Nevada
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87-0431533
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Page
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PART I-FINANCIAL INFORMATION
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Item 1. Financial Statements
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Balance Sheets (Unaudited) as of June 30, 2013 and December 31, 2012
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2 | |
Statements of Operations (Unaudited) for the three and six months ended June 30, 2013 and 2012 and from inception of exploration stage to June 30, 2013
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3 | |
Statements of Cash Flows (Unaudited) for the six months ended June 30, 2013 and 2012 and from inception of exploration stage to June 30, 2013
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4 | |
Notes to Financial Statements (Unaudited)
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5
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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10 | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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11
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Item 4. Controls and Procedures
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11
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
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12
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Item 1A. Risk Factors
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12
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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12
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Item 3. Defaults Upon Senior Securities
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12
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Item 4. Mine Safety Disclosure
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12
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Item 5. Other Information
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12
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Item 6. Exhibits
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13
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Signatures
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13
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June 30,
2013
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December 31,
2012
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|||||||
ASSETS
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(Unaudited)
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|||||||
Current Assets
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||||||||
Cash
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$ | - | $ | 15,252 | ||||
Total Current Assets
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- | 15,252 | ||||||
Fixed assets (net of depreciation)
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43,927 | 49,451 | ||||||
Total Other Assets
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43,927 | 49,451 | ||||||
Total Assets
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$ | 43,927 | $ | 64,703 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
Current Liabilities
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||||||||
Cash overdraft
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$ | 3 | $ | - | ||||
Trade accounts payable
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180,388 | 171,750 | ||||||
Accrued liabilities
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211,125 | 171,875 | ||||||
Accrued interest
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98,987 | 14,771 | ||||||
Notes Payable
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1,700,500 | 1,662,500 | ||||||
Proceeds for common stock to be issued
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1,360,000 | 1,360,000 | ||||||
Warrants derivative liability
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741,871 | 903,142 | ||||||
Total Current Liabilities
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4,292,874 | 4,284,038 | ||||||
Stockholders' Deficit
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||||||||
Common stock-$0.001 par value; 100,000,000 shares authorized; 61,658,726 and 34,038,726 shares outstanding, respectively
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61,658 | 34,038 | ||||||
Additional paid-in-capital
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56,206,472 | 55,209,889 | ||||||
Stock subscription receivable
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(75,000 | ) | - | |||||
Accumulated deficit
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(23,315,973 | ) | (23,315,973 | ) | ||||
Exploration stage deficit
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(37,126,104 | ) | (36,147,289 | ) | ||||
Total Stockholders' Deficit
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(4,248,947 | ) | (4,219,335 | ) | ||||
Total Liabilities and Stockholders' Deficit
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$ | 43,927 | $ | 64,703 |
For the Three Months | For the Six Months | From Inception of | ||||||||||||||||||
Ended June 30,
|
Ended June 30,
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Exploration Stage
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||||||||||||||||||
January 1,
2010
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||||||||||||||||||||
through
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||||||||||||||||||||
2013
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2012
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2013
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2012
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June 30,
2013
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||||||||||||||||
Sales
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$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses
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||||||||||||||||||||
General and administrative
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187,900 | 1,032,930 | 314,869 | 1,993,136 | 29,964,507 | |||||||||||||||
Total Expenses
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187,900 | 1,032,930 | 314,869 | 1,993,136 | 29,964,507 | |||||||||||||||
Operating Loss
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(187,900 | ) | (1,032,930 | ) | (314,869 | ) | (1,993,136 | ) | (29,964,507 | ) | ||||||||||
Other income (expense)
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||||||||||||||||||||
Gain (Loss) on derivative
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(665,433 | ) | 1,174,085 | 161,271 | 9,264,088 | 7,320,808 | ||||||||||||||
Derivative day-one loss
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- | - | - | - | (11,970,479 | ) | ||||||||||||||
