Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - ENSURGE INCFinancial_Report.xls
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. - ENSURGE INCensurgeexhexh311.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. - ENSURGE INCensurgeexhexh312.htm
EX-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) - ENSURGE INCensurgeexhexh321.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 September 30, 2012


[  ] 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.)

1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
(Address of principal executive offices)

888-978-9994
(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 33,138,726 shares of common stock, $0.001 par value, issued and outstanding as of November 12 2012.

 
 
 

 

 
Ensurge, Inc.
FORM 10-Q


QUARTER ENDED SEPTEMBER 30, 2012

TABLE OF CONTENTS


   
Page
PART I-FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
     
Balance Sheets
 
 
(Unaudited) as of September 30, 2012 and December 31, 2011
3
     
Statements of Operations
 
 
(Unaudited) for the three and nine months ended September 30, 2012 and 2011 and from inception of exploration stage to September 30, 2012
4
     
Statements of Cash Flows
 
 
(Unaudited) for the nine months ended September 30, 2012 and 2011 and from inception of exploration stage to September 30, 2012
5
     
 
Notes to Financial Statements (Unaudited)
6
     
Item 2. Management's Discussion and Analysis of Financial Condition and
 
 
Results of Operations
9
     
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
12
     
Signatures
13


 
2

 

PART I -   FINANCIAL INFORMATION

Item 1.     Financial Statements
 
Ensurge, Inc.
(An Exploration Stage Company)
BALANCE SHEET

   
September 30,
2012
   
December 31,
 2011
 
ASSETS
 
(Unaudited)
   
 
 
Current Assets
           
   Cash
  $ 28,051     $ 214,517  
                 
Total Current Assets
    28,051       214,517  
                 
   Fixed assets (net of depreciation)
    51,737       57,936  
                 
Total Other Assets
    51,737       57,936  
                 
Total Assets
  $ 79,788     $ 272,453  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current Liabilities
               
   Trade accounts payable
  $ 173,612     $ 36,214  
   Accrued wages
    93,750       -  
   Accrued interest
    100,833       18,333  
   Notes Payable
    1,100,000       1,100,000  
   Proceeds for common stock to be issued
    1,360,000       1,360,000  
   Warrants derivative liability
    2,061,891       11,128,157  
                 
Total Current Liabilities
    4,890,086       13,642,704  
                 
Stockholders' Deficit
               
Common stock-$0.001 par value; 100,000,000 shares authorized; 33,138,726 and 32,348,726 shares outstanding, respectively
    33,139       32,348  
Additional paid-in-capital
    48,790,188       46,494,730  
Accumulated deficit
    (23,315,973 )     (23,315,973 )
Exploration stage deficit
    (30,317,652 )     (36,581,356 )
                 
Total Stockholders' Deficit
    (4,810,298 )     (13,370,251 )
                 
Total Liabilities and Stockholders' Deficit
  $ 79,788     $ 272,453  
 

The accompanying notes are an integral part of these condensed financial statements.

 
3

 

Ensurge, Inc.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012
(UNAUDITED)


   
For the Three Months
   
For the Nine Months
   
From Inception of
 
   
Ended September 30,
   
Ended September 30,
   
Exploration Stage
 
                           
January 1, 2010
 
                           
Through
 
   
2012
   
2011
   
2012
   
2011
   
September 30, 2012
 
                               
Sales
  $ -     $ -     $ -     $ -     $ -  
                                         
Expenses
                                       
General and administrative
    936,098       1,096,733       2,929,234       15,251,089       23,077,673  
                                         
Total Expenses
    936,098       1,096,733       2,929,234       15,251,089       23,077,673  
                                         
Operating Loss
    (936,098 )     (1,096,733 )     (2,929,234 )     (15,251,089 )     (23,077,673 )
                                         
Other income (expense)
                                       
                                         
   Gain (Loss) on derivative
    11,133       (20,373,198 )     9,275,221       (38,347,395 )     6,000,788  
   Derivative day-one loss
    -       -       -       (8,314,646 )     (11,970,479 )
   Interest expense
    (27,500 )     -       (82,500 )     (323,355 )     (1,273,333 )
   Interest income
    19       50       217       1,319       3,545  
                                         
Net Income (Loss)
  $ (952,446 )   $ (21,469,881 )   $ 6,263,704     $ (62,235,166 )   $ (30,317,652 )
                                         
Basic and Diluted Net Gain (Loss) Per Common Share
  $ (0.03 )   $ (0.72 )   $ 0.19     $ (2.09 )        
                                         
Basic and Diluted Weighted Average Common Shares Outstanding
    32,962,266       29,710,341       32,962,266       29,710,341          
 
 
The accompanying notes are an integral part of these condensed financial statements.
 

