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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 10-K

 

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

 

OR

 

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

 

FOR THE TRANSITION PERIOD FROM __________ TO __________.

 

Commission File Number 0-24269

 

 

 

SURGE GLOBAL ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE   34-1454529
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
75-153 Merle Drive, Suite B, Palm Desert CA   92211
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including are code: (800) 284-3898

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Name of each exchange on which registered
NONE   NONE

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $.001 par value

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [  ] No [X]

 

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated file [  ]
       
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]

 

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

 

The aggregate market value of the registrant’s approximately 3,910,458 shares of common stock (held by non-affiliates computed by reference to the closing sales price of such common equity (i.e. $0.21) as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2014) was $821,000.

 

The number of shares outstanding of the registrant’s common stock at March 31, 2015 was 15,214,673.

 

 

 

 
 

 

INDEX

 

    Page
     
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION   3
         
PART I      
ITEM 1.   BUSINESS   3
ITEM 1A.   RISK FACTORS   7
ITEM 2.   PROPERTIES   13
ITEM 3.   LEGAL PROCEEDINGS   14
ITEM 4.   MINE SAFETY DISCLOSURES   14
         
PART II        
ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   14
ITEM 6.   SELECTED FINANCIAL INFORMATION   15
ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   16
ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.   19
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA   F-1 - F-17
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE   20
ITEM 9A.   CONTROLS AND PROCEDURES   20
ITEM 9B.   OTHER INFORMATION   21
         
PART III        
ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   21
ITEM 11.   EXECUTIVE COMPENSATION   25
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   27
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   28
ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES   28
         
PART IV        
ITEM 15.   EXHIBITS OF FINANCIAL STATEMENT SCHEDULES   29

 

2
 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This Annual Report on Form 10-K, including exhibits thereto, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are typically identified by the words “anticipates,” “believes,” “expects,” “intends,” forecasts,” estimates,” “plans,” “future,” “strategy,” or words of similar meaning. In particular, the following types of statements are forward-looking:

 

  statements regarding our potential growth opportunities;
     
  statements regarding our ability to generate revenues from our operations;
     
  statements regarding our anticipated exploration work;
     
  statements regarding our ability to extract, refine, sell oil or sell oil properties;
     
  statements regarding our estimated future costs and expenses; and
     
  statements regarding ability to comply or continue to comply with governmental regulations.

 

Various factors could cause actual results to differ materially from those expressed in the forward-looking statements, including those described in “Risk Factors” in this Form 10-K. The Company assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors, except as required by law.

 

PART I

 

ITEM 1. BUSINESS

 

General Overview

 

Surge Global Energy, Inc. (“Surge”) is a Delaware corporation traded on the OTC Markets Group (OTCQB) and on the OTC Bulletin Board (OTC BB) under the symbol “SRGG.” Our principal executive office is located at 75-153 Merle Drive, Suite B, Palm Desert, CA 92211 and our international sales office is located at 1110 Brickell Avenue, Suite 317, Miami FL 33131.

 

Our telephone number is (800) 284-3898 and our fax number is (786) 923-0963. We maintain a website at www.SurgeGlobalEnergy.com. The contents of this website are not made a part of this filing.

 

We are an oil and gas exploration and development company. The Company is engaged in negotiations concerning the acquisition, feasibility and development of a production partnership for the purposes of developing oil & gas assets located in the Gulf of Guinea and the surrounding offshore area of West Africa on the Atlantic Ocean and in East and West Texas in the United States and in South America. It is the Company’s present intent to acquire interests in existing production sites or historical production sites with proved reserves. We intend to actively participate in drilling for oil and gas for our own account and to participate with others in drilling opportunities. We will be competing with a number of other potential purchasers of prospects and producing properties, most of which will have greater financial resources than us or our co-interest holders. In the oil and gas industry, the bidding for prospects has become particularly intense with different bidders evaluating potential acquisitions with different product pricing parameters and other criteria that result in widely divergent bid prices. In the current oil and gas lease environment, there can be no assurance that there will be a sufficient number of suitable prospects available for acquisition by us or that we can sell prospects or obtain financing for, or participate with others to join in the development of, prospects.

 

Corporate History

 

We were incorporated as The Havana Group, Inc. on November 25, 1997 under the laws of the state of Delaware. Our initial business was the sale of pipes and tobacco products and we completed our initial public sheet and the cancellation of outstanding Preferred A and Preferred B shares and indebtedness related to the discontinued tobacco and pipe business.

 

From 2005 through 2014, we engaged in a series of acquisition, divestiture and capital transactions in an effort to expand our business and provide the basis for long-term shareholder returns from oil and gas exploration and development. Because our operations from 2005 forward have not generated any substantial revenue, we have used our equity and the value of interests in other entities that we have controlled from time to time, to attempt to develop business opportunities we believed would be advantageous. Our management has also undergone a number of changes during this period.

 

3
 

 

In October 2012 and February 2013, the Company issued a total of 10,216,715 post reverse split shares to William E. Fitzgerald, President, and Clark Morton, Chief Executive Officer, which shares have been subscribed for and paid for. After this sale, they owned approximately 85.00% of the total outstanding shares of the Company. In February 2013, the Company completed a 1 for 20 reverse stock split reducing the outstanding shares from 176,057,387 to 8,802,958 common shares, adjusted for the rounding of fractional common shares issued in conjunction with the reverse stock split. Including the additional shares due Mr. Fitzgerald and Mr. Morton and fractional shares issued in conjunction with the reverse split, the total outstanding shares were 12,019,673 at March 31, 2013.

 

In 2013, the Company sold a total of 900,000 common shares to three accredited investors for total cash proceeds of $452,000 which increased the total outstanding shares to 12,919,673 at December 31, 2013.

 

In 2014, the Company sold a total of 1,800,000 common shares to four accredited investors for proceeds of $837,500 plus $9,300 reimbursement of administrative expenses, and issued 45,000 shares as employee compensation which increased the total outstanding shares to 14,764,673 at December 31, 2014.

 

In 2015, through March 31, 2015, the Company sold a total of 450,000 common shares for total proceeds of $270,000, increasing the total outstanding shares to 15,214,673.

 

Because we are an exploration stage company, the inability to develop oil and gas prospects has reduced our working capital and created the need for additional strategic transactions to raise capital and liquidate assets.

 

Recent Developments

 

In February, 2015, the Company retained Omega Capital Street to raise funds for oil and gas acquisitions.

 

In March, 2015, the Company agreed to acquire a 10% interest in Nikoil Energy Limited for $150,000 in cash and common stock and options, which transaction should be closed in April, 2015. The cash payment was made in March, 2015.

 

Oil and Gas Drilling Activities

 

There were no new oil and gas drilling activities finalized and closed in fiscal 2014, but in August through November, 2013 we acquired a 32% working interest in four oil and gas wells located in Muhlenberg County, Kentucky. Two of these wells were drilled and completed in 2013. We also acquired small interests in two oil and gas partnerships located in Texas. The Company took impairments of $49,798 in the year ended December 31, 2014 for the Kentucky and Texas properties and $200,000 in the year ended December 31, 2013 for the Kentucky property.

 

During 2014, the Company developed several opportunities to invest in new oil and gas properties and is currently working to provide the financing to either acquire or put into production these opportunities. The Company’s ability to invest in future oil and gas transactions is dependent upon our ability to obtain additional financing on terms satisfactory to us, if at all. See “Risk Factors.”

 

Andora Energy Corporation (formerly Signet Energy)

 

In 2005, we formed a Canadian subsidiary that entered into an agreement to drill wells in the Sawn Lake Property located in Northern Alberta, Canada with Deep Well Oil & Gas, Inc. (“Deep Well”) and Northern Alberta Oil Ltd. (“NAOL”). In November 2005, that subsidiary, renamed Signet Energy, Inc. (“Signet”), was reorganized. At that time, Surge issued 5.1 million of common stock in its Canadian subsidiary to former Signet officers, directors and certain shareholders, and transferred shares of Signet to Deep Well, NAOL and Surge. Surge retained 10,500,000 shares of Signet after the foregoing transaction (approximately 49%) of Signet on a non-diluted basis. As a result, we became a minority shareholder in Signet, and obtained leases of oil and gas properties from Deep Well and NAOL. In July 2006, our interest in Signet was further diluted by the issuance of additional equity by Signet. On September 17, 2007, Signet combined with Andora Energy Corporation (“Andora”), resulting in further dilution of our interest in the combined entity to approximately 5.6% of the fully diluted shares of Andora. In exchange for our Signet shares we received 3,429,138 shares of Andora. In 2009, as a result of the dismissal of lawsuits and settlement agreements, we received 252,361 Andora shares from a settlement with our former Chief Executive Officer. We also paid out 75,000 shares in settlement with a former director. In another settlement with Andora dated February 2, 2010, 375,000 Andora shares were paid to Andora in full payment of all outstanding claims of approximately $560,000 owed Andora for legal fees in conjunction with a lawsuit.