Write-off of Goodwill
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(660,000 | ) | - | (660,000 | ) | - | (660,000 | ) | ||||||||||||
Interest expense
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(123,654 | ) | (27,500 | ) | (165,217 | ) | (55,000 | ) | (1,855,485 | ) | ||||||||||
Interest income
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- | 59 | - | 198 | 3,559 | |||||||||||||||
Net Income (Loss)
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$ | (1,636,987 | ) | $ | 113,714 | $ | (978,815 | ) | $ | 7,216,150 | $ | (37,126,104 | ) | |||||||
Basic and Diluted Net Gain (Loss) Per Common Share
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$ | (0.04 | ) | $ | 0.00 | $ | (0.02 | ) | $ | 0.22 | ||||||||||
Basic and Diluted Weighted Average Common Shares Outstanding
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46,102,682 | 33,138,726 | 40,104,030 | 32,873,067 | ||||||||||||||||
Diluted Net Gain (Loss) Per Common Share
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$ | (0.04 | ) | $ | 0.00 | $ | (0.02 | ) | $ | 0.18 | ||||||||||
Diluted Weighted Average Common Shares Outstanding
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46.102,682 | 41,209,825 | 40,104,030 | 41,073,616 |
For the Six Months Ended |
From Inception of
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|||||||||||
June 30,
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Exploration Stage
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|||||||||||
January 1,
2010
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||||||||||||
Through
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||||||||||||
2013
|
2012
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June 30,
2013
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||||||||||
Cash Flows From Operating Activities
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||||||||||||
Net income (loss)
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$ | (978,815 | ) | $ | 7,216,150 | $ | (37,126,104 | ) | ||||
Adjustments to reconcile net income (loss) in to net cash used in operating activities:
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||||||||||||
Common stock and options issued for services
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209,372 | 1,421,803 | 27,545,863 | |||||||||
Warrant derivative liability
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(161,271 | ) | (9,264,088 | ) | (8,147,513 | ) | ||||||
Amortization of debt discount
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- | - | 110,000 | |||||||||
Stock issued for interest
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81,000 | - | 171,000 | |||||||||
Non-cash interest expense
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- | - | 302,500 | |||||||||
Derivative day-one loss
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- | - | 11,970,479 | |||||||||
Depreciation expense
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4,358 | 3,914 | 16,082 | |||||||||
Write-off of Goodwill
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660,000 | - | 660,000 | |||||||||
Changes in operating assets and liabilities:
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||||||||||||
Increase( decrease) in trade accounts payable
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8,638 | 36,793 | 186,423 | |||||||||
Increase (decrease) in accrued expenses
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84,213 | - | 122,210 | |||||||||
Increase (decrease) in accrued liabilities
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39,250 | 55,000 | 310,047 | |||||||||
Net Cash Used in Operating Activities
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(53,255 | ) | (530,428 | ) | (3,879,013 | ) | ||||||
Cash Flows From Investing Activities
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||||||||||||
Investment in mining rights project
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- | - | (58,890 | ) | ||||||||
Net Cash Provided (Used) by Investing Activities
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- | - | (58,890 | ) | ||||||||
Cash Flows From Financing Activities
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||||||||||||
Proceeds from cash overdraft
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3 | - | 3 | |||||||||
Proceeds from notes payable
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38,000 | - | 1,788,000 | |||||||||
Repayments of notes payable
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- | - | (500,000 | ) | ||||||||
Proceeds from exercise of warrants for
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||||||||||||
common stock to be issued
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- | - | 1,360,000 | |||||||||
Purchase treasury stock
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- | - | (60,000 | ) | ||||||||
Proceeds from issuance of common stock
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- | 380,000 | 1,349,900 | |||||||||
Net Cash Provided (Used) by Financing Activities
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38,003 | 380,000 | 3,937,903 | |||||||||
Net Increase (decrease) in Cash
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(15,252 | ) | (150,428 | ) | - | |||||||
Cash at Beginning of Period
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15,252 | 214,517 | - | |||||||||
Cash at End of Period
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$ | - | $ | 64,089 | $ | - | ||||||
Non-Cash Investing and Financing Activities:
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||||||||||||
None
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Range of
exercise price
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Number
Outstanding
And Exercisible
|
Weighted
Average
Remaining
Contractual Life
(in years)
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Weighted
Average
Exercise
Price
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Aggregate
Intrinsic
Value
|
|||||||||||
$ | 0.125 to $1.00 | 8,612,200 |
3.67 years
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$ | 0.49 | $ | 0 |
Range of
exercise price
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual Life
(in years)
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||||
$ | 0.14 to $0.50 | 7,500,000 |
2.53 years
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$ | 0.25 | $ | 0 | ||||||||
Exercise Price
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$ | 0.14 to $0.50 | |||||||||||||
Term
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Ten years
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||||||||||||||
Volatility
|
261 | % | |||||||||||||
Dividends
|
0 | % |
10.1
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Acquistion Agreement with TransGlobal Gold Corporation. Dated May 23, 2013, previously filed with 8-K on June 19, 2013.
