10-Q 1 ensurge.htm ENSURGE, INC., 10Q 2013-06-30 ensurge.htm


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

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2013

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-54460

 Ensurge, Inc.
(Exact name of registrant as specified in its charter)

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

1046 East University
Mesa, Arizona 85203
(Address of principal executive offices)

480-459-5833
(Issuer’s telephone number)

(Former name, address, and fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during the preceding 12 months (or such shorter period that the Registrant was required to file such report(s)), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]                      No [  ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes   [X]                      No [  ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer [  ]      Accelerated filer [  ]       Non-accelerated filer [  ]      Smaller reporting company [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

There were 66,058,726 shares of common stock, $0.001 par value, issued and outstanding as of August 19, 2013.

 
 

 
 
Ensurge, Inc.
 
FORM 10-Q

QUARTER ENDED JUNE 30, 2013

TABLE OF CONTENTS


   
Page
     
PART I-FINANCIAL INFORMATION
 
     
Item 1. Financial Statements
 
     
 
Balance Sheets (Unaudited) as of June 30, 2013 and December 31, 2012
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
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
4
     
 
Notes to Financial Statements (Unaudited)
5
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
10
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 
11
     
Item 4. Controls and Procedures
11
     
PART II - OTHER INFORMATION
 
     
Item 1. Legal Proceedings
12
     
Item 1A. Risk Factors
12
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
12
     
Item 3. Defaults Upon Senior Securities
12
     
Item 4. Mine Safety Disclosure
12
     
Item 5. Other Information
12
     
Item 6. Exhibits
13
     
Signatures
13
 
 
1

 

PART I -                 FINANCIAL INFORMATION

Item 1.                 Financial Statements
 
Ensurge, Inc.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEET
 
    June 30,
2013
    December 31,
2012
 
ASSETS
 
(Unaudited)
       
Current Assets
           
   Cash
  $ -     $ 15,252  
                 
Total Current Assets
    -       15,252  
                 
   Fixed assets (net of depreciation)
    43,927       49,451  
                 
Total Other Assets
    43,927       49,451  
                 
Total Assets
  $ 43,927     $ 64,703  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current Liabilities
               
   Cash overdraft
  $ 3     $ -  
   Trade accounts payable
    180,388       171,750  
   Accrued liabilities
    211,125       171,875  
   Accrued interest
    98,987       14,771  
   Notes Payable
    1,700,500       1,662,500  
   Proceeds for common stock to be issued
    1,360,000       1,360,000  
   Warrants derivative liability
    741,871       903,142  
                 
Total Current Liabilities
    4,292,874       4,284,038  
                 
Stockholders' Deficit
               
Common stock-$0.001 par value; 100,000,000 shares authorized; 61,658,726 and 34,038,726 shares outstanding, respectively
    61,658       34,038  
Additional paid-in-capital
    56,206,472       55,209,889  
Stock subscription receivable
    (75,000 )     -  
Accumulated deficit
    (23,315,973 )     (23,315,973 )
Exploration stage deficit
    (37,126,104 )     (36,147,289 )
                 
Total Stockholders' Deficit
    (4,248,947 )     (4,219,335 )
                 
Total Liabilities and Stockholders' Deficit
  $ 43,927     $ 64,703  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
2

 
 
Ensurge, Inc.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012 AND FROM
INCEPTION OF EXPLORATION STAGE JANUARY 1, 2010 THROUGH JUNE 30, 2013
(UNAUDITED)
 
    For the Three Months     For the Six Months     From Inception of  
   
Ended June 30,
   
Ended June 30,
   
Exploration Stage
 
                           
January 1,
2010
 
                           
through
 
   
2013
   
2012
   
2013
   
2012
   
June 30,
2013
 
                               
Sales
  $ -     $ -     $ -     $ -     $ -  
                                         
Expenses
                                       
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 )
                                         
Other income (expense)
                                       
                                         
   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 )   $ 0.00     $ (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 )   $ 0.00     $ (0.02 )   $ 0.18          
                                         
Diluted Weighted Average Common Shares Outstanding
    46.102,682       41,209,825       40,104,030       41,073,616          
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
3

 
 
 
Ensurge, Inc.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
(UNAUDITED)
 
    For the Six Months Ended    
From Inception of
 
   
June 30,
   
Exploration Stage
 
         
January 1,
2010
 
               
Through
 
   
2013
   
2012
   
June 30,
2013
 
Cash Flows From Operating Activities
                 
Net income (loss)
  $ (978,815 )   $ 7,216,150     $ (37,126,104 )
Adjustments to reconcile net income (loss) in to net cash used in operating activities:
                       