 

4
 

 

In 2010 and 2011, we transferred a total of 33,333 Andora shares to our former Chief Executive Officer in lieu of $20,000 in salary. In October 2012, the Company agreed to issue a total of 308,780 Andora shares in settlement of amounts owed to its current Chief Financial Officer (and formerly its Chief Executive Officer) and another creditor.

 

In October 2014, the Company transferred a total of 2,886,286 shares of common stock of Andora held by it to its wholly-owned subsidiary, Cold Flow Energy ULC, an Alberta corporation (“Cold Flow”) and its wholly-owned subsidiary, Surge Holding Co., a Delaware corporation (either or both, the “Holding Company”). The Company has agreed that the Holding Company Shares will be distributed to Surge shareholders as soon as possible (the “Distribution Date”). Two of the Company’s prior directors, Charles V. Sage, Edwin J. Korhonen, and E. Jamie Schloss, a current director, were appointed directors of the Holding Company and Messrs. Sage and Schloss were also appointed officers of the Holding Company. The Buyers and the Company have agreed that such persons shall remain in such roles through the Distribution Date.

 

On the Distribution Date, the Company will distribute the shares of the Holding Company (or the Andora Shares) or a liquidating dividend to the shareholders of the Company other than the Buyers and their affiliates and transferees and any other holders of the Common Stock issued subsequent to the closing dates (including any purchaser of Common Stock of the Company in any private placement subsequent to the closing dates but excluding holders who have obtained shares in the public markets); provided, however, that such a dividend will be paid pursuant to applicable corporate laws and in compliance with all securities laws. The mechanism for such distribution shall be agreed upon between the Company and the majority of the directors of the Holding Company.

 

Subject to the distribution of the Andora shares, at December 31, 2014 we owned 2,889,386 Andora shares valued at $1,490,923 for financial statement purposes ($0.516 per share) on a consolidated basis. This value is after taking a permanent writedown of $1,340,852 in fiscal 2012 due to market conditions, and temporary writedowns of $138,691 at December 31, 2014 and $104,018 at December 31, 2013 respectively. These writedowns reflect the decline in the current market value of this property after conversion into US dollars. Some of these shares will be used to finance the distribution of the Andora shares as discussed above.

 

Andora is a privately owned oil and gas company which is 71.80% owned and controlled by Pan Orient Energy Corp., a Canadian energy company listed on the TSX Venture Exchange. The Company owns approximately 3% of the total outstanding shares of Andora. The Company plans on distributing the Andora shares to former Surge shareholders (as defined) in the second quarter of 2015.

 

Other

 

During 2011, the Company sold a total of 112,500 common shares for $67,500.

 

In September 2011, the Company issued a Convertible Note to Asher Enterprises for $45,000 and repaid the Note in full in February, 2012. See Notes to Consolidated Financial Statements for complete details. In January 2012, the Company issued 8,500 common shares at $0.03 per common share.

 

In October 2012, the Company issued a total of 7,000,000 post reverse split common shares for total proceeds of $350,000. In November 2012, the Company received $100,000 in cash for the purchase an additional 3,216,715 post reverse split common shares, which shares were subscribed for but were unissued at December 31, 2012 pending an increase in authorized shares and the completion of the proposed reverse 1 for 20 stock split which occurred on February 22, 2013.

 

In June, September and October 2013, the Company issued a total of 900,000 common shares for total proceeds of $452,000.

 

In January, March, April, and August 2014, the Company issued a total of 1,800,000 common shares for total cash proceeds of $837,500.

 

In February and March 2015, the Company issued a total of 450,000 common shares for total proceeds of $270,000.

 

Competition

 

The oil and gas business is highly competitive. Subject to additional financing, of which we can provide no assurances, we will try to compete with private, public and state-owned companies in all facets of the oil business, including suppliers of energy and fuel to industrial, commercial and individual customers. Numerous independent and major oil and gas companies and oil and gas syndicates actively seek out and bid for both oil and gas prospects with substantially greater financial and personnel resources and operating histories than we do.

 

5
 

 

Competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the government of the United States and other countries, as well as factors that we cannot control, including international political conditions, overall levels of supply properties as well as for the services of third-party providers, such as drilling companies, upon which we rely. Many of these companies not only explore for, produce and market oil and natural gas, but also carry out refining operations and market the resultant products.

 

Government and Environmental Regulation

 

Our operations will be subject to extensive and developing federal, state and local laws and regulations in the United States relating to environmental, health and safety matters; laws affecting petroleum, chemical products and materials; and waste management. Permits, registrations or other authorizations are required for the operation of certain of our facilities and for our oil and gas exploration and production activities. These permits, registrations or authorizations are subject to revocation, modification and renewal. Governmental authorities have the power to enforce compliance with these regulatory requirements, the provisions of required permits, registrations or other authorizations, lease conditions, and violators are subject to civil and criminal penalties, including fines, injunctions or both. Failure to obtain or maintain a required permit may also result in the imposition of civil and criminal penalties. Third parties may have the right to sue to enforce compliance.

 

Foreign and domestic development, production and sale of oil are extensively regulated in Canada at both the federal and state levels. Legislation affecting the oil and gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Also, numerous departments and agencies, in Canada and at federal and state levels, have issued rules and regulations binding on the oil and gas industry and its individual members, compliance with which is often difficult and costly and some of which carry substantial penalties for failure to comply. Canada and multiple state statutes and regulations where we intend to conduct operations require permits for drilling operations, drilling bonds and reports concerning wells. Such jurisdictions also have statutes and regulations governing conservation matters, including the unitization or pooling of oil and gas properties and establishment of maximum rates of production from oil and gas wells.

 

Some risk of costs and liabilities related to environmental, health and safety matters is inherent in our operations, as it is with other companies engaged in similar businesses, and there can be no assurance that material costs or liabilities will not be incurred. In addition, it is possible that future developments, such as stricter requirements of environmental or health and safety laws and regulations affecting our business or more stringent interpretations of, or enforcement policies with respect to, such laws and regulations, could adversely affect us. To meet changing permitting and operational standards, we may be required, over time, to make site or operational modifications at our facilities, some of which might be significant and could involve substantial expenditures. There can be no assurance that material costs or liabilities will not arise from these or additional environmental matters that may be discovered or otherwise may arise from future requirements of laws in the United States and Canada.

 

Number of Total Employees and Number of Full-time Employees

 

At December 31, 2014, the Company had four (4) full time employees. From our inception through the period ended December 31, 2014, we have relied on the services of outside consultants for services in addition to from one (1) to five (5) full-time employees. In order for us to attract and retain quality personnel, we anticipate we will have to offer competitive salaries to future employees. As we continue to expand, we may incur additional costs for personnel and consultants. This projected increase in personnel is dependent upon our generating revenues and obtaining sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees. None of our employees are covered by collective bargaining agreements, and we believe our relations with our employees are favorable.

 

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ITEM 1A. RISK FACTORS

  

An investment in our common stock is speculative and involves a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in our reports filed with the Securities and Exchange Commission, including the consolidated financial statements and notes thereto of our company, before deciding to invest in our common stock. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we presently consider immaterial may also adversely affect our company. If any of the following risks occur, our business, financial condition and results of operations and the value of our common stock could be materially and adversely affected.

 

RISKS RELATED TO OUR COMPANY

 

Risk Factors

 

Loss of Investment Company Act Exclusion Would Adversely Affect Our Business

 

Surge currently relies on section 3(c)(9) of the Investment Company Act of 1940 (“1940 Act”) to avoid federal registration and regulation as an investment company. Section 3(c)(9) excludes from the 1940 Act’s definition on investment company “[a]ny person substantially all of whose business consists of owning or holding oil, gas, or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts related to such mineral royalties or leases, or fractional interests therein relative to such royalties, leases, or fractional interests.”

 

Any future failure by Surge to qualify for the section 3(c)(9) exclusion, or any other exemption or exclusion from the 1940 Act or the rules there under, could cause Surge to be required to register with the U.S. Securities and Exchange Commission as an investment company under the 1940 Act or to reorganize its business so as to avoid such registration and regulation. Regulation and registration as an investment company under the 1940 Act and the rules there under would, among other things, prevent Surge from conducting its business as described herein and would create additional expenses and divert management time.

