of the Agreement, longer term, Ensurge will undertake an overall mineral assessment of the entire NME mining tenement, of which only about 10% has been explored to date.

As of October 1, 2010 the Engineering Scoping Study of the Nova Esparanza Mineraco (NME) project was underway. A team of geologists and drillers are at the NME Tuiuiu Mine, drilling and sampling of the tailings stockpiles. It is estimated that it will be the middle of November 2010 for the required work of the drilling and sampling program to be fully completed.

We had no revenues for the three and nine months ended September 30, 2010 and 2009. During the quarter ended September 30, 2010, the Company entered into an agreement with Mineracao Nova Esperanca (New Hope Mining Company) of Pocone, Mato Grosso, Brazil. The Company has agreed to purchase additional capital equipment to process gold from the existing tailings. We will share in the after tax net profits from these operations. We have completed a preliminary engineering study with positive results and have engaged the engineering firm to do a study of the entire tailings area. The construction of the tailing processing facility can be completed in 6 to 12 months.

Mining project expenses for the three months ended September 30, 2010 and 2009 were, respectively, $56,803 and $0. Mining project expenses for the nine months ended September 30, 2010 and 2009 were, respectively, $72,565 and $0. These expenses are made up of preliminary engineering costs, legal and travel costs directly related to reviewing and substantiating mining projects.

General and administrative expenses for the three months ended September 30, 2010 and 2009 were, respectively, $1,253,188 and $4,856. General and administrative expenses for the nine months ended September 30, 2010 and 2009 were, respectively, $1,559,089 and $115,555. These costs are made up of audit, legal, and consulting fees, along with travel expenses looking for acquisitions.

Interest expense for the three months ended September 30, 2010 and 2009 were, respectively, $0 and $25,573. Interest expense for the nine months ended September 30, 2010 and 2009 were, respectively, $0 and $76,548. These costs are made up of interest expense on notes payable that have been paid off.

The Company has financed its operations to date primarily through private placements of equity securities. The Company has been unprofitable since inception (1998) and has incurred net losses in each quarter and year. During February and March 2010, the Company sold an aggregate of 2,100,000 shares of common stock for $525,000. During July 2010, the Company sold warrants for $100 for the rights to purchase 4,000,000 shares of common stock for $560,000, which was received in July.

The Company has made progress in creating relationships with Corporate and Tax Council, Banks, and Engineering firms within Brazil. By having these areas completed, we have entered into our first agreement and are in discussion with several other groups. Once a project is identified and an agreement is in place, then a two part engineering study is done. The first part is to perform a preliminary test of a small area for the appropriate amount of gold within the tailings. The second part is a complete testing of the area and depth to determine amount of ore per tonnage of tailings. The Company will then build a processing plant to strip the gold from the remaining tailings. The estimated cost of these plants will be $3 to $5 million depending on the size of the production and tailings. We will have to raise additional capital to fund such projects and would anticpate dilution to current investors as we seek additional equity capital.

(a) Evaluation of Disclosure Controls and Procedures. The Company’s chief executive officer and chief financial officer / principle financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, Rules 13a-14(c) and 15-d-14(c)) as of September 30, 2010, have concluded that, as of the evaluation date, the Company’s disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company and its subsidiaries would be made known to them by others within those entities.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated Framework. During the course of this assessment, management identified a material weakness relating primarily to recording complex financial transactions.

The Company has a lack of staffing within its accounting department, in terms of the small number of employees performing its financial and accounting functions, which does not provide the necessary separation of duties. Management believes the lack of accounting and financial personnel amounts to a material weakness in its internal control over financial reporting and, as a result, at December 31, 2009 and on the date of this Report, its internal control over financial reporting is not effective. The Company will continue to evaluate the employees involved and the hiring of additional accounting staff. However, the Company will be unable to remedy this material weakness in its internal controls until the Company has the financial resources that allow the Company to hire additional qualified employees.

During July 2010, the Company sold 4,000,000 warrants for $100 for the right to purchase 4,000,000 shares of common stock at $0.14 per share or $560,000. $560,100 was received in July for the warrants and the exercise of the warrants. The sale was to one investor that is an existing shareholder of the Company. The Company relied on Section 4(2) and Rule 506 of Regulation D for the sale of such securities.

(a)	Exhibits.

	31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)



(b)	Reports on Form 8-K.

	None.

Nevada		87-0431533
(State or other jurisdiction		(IRS Employer Identification No.)

	Ensurge, Inc.

November 18, 2010	/s/ Jordan M. Estra
	Jordan M. Estra, Chief Executive Officer
	(Principal Executive Officer)



November 18, 2010	/s/ Jeff A. Hanks
	Jeff A. Hanks, Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)