Common stock and options issued for services
    209,372       1,421,803       27,545,863  
Warrant derivative liability
    (161,271 )     (9,264,088 )     (8,147,513 )
Amortization of debt discount
    -       -       110,000  
Stock issued for interest
    81,000       -       171,000  
Non-cash interest expense
    -       -       302,500  
Derivative day-one loss
    -       -       11,970,479  
Depreciation expense
    4,358       3,914       16,082  
Write-off of Goodwill
    660,000       -       660,000  
Changes in operating assets and liabilities:
                       
Increase( decrease) in trade accounts payable
    8,638       36,793       186,423  
Increase (decrease) in accrued expenses
    84,213       -       122,210  
Increase (decrease) in accrued liabilities
    39,250       55,000       310,047  
Net Cash Used in Operating Activities
    (53,255 )     (530,428 )     (3,879,013 )
                         
Cash Flows From Investing Activities
                       
Investment in mining rights project
    -       -       (58,890 )
Net Cash Provided (Used) by Investing Activities
    -       -       (58,890 )
                         
Cash Flows From Financing Activities
                       
Proceeds from cash overdraft
    3       -       3  
Proceeds from notes payable
    38,000       -       1,788,000  
Repayments of notes payable
    -       -       (500,000 )
Proceeds from exercise of warrants for
                       
common stock to be issued
    -       -       1,360,000  
Purchase treasury stock
    -       -       (60,000 )
Proceeds from issuance of common stock
    -       380,000       1,349,900  
Net Cash Provided (Used) by Financing Activities
    38,003       380,000       3,937,903  
                         
Net Increase (decrease) in Cash
    (15,252 )     (150,428 )     -  
Cash at Beginning of Period
    15,252       214,517       -  
Cash at End of Period
  $ -     $ 64,089     $ -  
Non-Cash Investing and Financing Activities:
                       
None
                       
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
4

 
 
Ensurge, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2013

NOTE 1–ORGANIZATION 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 Company’s annual financial statements and the notes thereto for the year ended December 31, 2012, 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 consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s 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 Company’s 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 Company’s common stock, plus three hundred eighty thousand (380,000) warrants with an exercise price of $1.00.
 
 
5

 
 
Ensurge, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2013

NOTE 1–ORGANIZATION 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 Company’s annual financial statements and the notes thereto for the year ended December 31, 2012, 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 consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s 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 Company’s 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 Company’s common stock, plus three hundred eighty thousand (380,000) warrants with an exercise price of $1.00.
 
 
6

 
 
Ensurge, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2013
 
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:

Range of
exercise price
   
Number
Outstanding
And Exercisible
 
Weighted
Average
Remaining
Contractual Life
(in years)
 
Weighted
Average
Exercise
Price
   
Aggregate
Intrinsic
Value
 
                       
$ 0.125 to $1.00       8,612,200  
3.67 years
  $ 0.49     $ 0  
 
 
7

 
 
Ensurge, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2013

Options:
 
The Company has granted options to purchase shares of Common Stock.
 
Options outstanding and exercisable at June 30, 2013 are as follows:

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
  $ 0.25     $ 0  
                               
       
Exercise Price
      $ 0.14 to $0.50          
       
Term
     
Ten years
         
       
Volatility
        261 %        
       
Dividends
        0 %        
 
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.

NOTE 2 – COMMITMENTS AND CONTINGENCIES

As part of our notes payable agreement, the lending parties are entitled to royalty payments per the terms of each agreement. These royalties are based upon the contract between the wholly owned subsidiary, Ensurge Brasil, LTDA, and the mine owner in Brazil. However, this contract has currently expired and the Company feels there is no further obligation or liabilities to either the mine owner or the note holders for these royalties.

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 Company’s 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.

 
8

 
 
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.

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.

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 Company’s Brazilian subsidiary, Ensurge Brasil LTDA, the Company has accepted the resignation of Jordan Estra as the Company’s Director and President/CEO and caused his appointment to the Board of Directors of its subsidiary Ensurge Brasil LTDA. The Company’s CFO, Jeff Hanks, was the Company’s acting President until replacement. During the month of May Jordan Estra resigned from Ensurge’s Brazilian subsidiary and no longer has any affiliation with Ensurge or any of its subsidiary’s.

On May 30, 2013, James D. Miller accepted the position of President and CEO for Ensurge. Jeff Hanks will continue as the Company’s CFO.

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.

 
9

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

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.

Recent Developments and Business Plan

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 is on-going.

Ensurge has acquired 80% ownership of TransGlobal Gold Corp., a Nevada Corporation, which is pursuing mining opportunities in Guyana and specifically along the Mazaruni River.

Despite the Company’s efforts in seeking opportunities in the gold mining industry, there can be no assurance that its efforts to enter this industry will ultimately prove successful.

Results of Operations

The Company had no revenues for the three and six months ended June 30, 2013 and 2012. It continues to search out other opportunities or joint ventures to create operations and revenues.