 

We will need additional financing to carry out our business plans and to finance our future operations.

 

We have a history of net losses and expect that our operating expenses will continue the need to raise additional financing as we have no revenues. Our business model contemplates expansion of our business by identifying and purchasing or leasing additional oil and gas properties, subject to availability of sufficient cash resources. To make these purchases or leases, our capital needs will increase substantially. We have limited working capital and cash resources to fund our oil and gas exploration operations. We may need to become involved in litigation to preserve our rights, the outcome and legal expense of which could adversely affect our operations and cash resources. We plan to attempt to obtain our future funding that we will need to drill wells on leases owned, to lease additional properties and to otherwise finance our operations through debt and equity markets or joint venture agreements with third parties; however, we can provide no assurances that we will be able to obtain new funding (and/or joint venture partners willing to fund specific exploration projects) when it is required or that it will be available to us on commercially acceptable terms, if at all. If we fail to obtain the financing that we need when it is required, we may have to forego or delay potentially valuable opportunities to acquire new oil and gas properties or default on then existing funding commitments to third parties and forfeit or dilute our rights in any then existing oil property interests. In the event additional financing is not available to us on commercially acceptable terms, if and when needed to finance our operations and to meet our cash needs as they come due, this may seriously harm our business, financial condition and results of operations and may adversely affect our ability to remain a going concern on a long term basis.

 

We may be involved in litigation and other disputes.

 

Our business and operations may subject us to claims, litigation and other proceedings brought by private parties and governmental authorities. Any claim that is successfully asserted against us could result in significant damage claims, legal fees, and other losses. Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which would adversely affect our financial condition, results of operations or cash flows.

 

7
 

 

We do not operate our properties or the entities in which we hold interests and we therefore have no influence over the testing, drilling and production operations of our properties.

 

Our lack of control means:

 

  if an operator refuses to initiate a project, we might be unable to pursue the project;
     
  the operator might initiate exploration or development on a faster or slower pace than we prefer; and
     
  the operator might obtain additional financing which may further dilute our interest in the property as well as trigger additional asset impairment.

 

Any of these events could materially reduce the value of our properties as currently stated in our financial statements.

 

Information in this report regarding our future exploration and development projects reflects our current intent and is subject to change.

 

We do not currently own any new exploration and development projects. Whether we ultimately undertake additional exploration or development projects will depend on the following factors:

 

  availability and cost of capital both by the Company and our planned majority partners;
     
  receipt of additional seismic data or the reprocessing of existing data;
     
  current and projected oil or natural gas prices;
     
  reserve results could be less than our anticipated recovery rate range;
     
  success or failure of activities in similar areas;
     
  changes in the estimates of the costs to complete the projects;
     
  our ability to attract other industry partners to acquire a portion of the working interest to reduce costs and costs and exposure to risks;
     
  decisions of our joint working interest owners and partners; and
     
 

market prices for our oil field assets could change and could vary when the development efforts and subsequent oil field values accrue.

 

We will continue to gather data about projects and it is possible that additional information will cause us to alter our schedule or determine that a project should not be pursued at all. You should understand that our plans regarding our projects might change. Reserve estimates also require numerous assumptions relating to operating conditions and economic factors, including the price at which recovered oil and gas can be sold, the costs of recovery, assumptions concerning future operating costs, severance and excise taxes, development costs and workover and remedial costs, prevailing environmental conditions associated with drilling and production sites, availability of enhanced recovery techniques, an ability to transport oil and gas to markets and governmental and other regulatory factors, such as taxes and environmental laws. For example, a decline in the market price of oil or gas to an amount that is less than the cost of recovery of such oil or gas in a particular location could make production commercially impracticable. The risk that a decline in price could have that effect is magnified in the case of reserves requiring sophisticated or expensive production enhancement technology and equipment, such as some types of heavy oil. Each of these factors, by having an impact on the cost of recovery and the rate of production, will also affect the present value of future net cash flows from estimated reserves.

 

We rely heavily upon reserve, geological and engineering data when determining whether or not to invest in a particular oil and gas property.

 

The reserve, geological and engineering data information that we use in evaluating oil and gas prospects is based on estimates involving a great deal of uncertainty. Different engineers may make different estimates of reserves and cash flows based on the same available data. Reserve estimates depend in large part upon the reliability of available geologic and engineering data, which is inherently imprecise. Geologic and engineering data are used to determine the probability that a reservoir of oil and gas exists at a particular location, and whether oil and/or gas and natural gas are recoverable from a reservoir. Recoverability is ultimately subject to the accuracy of data including, but not limited to, geological characteristics of the reservoir, structure, reservoir fluid properties, the size and boundaries of the drainage area, reservoir pressure, and the anticipated rate of pressure depletion. The evaluation of these and other factors is based on available seismic data, computer modeling, well tests and information obtained from oil or gas produced from adjacent or similar properties, but the probability of the existence and recoverability of reserves is less than 100% and actual recoveries of proved reserves can differ substantially from estimates.

 

8
 

 

Our ability to produce sufficient quantities of oil and gas from our properties may be adversely affected by a number of factors outside of our control.

 

The business of exploring for and producing gas involves a substantial risk of investment loss. Drilling wells involves the risk that the wells may be unproductive or that, although productive, that the wells may not produce oil in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well. Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic due to pressure depletion, water encroachment, mechanical difficulties or other reasons which impair or prevent the production of oil and gas from the well.

 

There can be no assurance that oil and gas will be produced from the properties in which we have interests. In addition, the marketability of any oil and gas that we acquire or discover may be influenced by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. We cannot predict how these factors may affect our business. In addition, the success of our business is dependent upon the efforts of various third parties that we do not control.

 

We rely upon various companies to assist us in identifying desirable oil prospects to acquire and to provide us with technical assistance and services. We also rely upon the services of geologists, geophysicists, chemists, engineers and other scientists to explore and analyze oil prospects to determine a method in which the oil prospects may be developed in a cost-effective manner. In addition, we rely upon the owners and operators of oil drilling equipment to drill and develop our prospects to production or to attract the interest of larger oil field companies. Although we have developed relationships with a number of third-party service providers, we cannot assure that we will be able to continue to rely on such persons. If any of these relationships with third-party service providers are terminated or are unavailable on commercially acceptable terms, we may not be able to execute our business plan.

 

If we are unable to access our properties or conduct our operations due to legal or surface conditions, our business will be adversely affected.

 

Our exploration and development of oil and gas reserves depends upon access to the areas where our operations are to be conducted. We may conduct a portion of our operations in regions where we are only able to do so on a seasonal basis. Unless the surface is sufficiently frozen, we may be unable to access our properties, drill or otherwise conduct our operations as planned. In addition, if the surface thaws earlier than expected, we would have to cease our operations for the season earlier than planned. Our operations may become affected by road bans imposed from time to time during the break-up and thaw period in the spring. Road bans are also imposed due to snow, mud and rock slides and periods of high water, which can restrict access to our well sites and production facility sites. Our inability to access our properties or to conduct our operations as planned could result in a shutdown or slowdown of our operations, which will adversely affect our business.

 

Pipeline capacity may be inadequate.

 

There may be periods of time when pipeline capacity is inadequate to meet our gas transportation needs. It is often the case that as new development comes online, pipelines are close to or at capacity. During periods when pipeline capacity is inadequate, we may be forced to reduce production or incur additional expense as existing production is compressed to fit into existing pipelines.

 

Essential equipment might not be available.

 

Oil and gas exploration and development activities depend upon the availability of drilling and related equipment in the particular areas where those activities will be conducted. Demand for that equipment or access restrictions may affect the availability of that equipment to us and delay our exploration and development activities.

 

9
 

 

Our reliance on third parties for gathering and distribution could curtail future exploration and production activities.

 

The marketability of our oil and or gas production will depend on the proximity of our reserves to and the capacity of third party services and facilities, including oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities. The unavailability or insufficient capacity of these facilities and services could force us to shut-in producing wells, delay the commencement of production, or discontinue development plans for some of our properties, which would adversely affect our financial condition and performance.

 

Our compliance with the Sarbanes-Oxley Act and other Securities and Exchange Commission rules concerning internal controls are time consuming, difficult and costly for us.

 

It may be time consuming, difficult and costly for us to develop and implement provisions of the Sarbanes-Oxley Act applicable to us. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls and other requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly-traded companies to obtain.