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31.1
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of Chief Executive Officer and Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
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Set forth below are the additional exhibits for the filing based on the new XBRL rules.
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101.INS
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XBRL Instance
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101.XSD
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XBRL Schema
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101.CAL
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XBRL Calculation
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101.DEF
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XBRL Definition
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101.LAB
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XBRL Label
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101.PRE
|
XBRL Presentation
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1.01
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Acquistion Agreement with TransGlobal Gold Corporation. Dated May 23, 2013, previously filed with 8-K on June 19, 2013.
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Ensurge, Inc. | |
August 19, 2013 | /s/ James D. Miller |
James D. Miller, Chief Executive Officer | |
(Principal Executive Officer) | |
August 19, 2013
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/s/ Jeff A. Hanks
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Jeff A. Hanks, Chief Financial Officer
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(Principal Financial Officer and Principal Accounting Officer)
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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By: /s/ James D. Miller
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Chief Executive Officer
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August 19, 2013
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James D. Miller
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(Principal Executive Officer)
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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By: /s/ Jeff A. Hanks
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Chief Financial Officer
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August 19, 2013
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D Jeff A. Hanks
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( (Principal Financial and Accounting Officer)
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CERTIFICATION PURSUANT TO
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18 U.S.C. SECTION 1350
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AS ADOPTED PURSUANT TO
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SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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By: /s/ James D. Miller
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Chief Executive Officer
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August 19, 2013
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||
James D. Miller
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(Principal Executive Officer)
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By: /s/ Jeff A. Hanks
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Chief Financial Officer
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August 19, 2013
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||
Jeff A. Hanks
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(Principal Financial and Accounting Officer )
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Note 1 - Organization and Basis of Presentation: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions |
|
STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | 6 Months Ended | 42 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
STATEMENTS OF OPERATIONS | |||||
Sales | |||||
General and administrative | 187,900 | 1,032,930 | 314,869 | 1,993,136 | 29,964,507 |
Total Expenses | 187,900 | 1,032,930 | 314,869 | 1,993,136 | 29,964,507 |
Operating Loss | (187,900) | (1,032,930) | (314,869) | (1,993,136) | (29,964,507) |
Gain (Loss) on derivative | (665,433) | 1,174,085 | 161,271 | 9,264,088 | 7,320,808 |
Derivative day-one loss | (11,970,479) | ||||
Write-off of Goodwill | (660,000) | (660,000) | (660,000) | ||
Interest Expense | (123,654) | (27,500) | (165,217) | (55,000) | (1,855,485) |
Interest income | 59 | 198 | 3,559 | ||
Net Income (Loss) | $ (1,636,987) | $ 113,714 | $ (978,815) | $ 7,216,150 | $ (37,126,104) |
Basic and Diluted Net Gain (Loss) Per Common Share | $ (0.04) | $ (0.02) | $ 0.22 | ||
Basic and Diluted Weighted Average Common Shares Outstanding | 46,102,682 | 33,138,726 | 40,104,030 | 32,873,067 | |
Diluted Net Gain (Loss) Per Common Share | $ (0.04) | $ (0.02) | $ 0.18 | ||
Diluted Weighted Average Common Shares Outstanding | 46.102682 | 41,209,825 | 40,104,030 | 41,073,616 |
Note 5 - Other Corporate Business
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Notes | |
Note 5 - Other Corporate Business | NOTE 5 OTHER CORPORATE BUSINESS
On May 8, 2013, in order to more fully devote his time and attention to the funding and opportunities of the Companys Brazilian subsidiary, Ensurge Brasil LTDA, the Company has accepted the resignation of Jordan Estra as the Companys Director and President/CEO and caused his appointment to the Board of Directors of its subsidiary Ensurge Brasil LTDA. The Companys CFO, Jeff Hanks, was the Companys acting President until replacement. During the month of May Jordan Estra resigned from Ensurges Brazilian subsidiary and no longer has any affiliation with Ensurge or any of its subsidiarys.