General and administrative expenses for the three months ended June 30, 2013 and 2012 were, respectively, $187,900 and $1,032,930. General and administrative expenses for the six months ended June 30, 2013 and 2012 were, respectively, $314,869 and $1,993,136. These costs are made up of engineering and drilling costs for projects, audit, legal, option expense and consulting fees, along with travel expenses incurred while performing due diligence on current projects and looking for acquisitions or other business opportunities in Brazil.

The warrant derivative income or expense for the three months ended June 30, 2013 and 2012 were, respectively, a loss of $665,433 and a gain of $1,174,085. The warrant derivative income or expense for the six months ended June 30, 2013 and 2012 was, respectively, a gain of $161,271 and $9,264,088. This income and expense is due to change in value of the warrants derivative liability, which is determined in part from the change of closing stock price from January to June and March to June 2013 and 2012.

The loss of write-off of Goodwill for the three months ended June 30, 2013 and 2012 were, respectively, $660,000 and $0. The loss of write-off of Goodwill for the six months ended June 30, 2013 and 2012 was, respectively, $660,000 and $0. This expense is due to the issuance of stock for 80% of TransGlobal. Due to TransGlobal not having any assets the purchase value was considered to be goodwill and was written off due to no estimated time of revenues.

Interest expense was $123,654 and $27,500 for the three months ended June 30, 2013 and 2012, respectively. Interest expense was $165,217 and $55,000 for the six months ended June 30, 2013 and 2012, respectively. The interest expense is loan interest from the notes payable the Company has incurred over the past year.

Interest income for the three months ended June 30, 2013 and 2012 was, respectively, $0 and $59. Interest income for the six months ended June 30, 2013 and 2012 was, respectively, $0 and $198. This income is from interest bearing bank accounts.

 
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Liquidity and Capital Resources

During April 2013, the Company entered into a 60 day convertible note payable for $15,000.

On May 9, 2013, the Company entered into a 6 month note payable of $23,000. These funds were used to complete and file the year end 10-K for 2012 and the March 31, 2013 10-Q.

The Company is continuing to look for additional funds, however, if the Company is unable to obtain additional funds to operate it will decrease its operations until such time that it is able to obtain additional financing for its operations.

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has sustained net losses from operations since it adopted its new business plan in January 2010, and it has limited liquidity. Management anticipates that the Company will be dependent, for the near future, on additional capital to fund its operating expenses and business operations. While the Company is continuing to look for new financing sources, in the current economic environment, the procurement of outside funding is extremely difficult and there can be no assurance that such financing will be available, or, if available, that such financing will be at a price that will be acceptable to the Company. Failure to generate significant revenues or to raise additional capital would have an adverse impact on the Company’s ability to achieve its longer-term business objectives, and would adversely affect its ability to continue operating as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures:
 
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2013. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.

Changes in Internal Control:
 
During the most recently completed fiscal quarter, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

 
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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

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

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 Company’s 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 22, 2013, the Company issued 6,000,000 shares of common stock for 80% ownership of TransGlobal Gold Corporation, a Nevada Corporation and 200,000 shares 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 two 24 month note receivable for an aggregate of $75,000 in exchange for 15,000,000 shares of common stock.

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

Item 3. Defaults Upon Senior Securities
 
None

Item 4. Mine Safety Disclosures

We have not engaged in any mining activities except for taking core samples, which were taken by a 3rd party consulting firm and consequently we have no mining safety issues.

Item 5. Other Information

There were no other items to be reported under Part II of this report.
 
 
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Item 6. Exhibits and Reports on Form 8-K.
 
(a) Exhibits.
 
10.1
Acquistion Agreement with TransGlobal Gold Corporation. Dated May 23, 2013, previously filed with 8-K on June 19, 2013.
   
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.
   
32.1
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)
   
Set forth below are the additional exhibits for the filing based on the new XBRL rules.
   
101.INS
XBRL Instance
   
101.XSD
XBRL Schema
   
101.CAL
XBRL Calculation
   
101.DEF
XBRL Definition
   
101.LAB
XBRL Label
   
101.PRE
XBRL Presentation
 
(b) Reports on Form 8-K.
 
1.01
Acquistion Agreement with TransGlobal Gold Corporation. Dated May 23, 2013, previously filed with 8-K on June 19, 2013.

SIGNATURES
 

  Ensurge, Inc.
   
   
 August 19, 2013 /s/ James D. Miller
  James D. Miller, Chief Executive Officer
  (Principal Executive Officer)
   
August 19, 2013
/s/ Jeff A. Hanks
 
Jeff A. Hanks, Chief Financial Officer
 
(Principal Financial Officer and Principal Accounting Officer)
 
 
 
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