 

The loss of key employees would materially adversely affect our ability to operate our business and implement our business plan.

 

Our business operations are presently managed by three key employees, Clark Morton, who serves as our Chief Executive Officer and Ms. Nancy Proano who serves as the Director of Corporate Development and E. Jamie Schloss, who serves as our Chief Financial Officer and a Director of the Company and its wholly-owned subsidiaries. The loss of the services of either of these employees could seriously impair our business operations. All executives are employed on a month to month basis.

 

We do not have key man life insurance on our Chief Executive Officer, Chief Financial Officer, or any of our directors. We can provide no assurances that any officer or director or employee employment will be extended on terms satisfactory to us, if at all, or that qualified replacements can be hired by the Company on reasonable terms.

 

Complying with environmental and other government regulations could be costly and could negatively impact production.

 

Our business is governed by numerous laws and regulations at various levels of government. These laws and regulations govern the operation and maintenance of our facilities, the discharge of materials into the environment and other environmental protection issues. The laws and regulations may, among other potential consequences, require that we acquire permits before commencing drilling, restrict the substances that can be released into the environment with drilling and production activities, limit or prohibit drilling activities on protected areas such as wetlands or wilderness areas, require that reclamation measures be taken to prevent pollution from former operations, require remedial measures to mitigate pollution from former operations, such as plugging abandoned wells and remediating contaminated soil and groundwater, and require remedial measures to be taken with respect to property designated as a contaminated site.

 

Under these laws and regulations, we could be liable for personal injury, clean-up costs and other environmental and damages, as well as administrative, civil and criminal penalties. However, with each of the projects we evaluate, insurance coverage is also evaluated for sudden and accidental environmental damages as well as environmental damage that occurs over time. However, we do not believe that insurance coverage for the full potential liability of environmental damages is available at a reasonable cost. Accordingly, we could be liable, or could be required to cease production on properties, if environmental damage occurs.

 

The costs of complying with environmental laws and regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could occur that result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.

 

10
 

 

The successful implementation of our business plan is subject to risks inherent in the oil and gas business.

 

Our oil and gas operations are subject to the economic risks typically associated with exploration, development production activities and locating suitable purchasers of our properties, including the necessity of significant expenditures to locate, acquire and drill exploratory wells. The cost and timing of drilling, completing and operating wells is often uncertain. In conducting exploration and development activities, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, development and production activities to be unsuccessful. This could result in a total loss of our investment in a particular property. If exploration efforts are unsuccessful in establishing proved reserves and exploration activities cease, the amounts accumulated as unproved costs will be charged against earnings as impairments.

 

Oil and gas operations involve various hazardous risks.

 

The oil and gas business involves operating hazards such as well blowouts, craterings, explosions, uncontrollable flows of crude oil, natural gas or well fluids, fires, formations with abnormal pressures, pipeline ruptures or spills, pollution, releases of toxic gas and other environmental hazards and risks. Personal injuries, damage to property and equipment, reservoir damage, or loss of reserves may occur if such a catastrophe occurs, any one of which could cause us to experience substantial losses. In addition, we may be liable for environmental damage caused by previous owners of properties purchased or leased by us.

 

The oil and gas industry is highly competitive.

 

The oil and gas industry is highly competitive. We compete with oil and gas companies and other individual producers and operators, many of which have longer operating histories and substantially greater financial and other resources than we do, as well as companies in other industries supplying energy, fuel and other needs to consumers. Many of these companies not only explore for and produce crude oil and gas, but also carry on refining operations and market petroleum and other products on a worldwide basis. In addition, we compete with other oil development firms in marketing their properties to other larger oil field operators.

 

Our larger competitors, by reason of their size and relative financial strength, can more easily access capital markets than we can and may enjoy a competitive advantage in the recruitment of qualified personnel.

 

They may be able to absorb the burden of any changes in laws and regulation in the jurisdictions in which we do business and handle longer periods of reduced prices of gas and oil more easily than we can. Our competitors may be able to pay more for productive oil and gas properties and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than we can. Our ability to acquire additional properties in the future will depend upon our availability of cash resources, ability to conduct efficient operations, evaluate and select suitable properties, implement advanced technologies and consummate transactions in a highly competitive environment.

 

Market fluctuations in the prices of oil and gas could adversely affect our business.

 

Prices for oil and gas tend to fluctuate significantly in response to factors beyond our control. These factors include, but are not limited to, acts of terrorists, the continued threat of war in the Middle East and actions of the Organization of Petroleum Exporting Countries and its maintenance of production constraints, the United States. economic environment, weather conditions, the availability of alternate fuel sources, transportation interruption, the impact of drilling levels on crude oil and gas supply, and the environmental and access issues that could limit future drilling activities for the industry. Changes in commodity prices may significantly affect our capital resources, liquidity and expected operating results. Price changes directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.

 

Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture and often cause disruption in the market for oil and gas producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and development and exploration of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

 

Review of Risks Arising from Compensation Policies and Practices

 

We have reviewed our compensation policies and practices for all employees and we concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on the Company, although no assurances can be given in this regard.

 

11
 

 

RISKS RELATED TO OUR STOCK

 

Insiders have substantial control over us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur.

 

Our executive officers, directors, and principal stockholders who hold 5% or more of the outstanding common stock and their affiliates beneficially own a significant percentage of our Company. See “Item 12.” These stockholders are able to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.

 

We do not expect to pay cash dividends.

 

We have not paid cash dividends since inception on our common stock, and we do not contemplate paying dividends in the foreseeable future on our common stock in order to use all of our earnings, if any, to finance expansion of our business plans.

 

Future sales of our common stock may cause our stock price to decline.

 

Our stock price may decline by future sales of our shares or the perception that such sales may occur. If we issue additional shares of common stock in private financings under an exemption from the registration laws, then those shares will constitute “restricted shares” as defined in Rule 144 under the Securities Act. The restricted shares may only be sold if they are registered under the Securities Act, or sold under Rule 144, or another exemption from registration under the Securities Act.

 

Our common stock is subject to the “penny stock” rules of the Securities and Exchange Commission and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

The Securities and Exchange Commission has adopted Rule 15g-1through 15-g100 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions accounts. This provision may also limit the ability to transfer Surge common shares to new or existing brokerage accounts. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

Our stock price can be extremely volatile.

 

Our common stock is traded on the OTC Markets Group (OTCQB) and the Pink Sheets OTC Bulletin Board (OTCBB). There can be no assurance that an active public market will continue for the common stock, or that the market price for the common stock will not decline below its current price. Such price may be influenced by many factors, including, but not limited to, investor perception of us and our industry and general economic and market conditions. The trading price of Surge common stock could be subject to wide fluctuations in response to announcements of our business developments of our competitors, quarterly variations in operating results, and other events or factors. In addition, stock markets have experienced extreme price volatility in recent years. This volatility has had a substantial effect on the market prices of companies, at times for reasons unrelated to their operating performance. Such broad market fluctuations may adversely affect the price of our common stock.

 

Our stock price may decline at such time when we make a distribution of the Andora common stock.

 

All of our outstanding shares of common stock are either free trading or eligible for sale pursuant to Rule 144 in accordance with requirements and the limitation contained therein. We are unable to estimate the amount, timing, or nature of future sales of outstanding common stock. Sales of substantial amounts of our common stock in the public market or a distribution of the Andora common may cause the stock’s market price to decline.

 

12
 

 

If we fail to remain current on our reporting requirements, we could be removed from the OTC Markets Group, we could be subject enforcement action by the Securities and Exchange Commission or we could incur liability to our shareholders.

 

Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under the Securities Exchange Act of 1934, as amended, and must be current in their reports in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. Failure to remain current in our reporting obligations might also subject us to enforcement action by the Securities and Exchange Commission or private rights of action by our shareholders.

 

For any transaction involving a penny stock, unless exempt, the rules require:

 

   that a broker or dealer approve a person’s account for transactions in penny stocks; and
     
  the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
     
   obtain financial information and investment experience objectives of the person; and
     
  make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

 

  sets forth the basis on which the broker or dealer made the suitability determination; and
     
  that the broker or dealer received, prior to the transaction but after a waiting period of at least two business days, a signed acknowledgement of the suitability determination from the investor and an agreement from the investor to purchase the penny stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

ITEM 2.PROPERTIES

 

Our principal executive officer is presently located at 75-153 Merle Drive, Suite B, Palm Desert, California 92211. This space was sub-leased on May 1, 2011 and the current rental is $250.00 per month on a month to month basis. Our facilities are in good condition for their intended use as offices and are sufficient to meet our present needs.