On May 30, 2013, James D. Miller accepted the position of President and CEO for Ensurge. Jeff Hanks will continue as the Companys CFO.
|
Note 4 - Legal Issues (Details) (USD $)
|
Mar. 25, 2013
|
---|---|
Details | |
Complaint Filed Against Ensurge by Randall K Edwards | $ 74,924 |
Complaint Filed Against Ensurge by Gaia, Silva, Gaede and Associates | $ 18,627 |
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Note 6 - Subsequent Events (Details)
|
1 Months Ended | |
---|---|---|
Aug. 31, 2013
|
Aug. 16, 2013
|
|
Details | ||
Shares issued for aquisition of mine license | 4,000,000 | |
Warrants issued for aquisition of mine license | 5,000,000 | |
Shares issued for exchange of dredge equipment | 400,000 |
Note 1 - Organization and Basis of Presentation
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1 - Organization and Basis of Presentation | NOTE 1ORGANIZATION AND BASIS OF PRESENTATION
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 in the mining industry; accordingly, the accompanying financial statements are presented on a GAAP basis of accounting, rather than on a liquidation basis.
Basis of Presentation The accompanying unaudited condensed consolidated 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 Companys annual financial statements and the notes thereto for the year ended December 31, 2012, included in the Companys 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 Companys management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Companys financial position as of June 30, 2013, and its results of operations and cash flows for the six months ended June 30, 2013 and 2012. The results of operations for the six months ended June 30, 2013, may not be indicative of the results that may be expected for the year ending December 31, 2013.
Business Condition The Company has suffered losses from operations, and the Company had a working capital deficit in the amount $4,292,874 at June 30, 2013. Part of the deficit is due to outstanding warrants and warrant derivatives. Without the warrant derivatives the adjusted working capital deficit is $3,551,003.
During the month of October 2011 the Company entered into two twelve month convertible Notes Payable for $605,000 each, for a total funding of $1,210,000, with an initial issue discount of 10% and total proceeds of $1,100,000, which are collateralized by all the assets of the Company. These notes may be converted at a fixed price of $0.50 per share of the Companys common stock, which may be converted at the option of the lender. These notes also include 950,000 warrants each for a total of 1,900,000 warrants at an exercise price of $1.00 per share and have a cashless exercise provision. The warrants have a 5 year term. In case of default, the Note may be converted into common stock at $0.50 per share. During November 2012, the Company negotiated an extension of these two notes payable, which are due on March 15, 2013 and are currently in default. The principal was increased from $550,000 per note to $756,250, or a total of $1,512,500. As part of this negotiation to extend the note, the Company agreed to pay a total of 900,000 shares of common stock. On May 6, 2013 the Company negotiated with the debt holders to move this liability off of the books of Ensurge and onto its Brazilian subsidiary. As part of the this negotiation the Company agreed to pay a total of 2,000,000 shares of common stock.
Effective March 2, 2012, the Company accepted $380,000 in private placement funds from accredited investors in exchange for units consisting of seven hundred sixty thousand (760,000) shares of the Companys common stock, plus three hundred eighty thousand (380,000) warrants with an exercise price of $1.00.
During November 2012, the Company entered into several 12 month notes payable for an aggregate of $150,000.
During April 2013, the Company entered into a 60 day 10% convertible note payable for $15,000, which has not been paid off nor converted into stock. Due to the note being in default the interest rate has now increased to 18%.
On May 9, 2013, the Company entered into a 6 month note payable of $23,000 with interest payable at 22% APR. As part of this note the Company issued 1,000,000 shares of common stock.
During May 2013, the Company entered into two 24 month notes receivable for an aggregate of $75,000 in exchange for 15,000,000 shares of common stock.
During May 2013, the Company acquired 80% of Transglobal Gold Corporation in exchange for 6,000,000 shares of Ensurge common stock and issued 200,000 shares to employees.