 
4

 
 
Ensurge, Inc.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(UNAUDITED)
 
 
               
From Inception of
 
   
For the Nine Months Ended
   
Exploration Stage
 
   
September 30,
   
January 1, 2010
 
               
through
 
   
2012
   
2011
   
September 30, 2012
 
Cash Flows From Operating Activities
                 
   Net income (loss)
  $ 6,263,704     $ (62,235,166 )   $ (30,317,652 )
Adjustments to reconcile net income (loss) in to net cash used in operating activities:
                       
   Common stock and options issued for services
    2,125,204       15,966,419       20,277,978  
   Warrant derivative liability
    (9,275,221 )     38,347,395       (6,000,788 )
   Derivative day-one loss
    -       6,954,001       11,970,479  
   Accumulated Depreciation
    6,199       636       4,868  
Changes in operating assets and liabilities:
                       
   Increase (decrease) in trade accounts payable
    137,398       (16,553 )     164,926  
   Increase (decrease) in accrued interest
    82,500       24,948       82,500  
   Increase (decrease) in accrued liabilities
    93,750       -       97,345  
Net Cash Used in Operating Activities
    (566,466 )     (958,320 )     (3,718,059 )
                         
Cash Flows From Investing Activities
                       
   Investing in fixed assets
    -       (3,817 )     (58,890 )
   Investment in mining rights project
    -       (685,139 )     -  
Net Cash Provided (Used) by Investing Activities
    -       (688,956 )     (58,890 )
                         
Cash Flows From Financing Activities
                       
   Proceeds from notes payable
    -       510,000       1,600,000  
   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       -       1,405,000  
Net Cash Provided (Used) by Financing Activities
    380,000       510,000       3,805,000  
                         
Net Increase (decrease) in Cash
    (186,466 )     (1,137,276 )     28,051  
                         
Cash at Beginning of Period
    214,517       1,146,936       -  
Cash at End of Period
  $ 28,051     $ 9,660     $ 28,051  
                         
Non-Cash Investing and Financing Activities:
                       
   None
                       
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
5

 

Ensurge, Inc.
(An Exploration Stage Company)
Notes to Unaudited Financial Statements
September 30, 2012

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.  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, 2011, 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, 2012, and its results of operations and cash flows for the nine months ended September 30, 2012 and 2011.  The results of operations for the nine months ended September 30, 2012, may not be indicative of the results that may be expected for the year ending December 31, 2012.

Business Condition – The Company has suffered losses from operations, and the Company had a working capital deficit in the amount $4,862,035 at September 30, 2012. A large part of the deficit is due to outstanding warrants and warrant derivatives. Without the warrant derivatives the adjusted working capital deficit is $2,800,144.

During 2010, the Company sold an aggregate of 3,100,000 shares of common stock to investors for an aggregate purchase price of $894,900 in a private placement.  The Company received $1,360,000 for exercise of warrants to purchase 5,600,000 shares of the Company’s common stock.  In August 2011 the Company entered into a 90 day note payable in the amount of $500,000.

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.  Half of the proceeds were used to repay the $500,000 August 2011 note. These notes may be converted at a fixed price of $1.50 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 Notes may be converted into common stock at $1.50 per share or 80% of the current market bid price, whichever is lower.  Interest upon default will be charged at 18% per annum, compounded daily.  The notes are due on November 15, 2012.

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.  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.
 
 
 
6

 
 
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.  As of September 30, 2012, the Company had 8,330,000 warrants outstanding which all have a 5 year term.  As of September 30, 2012, the Company had a total of 7,500,000 options of which 5,925,000 are vested and none have been exercised.  The options are all 10 year options with an exercise price ranging from $0.14 to $0.50.
 
Warrants:
 
The Company has granted warrants to purchase shares of Common Stock.
 