 

We maintain executive offices at 1110 Brickell Avenue, Suite 317, Miami, FL 33131. The lease is for a term of two years from the lease date of July 1, 2013 at a monthly rental of $2,750.00 per month.

 

We commenced oil and gas exploration activities in February 2005. However, we did not engage in any production activities in the fiscal year ended December 31, 2014. We do not have proved reserves at the end of such periods, and thus, were not required to provide any of the production data required by ASC 932 (formerly Statement of Financial Accounting Standards No. 69. We did not engage in drilling activities during the fiscal years ended December 31, 2014 but did so in 2013 applicable to ASC 932. Previously, we did commence drilling activities in 2008 but none of the properties were proved as of December 31, 2014 and had been written off in both current and prior years.

 

Undeveloped acreage is considered to be those lease acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether or not that acreage contains proved reserves, but does not include undrilled acreage held by production under the terms of a lease. As is customary in the oil and gas industry, we can generally retain our interest in undeveloped acreage by drilling activity that establishes commercial production sufficient to maintain the leases or by paying delay rentals during the remaining primary term of such a lease.

 

13
 

 

We do not have any obligations under existing contracts or agreements calling for the provision of fixed and determinable quantities of oil and gas over the next three years, and have therefore not filed any information or reports with any federal authority or agency, containing estimates of total, proved developed or undeveloped net oil or gas reserves.

 

ITEM 3. LEGAL PROCEEDINGS

 

The Company’s business and operations may subject the Company to claims, litigation and other proceedings brought by private parties and governmental authorities. The Company has in the past been involved in contract and indemnity disputes in several litigation matters. Currently there is no ongoing litigation. Litigation can involve complex factual and legal questions and its outcome is uncertain. Any claim that is successfully asserted against us could result in significant damage claims and other losses and could adversely affect our financial condition. Even if the Company were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which adversely affect our financial condition, results of operations or cash flows.

 

There are currently no litigation matters pending.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

 

Market for Common Stock

 

Our common stock is quoted dually on the OTC Bulletin Board (OTCBB) and the OTC Markets Group (OTCQB) under the trading symbol “SRGG.” The following table sets forth the high and low bid prices for our common stock for the periods indicated. Such quotations are taken from information provided by “Yahoo! Finance” and reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.

 

Quarter Ended  High   Low 
December 31, 2014  $0.21   $0.10 
September 30, 2014  $0.80   $0.11 
June 30, 2014  $0.25   $0.12 
March 31, 2014  $0.18   $0.12 
December 31, 2013  $0.24   $0.06 
September 30, 2013  $0.35   $0.05 
June 30, 2013  $0.35   $0.16 
March 31, 2013  $0.32   $0.08 

 

American Stock Transfer Co. & Trust Company (6201 15th Avenue, New York, NY 11219) is the transfer agent for our common shares.

 

As of March 31, 2015, we had 15,214,673 shares of common stock outstanding (adjusted for the reverse 1 for 20 stock split which occurred on February 22, 2013) and approximately 1,000 stockholders of record.

 

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Sale of Unregistered Securities

 

During the years ended December 31, 2014 and 2013 there were no sales of securities by the Company, except as follows:

 

Date of Sale   Title of Security  

Number

Sold

  Consideration
Received,
Commissions
  Purchasers  

Exemption

Claimed from

Registration

2014        
January, 2014   Common Stock     400,000 shares   $175,000 received from one Investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

                     
March, 2014   Common Stock   650,000 shares   $250,000 received from one Investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

                     
April, 2014   Common Stock   250,000 shares   $150,000 received from one Investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

                     
August, 2014   Common Stock   500,000 shares   $262,500 received from one Investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

                     
2013                    
March, 2013   Common Stock   3,216,725 shares   $100,000 received from two Investors; no commissions were paid.   Accredited Investors   Rule 506: Section 4(2)
                     
June, 2013   Common Stock and warrants   200,000 shares and 200,000 warrants   $100,000 received from one Investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

                     

September,

2013

  Common Stock and warrants   500,000 shares and 500,000 warrants   $252,000 gross proceeds from one investor; no commissions were paid.   Accredited Investor  

Rule506;

Section 4(2)

                     
October, 2013   Common Stock and warrants   200,000 shares and 200,000 warrants   $200,000 received from one investor; no commissions were paid.   Accredited Investor  

Rule 506;

Section 4(2)

 

Note: All of the above figures shown are after the reverse stock split which occurred on February 22, 2013.

 

Dividend Policy

 

We have never declared or paid dividends on our common stock, except for the distribution of the shares of Surge Holding Co (or Andora), we do not anticipate that we will do so in the foreseeable future. We intend to retain future earnings, if any, for use in our operations and the expansion of our business.

 

Repurchase of Securities

 

During fiscal 2014, the Company did not repurchase any of its securities.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not Applicable.

 

15
 

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion of our financial condition, changes in financial condition and results of operations for the fiscal years ended December 31, 2014 and December 31, 2013, should be read in conjunction with the audited annual financial statements and the notes thereto. The Company began implementing plans to establish an oil and gas development business in 2005, which plans have not been successful to date. As a result, the Company has not generated any revenues and has incurred significant operating expenses. Our consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”), although we have interests in Canadian companies.

 

Overview

 

For the year ended December 31, 2014, we had a net loss from operations of $861,213 versus a net loss from operations of $911,432 in 2013, a decrease in operating losses of $50,219. The net loss from operations in 2014 included an impairment of oil and gas properties of $49,798 versus an impairment of $200,000 in 2012. Our total comprehensive loss for the year ended December 31, 2014 was $999,904 versus a comprehensive loss of $1,015,450 in 2013, a decrease of $15,546. This decrease was composed primarily of the net decrease in oil and gas impairment of $150,202 from 2014 to 2013, and an increase in operating losses excluding the impairment of $99,983. Included in the 2014 comprehensive loss was an unrealized loss of our Andora investment in the amount of $138,691 to reflect market conditions, compared with an unrealized loss of $104,018 in 2013.

 

The Company continues to seek additional capital and to utilize its assets to fund its operations, but there can be no assurance that we will be able to raise additional working capital or complete other financings in the future. These losses are described in detail in the “Notes to the Consolidated Financial Statements” and are briefly summarized above in “Item 1 Business.”

 

In 2015, our primary financial focus will be to conclude a major oil and gas acquisition, reduce operating expenses, realize value from our remaining assets in order to position Surge to take advantage of oil and gas and other business opportunities, and raising additional financing to meet our cash liquidity and capital resource needs as they arise through the sale of common stock, debt and/or other convertible securities.

 

Results of Operations

 

For the year ended December 31, 2014, we had a net loss from operations of $861,213 versus a net loss in 2013 of $911,432, a decreased loss of $50,219. The net loss per common share was $0.06 in 2014 versus a loss of $0.08 per share in 2013.

 

The Company had operating revenues in the year ended December 31, 2014 of $145 versus $2,387 in 2013. We also had an impairment of oil and gas and related investments of $49,798 in 2014 versus an impairment of oil and gas properties of $200,000 in 2013, a decrease of $150,202.

 

Selling general and administrative expenses for the year ended December 31, 2014 were $806,159 compared to $711,038 in 2013, an increase of $95,121. Included within this $95,121 increase were an increase of officer and employee salaries to $454,611 in 2014 from $278,500 in 2013, an increase of $176,111; a decrease of $81,959 in legal fees due to reduced litigation expense; an increase of travel and entertainment expenses of $57,899; a decrease of placement fees of $30,000; an increase of $1,500 of accounting and audit fees; an increase of rent expense of $20,584; a decrease in the impairment of oil & gas properties to $49,798 in 2014 from $200,000 in 2013, a decrease of $150,202, an increase in warrant expense of $12,450 in 2014 from$0 in 2013, less and other expenses of $6,800. Depreciation and amortization increased to $4,397 in 2014 from $1,447 in 2013, an increase of $2,950.

 

Net interest expense in 2014 was $918 versus interest expense of $425 in 2013, an increase of $493.

 

The net cash flow deficit from operating activities in 2014 was $883,312 versus cash used in operating activities of $618,527 in 2013, an increased deficit from operating activities of $269,785. The increased deficit consisted primarily of a net loss of $861,213 in 2014 versus a net loss of $911,432 in 2013. Non-cash items included in the 2014 loss were an impairment of oil and gas properties of $49,798 and compared with an impairment of oil and gas properties of $200,000 in 2013, and $12,450 in warrant expense in 2014 with no comparable cost in 2013.

