Note 1 - Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2013 |
Notes | ' |
Note 1 - Organization and Basis of Presentation | ' |
NOTE 1–ORGANIZATION AND BASIS OF PRESENTATION |
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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. |
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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, 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 financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s financial position as of September 30, 2013, and its results of operations and cash flows for the nine months ended September 30, 2013 and 2012. The results of operations for the nine months ended September 30, 2013, may not be indicative of the results that may be expected for the year ending December 31, 2013. |
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Business Condition – The Company has suffered losses from operations, and the Company had a working capital deficit in the amount $4,160,650 at September 30, 2013. |
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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 this negotiation the Company agreed to pay a total of 2,000,000 shares of common stock. |
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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. |
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During November 2012, the Company entered into several 12 month notes payable for an aggregate of $150,000. |
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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%. |
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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. |
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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. |
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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. As part of this transaction the Company recognized goodwill of $660,000 and later wrote it off. |
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On August 16, 2013, the Company entered into a 12 month note payable of $9,000 with interest payable at 5% APR. |
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On August 30, 2013, the Company entered into a 12 month note payable of $5,000 with interest payable at 5% APR. |
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The proceeds of the financing are being used by the Company to fund operation and the exploration for gold mines or to acquire relating mining assets, either directly or through one or more partnerships or joint ventures, in Brazil and Guyana or elsewhere in South America. |
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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. |
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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, 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 September 30, 2013, the Company had a total of 7,500,000 options of which 7,500,000 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: |
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Range of exercise price | Number Outstanding | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price | Aggregate Intrinsic Value |
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$0.125 to $1.00 | 11,152,000 | 3.32 years | $ 0.50 | $ 0 |
Options: |
The Company has granted options to purchase shares of Common Stock. All options have ten years to exercise them. Options outstanding and exercisable at September 30, 2013 are as follows: |
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Range of exercise price | Number Outstanding | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price | Number Exercisable |
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$0.14 to $0.50 | 7,500,000 | 7.55 years | $ 0.25 | $ 7,500,000 |
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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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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. |