The proceeds of the financing are being used by the Company to fund the exploration for gold mines or to acquire relating mining assets, either directly or through one or more partnerships or joint ventures, in Brazil or elsewhere in South America.
Principles of Consolidation The financial statements have been consolidated with its wholly owned subsidiary, Ensurge Brazil, LTDA., which was incorporated in Sao Paulo, Brazil on April 18, 2011. Currently the Brazil entity has no assets, revenues or expenses. It has two notes payable, which were transferred from the parent Company Ensurge in the aggregate amount of $1,512,500. Also, the financial statements of TransGlobal, which is a Nevada Corporation owned 80% by Ensurge, have been consolidated with Ensurge. Currently, TransGlobal has no assets, liabilities, revenues or expenses.
Basic and Diluted Loss Per Share Basic earnings 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. As of June 30, 2013, the Company had 11,152,000 warrants outstanding of which 8,330,000 have a 5 year term and are all fully vested. 2,822,000 have a 2 year term and vest 10% each month starting on May 30, 2013. As of June 30, 2013, the Company had a total of 7,500,000 options of which 7,500,000 have vested and none have been exercised. The options are all 10 year options with an exercise price ranging from $0.125 to $0.50.
Warrants: The Company has granted warrants to purchase shares of Common Stock. Warrants outstanding and exercisable at June 30, 2013 are as follows:
Options: The Company has granted options to purchase shares of Common Stock. Options outstanding and exercisable at June 30, 2013 are as follows:
Recently Enacted Accounting Standards
Accounting Standards Updates (ASU) through ASU No. 2013-11 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.
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Note 3 - Issuance of Stock and Options
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
Note 3 - Issuance of Stock and Options | NOTE 3 ISSUANCE OF STOCK AND OPTIONS
On May 15, 2013, the Company entered into an agreement with Next View Capital, LP and Zadar, LLC, which have notes payable with an aggregate total of $1,512,500. As part of this agreement, these two notes will be moved to the Companys wholly owned subsidiary, Ensurge Brasil, LTDA, thereby releasing Ensurge, Inc. of this Liability. As part of this agreement the Company issued 1,000,000 shares of common stock to each note holder.
On May 23, 2013, the Company issued 6,000,000 shares of common stock for 80% ownership of TransGlobal Gold Corporation, a Nevada Corporation and 200,000 to employees.
On May 22, 2013, the Company issued 2,000,000 shares of common stock to its CEO in exchange for past due wages.
On May 22, 2013, the Company issued 1,000,000 shares of common stock as part of its negotiation with an entity to provide cash and a note payable.
On May 22, 2013, the Company entered into a 24 month 5% note receivable for $50,000 in exchange for 10,000,000 shares of common stock with Workhorse Capital Leasing LLC.
On May 22, 2013, the Company entered into a 24 month 5% note receivable for $25,000 in exchange for 5,000,000 shares of common stock with OG3 LLC.
On May 30, 2013, the Company entered into an employment agreement with its new President and as part of the negotiation, the Company issued 1,420,000 shares of common stock and 2,822,000 warrants ranging from a price of $0.125 to $0.75. These warrants have a 2 year term and vest 10% each month starting on the date of the employment agreement.
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Note 6 - Subsequent Events
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
Note 6 - Subsequent Events | NOTE 6 SUBSEQUENT EVENTS
During August, 2013, the TransGlobal Gold Corp, an 80% owned subsidiary of Ensurge, acquired a mine license application that has tied up gold bearing property located on the Mazaruni river. As part of this negotiation the Company issued 4 million shares of common stock along with 5 million warrants.
On August 16th, 2013, the Company issued 400,000 shares of common Kimberly Ann Jeffrey in exchange for land dredge equipment.
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued, and has determined there are no other events to disclose. |
Note 4 - Legal Issues
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
Note 4 - Legal Issues | NOTE 4 LEGAL ISSUES
On March 25, 2013 a Complaint was filed against Ensurge, by Randall K. Edwards and Gaia, Silva, Gaede & Associates in the amount of $74,924 and $18,627, respectively. These are liabilities for services performed, however, due to lack of funding the Company has not been able to pay these amount owed. These liabilities are booked as part of accounts payable.
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