 

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The net cash flow provided in financing activities of $854,950 in 2014 consists of the Company receiving proceeds from the sale of common stock of $552,000. In 2013, proceeds from the sale of common stock were $552,000 less $100,000 of common stock subscribed and $393,000 from a reduction in the investment obligation.

 

The net decrease in cash in 2014 was $36,362 compared with a decrease in net cash in 2013 of $29,020.

 

We have a history of net losses and expect that our operating expenses will require additional financing as we have no revenues. Our business model contemplates expansion of our business by identifying and acquiring additional oil and gas properties or other business opportunities, subject to availability of sufficient cash resources. To make these acquisitions, our capital needs will increase substantially. We have limited working capital and cash resources to fund our oil and gas exploration operations. While we are not presently involved in litigation, any future litigation would result in legal expenses which could adversely affect our operations and cash resources. We plan to attempt to obtain our future funding to lease additional properties and to otherwise finance our operations through debt and equity markets or joint venture agreements with third parties; however, we can provide no assurances that we will be able to obtain additional funding (and/or joint venture partners willing to fund specific exploration projects) when it is required or that it will be available to us on commercially acceptable terms, if at all. If we fail to obtain the financing that we need when it is required, we may have to forego or delay potentially valuable opportunities to acquire new oil and gas properties or default on existing funding commitments to third parties and forfeit or dilute our rights in existing oil property interests. In the event additional financing is not available to us on commercially acceptable terms, if and when needed to finance our operations and to meet our cash needs as they come due, this may seriously harm our business, financial condition and results of operations and may adversely affect our ability to remain a going concern on a long term basis. See “Risk Factors” under “Item 1.A.”

 

Number of Employees

 

From our inception through the period ended December 31, 2014, we have primarily relied on the services of outside consultants for services. In order for us to attract and retain quality personnel, we anticipate we will have to offer competitive salaries to future employees. As of December 31, 2014, we had four full-time employees and we anticipate no increase in our administrative employment base during the next 12 months at the present time until we complete a major acquisition. In the event that we expand our oil and gas operations, we will incur additional cost for oil and gas related personnel. This projected increase in personnel is dependent upon our generating revenues and obtaining sources of additional financing.

 

There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund a projected increase in the number of employees.

 

None of our employees are covered by collective bargaining agreements, and we believe our relations with our employees are favorable.

 

Critical Accounting Policies and Estimates

 

Our discussion and analysis of our financial condition and results of operation are based upon consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The following summarizes several of our critical accounting policies. See a complete list of significant accounting policies in Note A to the Consolidated Financial Statements.

 

Acquisition or Disposition of Plant and Equipment

 

None.

 

Oil and Gas Properties

 

We follow the full cost accounting method to account for the costs incurred in the acquisition, exploration, development and production of oil and gas reserves. All costs, including internal costs, directly related to acquisition, exploration and development activities, are capitalized as oil and gas property costs. The capitalized costs of oil and gas properties, excluding unevaluated or unproven properties, are amortized using a unit-of-production method based on estimated proved recoverable oil and gas reserves.

 

17
 

 

Amortization of unevaluated property costs begins when the properties become proved or their values become impaired. Impairment of unevaluated prospects is assessed based on management’s intention with regard to future exploration and development of individually significant properties and our ability to obtain funds to finance such exploration and development. We anticipate our unevaluated property costs to remain as unevaluated for no longer than two years.

 

Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the “cost ceiling”) equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current economic and operating conditions, discounted at 10%, plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to earnings.

 

Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that additional impairments of oil and gas properties could occur. In addition, it is reasonably possible that additional impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves.

 

Impairment of Long-Lived Assets

 

Long-lived assets and certain identifiable intangibles held and used by us are reviewed for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Events relating to recoverability of Long-lived assets may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. We evaluate the recoverability of Long-Lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

Inflation

 

Management believes that inflation has not had a material effect on our operations.

 

Product Research and Development

 

We do not anticipate incurring any research and development during the next twelve months.

 

New Accounting Pronouncements

 

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed these rules and releases and does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its consolidated results of operations, financial position or cash flow.

 

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915), which includes those in exploration stage. The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard.

 

18
 

 

Off Balance Sheet Arrangements

 

We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.

 

Stock Based Compensation

 

We measure and recognize compensation expense for all share-based payment awards made to employees and directors including employee stock options based on estimated fair values.

 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

 

ITEM 7A.Market Risk

 

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, stock and commodity prices. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure, except that we own equity securities in a private company held for long term investment and we hold equity securities in a publicly traded company whose value is marked to market on a quarterly basis. Our primary exposure to market risk is interest rate risk associated with our short term money market investments and the market price risk of our publicly traded investments, if any. The Company does not have any credit facilities with variable interest rates.

 

19
 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The report of the Independent Registered Public Accounting Firm, Financial Statements and Schedules are set forth beginning on page F-1 of this Annual Report on Form 10-K following this page.

 

SURGE GLOBAL ENERGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

    Page No.
     
Reports of Independent Registered Public Accounting Firms   F-2
     
Consolidated Balance Sheets at December 31, 2014 and December 31, 2013   F-3
     
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2014 and December 31, 2013   F-4
     
Consolidated Statements of Shareholders’ Equity (Deficit) for the period from January 1, 2013 through December 31, 2014   F-5
     
Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013   F-6 - F-7
     
Notes to Consolidated Financial Statements   F-7 - F-17

 

F-1
 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Stockholders of

Surge Global Energy, Inc.

 

We have audited the accompanying consolidated balance sheets of Surge Global Energy, Inc. as of December 31, 2014 and December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Surge Global Energy, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 
Messineo & Co., CPAs, LLC  
Clearwater, Florida  
March 30, 2015  

 

F-2
 

 

SURGE GLOBAL ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

 

   December 31, 2014   December 31, 2013 
ASSETS          
Current assets:          
Cash and cash equivalents  $25,159   $61,521 
Accounts Receivable   -    105 
Prepaid expenses   12,638    18,026 
Total current assets   37,797    79,652 
           
Property and equipment of $49,368 and $36,345, net of accumulated depreciation of $42,189 and $37,792, respectively   7,179    11,576 
Oil & Gas Properties, net of $250,470 and $200,586 of accumulated amortization, respectively   -    41,884 
Investment in Andora Energy (Note 2)   1,490,923    1,629,614 
Security Deposit   5,000    - 
           
Total assets  $1,540,899   $1,767,726 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities  $49,932   $144,255 
Investment Obligation   -    393,000 
           
Total current liabilities   49,932    537,255 
           
Total liabilities   49,932    537,255 
           
Commitments and contingencies   -    - 
           
Stockholders’ equity:          
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized:   -    - 
Series A - none issued and outstanding   -    - 
Series B - none issued and outstanding   -    - 
Special Voting Preferred - none issued and outstanding   -    - 
Common stock, par value $0.001 per share; 400,000,000 shares authorized; 14,764,673 and 12,919,673 shares issued and outstanding, respectively   14,765    12,920 
Additional paid-in capital   56,846,764    55,588,209 
Accumulated other comprehensive income (deficit)   (242,709)   (104,018)
Retained deficit   (55,127,853)   (54,266,640)
Total stockholders’ equity   1,490,967    1,230,471 
           
Total liabilities and stockholders’ equity  $1,540,899   $1,767,726 

 

See the accompanying footnotes to these consolidated financial statements

 

F-3
 

 

SURGE GLOBAL ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

   For the Year Ended
December 31,
 
   2014   2013 
Revenues and Cost of Sales:          
Revenues   145   $2,387 
Cost of sales   (86)   (697)
Gross profit   59   $1,690 
           
Operating expenses:          
Selling, general and administrative expenses  $806,159    711,038 
Accretion, depreciation and amortization   4,397    1,659 
Oil and gas property impairment   49,798    200,000 
Total operating expenses   860,354    912,697 
           
Loss from operations   (860,295)   (911,007)
Interest income (expense)   (918)   (425)
    -      
Loss from continuing operations, before income taxes and minority interest   (861,213)   (911,432)
Benefit (provision) for income taxes   -      
Income (loss) before non-controlling interest   (861,213)   (911,432)
Income (loss) applicable to non-controlling interest   -      
Net income (loss)   (861,213)   (911,432)
Other comprehensive income (loss):          
Unrealized gain (loss) on available for sale securities   (138,691)   (104,018)
    -      
Comprehensive income (loss)  $(999,904)  $(1,015,450)
           
Income (loss) per common share - basic and diluted  $(0.06)  $(0.08)
           
Weighted average shares outstanding - basic and diluted   13,944,399    11,546,225 

 

See the accompanying footnotes to these consolidated financial statements

 

F-4
 

 

SURGE GLOBAL ENERGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

FOR THE PERIOD FROM JANUARY 1, 2013

THROUGH DECEMBER 31, 2014

 

NOTE: The amounts of common shares shown hereafter have been restated for 2011 and 2012 for the reverse stock split which occurred on February 22, 2013.