Warrants outstanding and exercisable at September 30, 2012 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 $1.00       8,330,000  
3.62 years
  $ 0.49     $ 4,081,700  
 
Options:
 
The Company has granted options to purchase shares of Common Stock.
 
Options outstanding and exercisable at September 30, 2012 are as follows:

Range of
 exercise price
   
Number
Outstanding
 
Weighted Average
Remaining Contractual
 Life (in years)
 
Weighted Average
 Exercise Price
   
Number
 Exercisable
 
                       
$ 0.14 to $0.50       7,500,000  
8.35 years
  $ 0.25       5,925,000  
 
Recently Enacted Accounting Standards

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. 2012-07, 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.
 
Going Concern - Our accompanying financial statements have been prepared assuming that we will continue as a “going concern.” As discussed in Notes to the financial statements, we have no revenues, have incurred a loss from operations and have negative operating cash flows since inception. These issues raise substantial doubt about our ability to continue as a “going concern.” Our ability to stay in business will, in part, depend on our ability to raise additional funding.  Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 2 – COMMITMENTS AND CONTINGENCIES

Ensurge Brasil Participacoes LTDA, (a wholly owned subsidiary of Ensurge, Inc.), hereinafter “Ensurge”, has entered into a Definitive Agreement (“Agreement”) with Metais Juara LTDA, hereinafter “Metais” of Pocone, Mato Grosso, Brazil, on June 13, 2012.  Under provisions of this Agreement, Ensurge will provide technology and the capital equipment necessary to expand gold production and in return will receive an in-kind royalty payment.
 
 
7

 
 
As part of this Agreement Ensurge is required to make an initial payment of four million Brazilian Reals (R$4,000,000), which is approximately US $1,968,659, to be paid within 90 business days from the date of signing the Agreement.  This Agreement will not become effective until the date the funds are wired to Metais.  In return for said payment Ensurge will be entitled to a top line royalty payment of seventeen percent (17%) of daily gold production, delivered in-kind as a gold dore bar, which is approximately 93% gold.
 
Per the Agreement, Ensurge is required to construct a new gold recovery mill with the purpose of bringing new technology to the current process, which is expected to increase the rate of gold recovery.  The new mill will process approximately 400 tons of ore per day, with the expectation of increasing gold recovery to over 50%.  The construction of the new mill is expected to be completed within 12 months from the initial ordering of equipment.  Once the mill is completed and running as expected, the royalty payment will be increased to forty-one percent (41%). The mill and its equipment will belong to Ensurge.
 
Ensurge may acquire additional mining equipment (ie. trucks, excavators, etc.) to increase the daily mine production.  Once this additional mining equipment is in place and in operation, the royalty payment will be increased to forty-three percent (43%).
 
Metais is required to continue to operate and manage the current mining operations for the next three years.  If at any time Metais desires to terminate or sell the mine operation, Ensurge has first right of refusal to purchase and/or continue the mining operations.   The term of the Agreement runs for the life of the mine operations by Metais.  The company has obtained a 30 day extension to this agreement.

NOTE 3 – ISSUANCE OF STOCK AND OPTIONS

There has been no issuance of stock or options during this quarter.

NOTE 4 – SUBSEQUENT EVENTS

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.
 

 
8

 

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.

Brazil Mining Project
 
On June 13, 2012, Ensurge entered into a Definitive Agreement with Metais Juara LTDA, of Pocone, Mato Grosso, Brazil. Under provisions of this Agreement, Ensurge will provide technology and the capital equipment necessary to expand gold production and in return will receive an inkind royalty payment.

As part of this Agreement Ensurge is required to make an initial payment of four million Brazilian Reals (R$4,000,000), which is approximately US $1,968,659 (based on the reported exchange rate as of July 18, 2012), to be paid within 90 business days from the date of signing the Agreement. In return for said payment Ensurge will be entitled to a top line royalty payment of seventeen percent (17%) of daily gold production, delivered in-kind as dore.

Ensurge will construct a new gold recovery mill with the purpose of bringing new technology to the current process, which is expected to increase the rate of gold recovery. The new mill will process approximately 400 tons of ore per day, with the expectation of increasing gold recovery to over 50%. The construction of the new mill is expected to be completed within 12 months from the initial ordering of equipment. Once the mill is completed and running as expected, the royalty payment will be increased to forty-one percent (41%). The mill and its equipment will belong to Ensurge.