 

   Common
Stock
   Common
Stock
amount
   Additional
Paid-In
Capital
   Common
Stock
subscribed
   OCI
Adjustment
   Accumulated
deficit
   Net
Shareholders’
Equity
 
Balance at December 31, 2012   8,802,958   $8,803   $55,040,326   $100,000   $-   $(53,385,208)  $1,793,921 
                                    
Adjustment from reverse split   89    -                        - 
                                    
Issuance of common shares to investors   900,000    900    451,100                   452,000 
                                    
Issuance of common shares to related parties   3,216,715    3,217    96,783                   100,000 
                                    
Common Stock Subscribed                  (100,000)             (100,000)
                                    
OCI adjustment                       (104,018)        (104,018)
                                    
 Net Loss                       -    (911,432)   (911,432)
                                    
Balance at December 31, 2013   12,919,673   $12,920   $55,588,209    -   $(104,018)  $(54,266,640)  $1,230,471 
                                    
Issuance of common shares to investors   1,800,000    1,800    1,237,700                   1,238,500 
                                    
Share based compensation   45,000    45    9,405                   9,450 
                                    
Warrant Expense             12,450                   12,450 
                                    
OCI adjustment                       (138,691)        (138,691)
                                    
Net Loss                            (861,213)   (861,213)
                                    
Balance at December 31, 2014   14,764,673   $14,765   $56,846,764   $-   $(242,709)  $(55,127,853)  $1,490,967 

 

See the accompanying footnotes to these consolidated financial statements

 

F-5
 

 

SURGE GLOBAL ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   December 31, 2014   December 31, 2013 
Cash flows from operating activities:          
Net loss  $(861,213)  $(911,432)
           
Adjustments to reconcile net loss to net cash used in operating activities:          
Accretion, depreciation and amortization   4,483    2,033 
           
Impairment of oil and gas properties   49,798    200,000 
Stock based compensation   9,450    - 
Warrant expense   12,450    - 
           
Changes in operating assets and liabilities:          
Accounts receivable and other receivables   105    (105)
Prepaid expenses   5,388    (9,125)
Security deposit and other assets   -    (5,000)
Accounts payable and accrued liabilities   (94,323)   105,012 
           
Net cash received in operating activities  $(873,862)  $(618,527)
Cash flows from investing activities:          
Purchases of property and equipment        (13,023)
Purchase of oil & gas properties   (8,000)   (242,470)
           
Net Cash provided (used) in investing activities   (8,000)   (255,493)
           
Cash flows from financing activities          
Proceeds from sales of common stock   1,238,500    552,000 
Common stock subscribed        (100,000)
Proceeds from investing obligation   (393,000)   393,000 
           
Total Cash flows from financing activities  $845,500    845,000 
           
Net increase (decrease) in cash and cash equivalents   (36,362)   (29,020)
Cash and cash equivalents at the beginning of the period   61,521    90,541 
Cash and cash equivalents at the end of the period  $25,159   $61,521 

 

See accompanying footnotes to these unaudited consolidated financial statements

 

F-6
 

 

SURGE GLOBAL ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

 

   For the years ended
December 31,
 
   2014   2013 
Supplemental Disclosures of Cash Flow Information:          
Cash paid during the period for interest  $918   $425 
Cash paid during the period for income taxes   -    - 
           
Supplemental Disclosures of Non-Cash Transactions:          
Unrealized loss (gain) on available for sale securities  $(138,691)  $(104,018)
Repayment and proceeds of equity obligation, respectively  $(393,000)  $393,000 

 

See accompanying notes to these unaudited consolidated financial statements.

 

F-7
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows.

 

Business and Basis of Presentation

 

The consolidated financial statements include the accounts of Surge Global Energy, Inc., its wholly owned subsidiaries, Cold Flow Energy ULC, 1294697 Alberta Ltd., and Surge Holding Co., (collectively the “Company”). Neither 1294697 Alberta Ltd., nor Surge Holding Co., has any ongoing business operations at this time.

 

The Company’s Canadian subsidiaries are carried in their Canadian dollar functional currency and are presented in U.S. dollars upon consolidation. Any gain or loss on conversion into U.S. dollars is reflected in other comprehensive income. All amounts stated in these financial statements are in $US unless otherwise noted.

 

In January 2005, the Company began implementing plans to establish an oil and gas development business. As a result, the Company is an exploration stage enterprise, as defined by ASC 915 (formerly Statement of Financial Accounting Standards No. 7 (“SFAS 7”)) and is now seeking to explore the acquisition and development of oil and gas properties in the United States and Canada. From its inception of exploration stage through the date of these financial statements, the Company has not generated any revenues from oil and gas operations and has incurred significant operating expenses. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise.

 

Management Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates.

 

Oil and Gas Properties

 

The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income.

 

The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized using the units-of-production method based on estimated proved recoverable oil and gas reserves. Amortization of unevaluated and unproved property costs begins when the properties become proved or their values become impaired. Impairment of unevaluated and unproved prospects is assessed periodically based on a variety of factors, including management’s intention with regard to future exploration and development of individually significant properties and the ability of the Company to obtain funds to finance such exploration and development.

 

Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the “cost ceiling”) equal to the sum of (a) the present value of future net cash flows from estimated the production of proved oil and gas reserves, based on current economic and operating conditions, discounted at 10%, plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to earnings.

 

F-8
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)

 

Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that additional impairments of oil and gas properties could occur. In addition, it is reasonably possible that additional impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves.

 

Investment in unconsolidated subsidiary

 

Investee entities that the Company can exercise significant influence, but not control, are accounted for under the equity method of accounting. Whether the Company exercises significant influence with respect to an investee depends on an evaluation of several factors, among others, representation of the Company’s board of directors and ownership level, generally 20% to 50% interest in the voting securities of the company including voting rights associated with the Company’s holdings in common, preferred and other convertible instruments in the company. Under the equity method of accounting, the Company’s share of the earnings or losses of these companies is included in the equity income (loss) section of the consolidated statements of operations. A loss in value of an investment that is other than a temporary decline is recognized as a charge to operations. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. The Company had no unconsolidated subsidiaries in which it held equity interests of over 20% as of December 31, 2014 or 2013.

 

Cash Flow Reporting

 

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.

 

Cash and Cash Equivalents

 

For purposes of the Balance Sheet and Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. The Company had total cash of $25,159 in cash in an account maintained by at a U.S. bank at December 31, 2014, all of which is subject to up to $250,000 of FDIC insurance.

 

Fair Value of Financial Instruments

 

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings as reflected in the balance sheets, approximate the fair value because of the short-term maturity of these instruments.

 

Foreign Currency Translation

 

Assets and liabilities in foreign currency are translated at the rates of exchange at the balance sheet date, and related revenue and expenses are translated at average monthly exchange rates in effect during the period. Resulting translation adjustments are recorded as a separate component in stockholders’ equity. Foreign currency transaction gains and losses are included in the statements of operations.

 

F-9
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

 

Going Concern

 

As shown in the accompanying consolidated financial statements, the Company incurred losses from continuing operations of $861,213 and $911,432 for the years ending December 31, 2014 and 2013, respectively. The Company’s cash position as of December 31, 2014 was $25,159 compared with $61,521 at December 31, 2013, a decrease of $36,365. The Company’s current assets, on a consolidated basis, were a deficit of $12,135 compared with a current deficit of $457,603 at December 31, 2013, an improvement of $445,468.

 

The Company concluded negotiations with three private investors in February, 2015 to raise $160,000 in equity financing, which amount was received in 2015and expects additional financing during the remainder of 2015. After the foregoing, management believes it will have sufficient capital resources to meet projected cash flow needs through the next twelve months, although no assurances can be given in this regard.

 

Income Taxes

 

Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be removed or settled. Most of our tax loss carry forwards were cancelled as a result of a change of control which occurred in October, 2012.