Ensurge may acquire additional mining equipment (ie. trucks, excavators, etc.) to increase the daily mine production. Once this additional mining equipment is in place and in operation, the royalty payment will be increased to forty-three percent (43%).

Metais is required to continue to operate and manage the current mining operations for the next three years. If at any time Metais desires to terminate or sell the mine operation, Ensurge has first right of refusal to purchase and/or continue the mining operations. The term of the Agreement runs for the life of the mine operations by Metais.  The company has obtained a 30 day extension to this agreement.

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 nine months ended September 30, 2012 and 2011.  The Company is currently reviewing several projects and is awaiting completion of engineering results to determine the feasibility of each project, including capital equipment and operating costs.  It continues to search out other opportunities or joint ventures to create operations and revenues.

 
9

 


General and administrative expenses for the three months ended September 30, 2012 and 2011 were, respectively, $936,098 and $1,096,733.  General and administrative expenses for the nine months ended September 30, 2012 and 2011 were, respectively, $2,929,234 and $15,251,089.  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 September 30, 2012 and 2011 were, respectively, a gain of $11,133 and a loss of $20,373,198.  This income and expense is due to change in value of the warrants derivative liability, which is determined primarily from the change of closing stock price from June to September 2012 and 2011.  The warrant derivative income or expense for the nine months ended September 30, 2012 and 2011 was, respectively, a gain of $9,275,221 and a loss of $38,347,395.  This income and expense is due to change in value of the warrants derivative liability, which is determined primarily from the change of closing stock price from January to September 2012 and 2011.

Interest expense was $27,500 and $0 for the three months ended September 30, 2012 and 2011, respectively. Interest expense was $82,500 and $323,355 for the nine months ended September 30, 2012 and 2011, respectively. The interest expense is loan interest from the notes payable the Company has incurred during 2012 and 2011.

Interest income for the three months ended September 30, 2012 and 2011 was, respectively, $19 and $50.  Interest income for the nine months ended September 30, 2012 and 2011 was, respectively, $217 and $1,319.  This income is from interest bearing bank accounts.

Liquidity and Capital Resources

The Company has financed its operations to date primarily through private placements of equity securities and convertible debt instruments.  The Company has been unprofitable since inception (1998) and has incurred net losses in each quarter and year.  From the beginning of 2010 through March 31, 2012 the Company sold an aggregate of 8,941,000 warrants and 3,860,000 shares of common stock for $2,765,000.  As part of this transaction the warrants have been paid for and exercised, but the common stock has not been requested, thus the Company has booked a current liability of $1,360,000 and a warrant derivative liability of $2,061,891, which valuation is determined on a quarterly basis based primarily on the price of the common stock.

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 $1.50 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 $1.50 per share or 80% of the current market bid price, whichever is lower.  Interest upon default will be charged at 18% per annum, compounded daily.  The notes are due on November 15, 2012.

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.  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.

 
10

 
 
We expect these funds will allow the Company to operate for approximately 7 months, due to the majority of the Companies expenses being paid in stock or options.  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.  Additional funds of at least $2,000,000 will be required to close the transaction with Metais described above under “Recent Developments and Business Plan”.

The Company has made progress in creating relationships with Corporate and Tax Counsel, Banks, and Engineering firms within Brazil.  The Company is continuing to look for appropriate opportunities in Brazil and South America. We will have to raise additional capital to fund current and future projects and would anticipate dilution to current investors as we close on additional equity capital.

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 September 30, 2012. 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 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.

 
11

 
 
PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
None
 
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.
 
Item 6.  Exhibits and Reports on Form 8-K.
 
(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.
     
 
32.1
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.XS 
XBRL Schema
     
 
101.CAL
XBRL Calculation
     
 
101.DEF
XBRL Definition
     
 
101.LAB
XBRL Label
     
 
101.PRE
XBRL Presentation
     
(b)
Reports on Form 8-K.
 
None
 

 
12

 
 
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
Ensurge, Inc.
   
November 13, 2012
/s/ Jordan M. Estra
 
Jordan M. Estra, Chief Executive Officer
 
(Principal Executive Officer)
   
   
   
November 13, 2012
/s/ Jeff A. Hanks
 
Jeff A. Hanks, Chief Financial Officer
  (Principal Financial Officer and Principal Accounting Officer)

 

13