 

Marketable securities

 

All investment securities are classified as either as available-for-sale or trading, and are carried at fair value or quoted market prices. Unrealized gains and losses on available-for-sale securities losses are reported as a separate component of stockholders’ equity. Amortization, accretion, interest and dividends, realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are recorded in other income. This evaluation depends on the specific facts and circumstances. Factors that we consider in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for possible recovery in the market value of the investment.

 

Property and Equipment

 

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Depreciation expenses were $4,483 and $2,033 for the years ended December 31, 2014 and 2013, respectively. Maintenance, repairs, and minor renewals are charged against earnings when incurred. Additions and major renewals are capitalized.

 

Stock-Based Compensation

 

The Company measures and recognizes compensation expense for all share-based payment awards made to employees, consultants and directors including employee stock options based on estimated fair values. There was no stock-based compensation expense recognized for the year ended December 31, 2014 or 2013, except that $9,450 in common shares were issued to an employee in 2014 in lieu of each compensation.

 

The Company used the Black-Scholes option-pricing model as its method of valuation for share-based awards granted. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and certain other market variables such as the risk free interest rate.

 

F-10
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

 

Comprehensive Income

 

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company’s other comprehensive income includes unrecognized gains (losses) on available for sale securities and foreign currency translation adjustments.

 

Reclassifications

 

Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation and FASB pronouncements. These reclassifications did not have any effect on comprehensive net income (loss) or shareholders’ equity.

 

Commitments and Contingencies

 

In the normal course of business, the Company may become a party to litigation matters involving claims against the Company. The Company’s management is unaware of any pending or threatened assertions and there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

Subsequent Events

 

See Note 8 for further details on such subsequent events which occurred after December 31, 2014.

 

Recently Issued Accounting Pronouncements

 

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard.

 

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.

 

F-11
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

 

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.

 

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed these rules and releases and does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its consolidated results of operations, financial position or cash flow.

 

NOTE 2 - INVESTMENT IN ANDORA ENERGY CORPORATION

 

On September 19, 2007, Signet completed the proposed business combination of Signet and Andora Energy Corporation (“Andora”). As part of the combination, each of the issued and outstanding shares of Signet common stock was exchanged for 0.296895028 shares of Andora common stock. The Company exchanged its 11,550,000 shares of Signet common stock for approximately 3,429,140 shares of common stock of Andora representing approximately 5.78% of the fully diluted shares of Andora. At that time, 2,349,321 shares of Andora common stock received by the Company were placed in an escrow account pursuant to an agreement with Valiant Trust Company, Andora and Signet. In connection with the Dynamo litigation claim, Andora was entitled to recover a claim of legal fees from the Company pursuant to a judgment of a court of competent jurisdiction and after exhausting all appeals, which only allowed the escrowed shares to be released upon settlement of all claims. Pursuant to the agreement reached between the Company and Andora, all shares were released from escrow to the Company in February, 2010 after payment of 375,000 Andora shares owned by the Company to Andora.

 

During the years ended December 31, 2010 and 2011 the Company issued 16,667 and 16,666 shares of Andora common stock to its Chief Executive Officer in lieu of $20,000 in cash compensation due under his employment agreement.

 

In October, 2012 the Company agreed to issue a total of 308,780 Andora shares and $120,919 in cash to two creditors, one of which was its former Chief Executive Officer and current Chief Financial Officer, E. Jamie Schloss, who received 243,156 shares and $85,668 in cash, in settlement of $234,431 in claims.

 

The Company’s valuation of Andora is based on reserve reports furnished to the Company by Andora which the Company has relied upon in assessing the value of its investment in Andora. Virtually all of these reserves will require alternative methods of production to enable them to be realized as income. Such methods require substantial investment in plant and equipment to be effective. Andora may obtain equity financing in the future to finance its drilling operations and, in that event, the Company may sustain additional dilution to its equity interest in Andora.

 

In October 2012, the Company agreed it would take steps to contribute as promptly as possible 2,889,386 shares of common stock of Andora held by it to its wholly-owned subsidiary, Cold Flow Energy ULC, an Alberta corporation (“Cold Flow”), or a newly-formed wholly-owned subsidiary, Surge Holding Co., a Delaware corporation (either or both, the “Holding Company”). The Buyers and the Company have agreed that the Holding Company and the Andora Shares will not be disposed of by the Company for any purpose until the later of (i) April 30, 2013 or (ii) 180 days after the subsequent closing date (the “Distribution Date”). This restriction on the time period for the disposition of the Andora Shares or of the Holding Company may be waived in the event that the value of the total non-cash assets of the Company exceeds the value of the Andora Shares.

 

F-12
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 2 - ANDORA ENERGY CORPORATION (continued)

 

Three of the Company’s previous directors, Charles V. Sage, Edwin J. Korhonen and E. Jamie Schloss, were appointed directors of the Holding Company and Messrs. Sage and Schloss were appointed officers of the Holding Company. The Buyers and the Company have agreed that such persons shall remain in such roles through the Distribution Date.

 

On the Distribution Date, the Company will distribute the shares of the Holding Company (or the Andora Shares) or a liquidating dividend to the shareholders of the Company other than the Buyers and their affiliates and transferees and any other holders of the Common Stock issued subsequent to the closing dates (including any purchaser of Common Stock of the Company in any private placement subsequent to the closing dates but excluding holders who have obtained shares in the public markets); provided, however, that such a dividend can be paid pursuant to applicable corporate laws and in compliance with all securities laws. The mechanism for such distribution shall be agreed upon between the Company and the majority of the directors of the Holding Company.

 

The distribution will occur as soon as practical after a pending determination of the tax consequences, if any, and the determination of the method of distribution, upon approval of FINRA.

 

At December 31, 2014 the Company owned 2,889,386 Andora shares valued at $1,490,923 (valued at $0.516 per share), which shares are approximately 3% of Andora’s total outstanding common shares on a fully diluted basis.

 

NOTE 3 - CAPITAL STOCK

 

Preferred Stock

 

On March 2, 2007, the Company issued one share of Special Voting Preferred Stock to Olympia Trust Company as trustee pursuant to the Voting and Exchange Trust Agreement. The preferred stock was issued in connection with the acquisition of Peace Oil Corp. The issuance of the preferred stock is exempt from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended. The Special Voting Preferred Stock is not convertible into shares of any other series or class of our capital stock. The one share of Special Voting Preferred Stock referred to herein was cancelled in June 2008.

 

Common Stock

 

On February 22, 2013, the Company approved an increase to the Company’s authorized shares of capital stock to an aggregate of 410,000,000 shares, consisting of 400,000,000 shares of common stock with a par value of $0.001 per share and 10,000,000 shares of preferred stock, pursuant to an amendment to our Certificate of Incorporation.

 

The Company is not currently subject to any contractual arrangements which restrict its ability to pay cash dividends. The Company’s Certificate of Incorporation prohibits the payment of cash dividends on the Company’s Common Stock in excess of $0.05 per share per year so long as any one preferred stock remains outstanding unless all accrued and unpaid dividends on one preferred stock has been set apart and there are no arrearages with respect to the redemption of any preferred stock.

 

In February, 2013 the Company completed a reverse 1 for 20 reverse common stock split and increased the authorized common shares to 400,000,000 from 200,000,000.

 

All figures shown hereafter reflect the reverse common stock split:

 

In 2011, the Company sold a total of 112,500 common shares for total proceeds of $67,500 at $0.60 per share on a past reverse split basis.

 

In January, 2012, the Company issued 8,500 shares of common shares and 8,500 warrants for total proceeds of $5,100. The warrants are exercisable for one year at a price of $1.00 per share.

 

In October, 2012, the Company issued 7,000,000 shares of common stock for total proceeds of $350,000 at $0.05 per share.

 

In June, 2013, the Company issued 200,000 shares of common stock for total proceeds of $100,000.

 

In September, 2013, the Company issued 500,000 shares of common stock for total proceeds of $251,100.

 

F-13
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 3 – CAPITALSTOCK (continued)

 

In October, 2013, the Company issued 200,000 shares of common stock for total proceeds of $100,000.

 

From January 1, 2014 to June 30, 2014, the Company sold 1,800,000 common shares to three accredited investors for total proceeds of $837,500 and converted equity obligations, received in prior year, in the amount of $393,000.

 

In June, 2014, the Company issued 15,000 common shares as employee compensation, valued at fair market value, $3,150.

 

During the period from July 1, 2014 to September 30, 2014, the Company sold 500,000 shares to an accredited investor for total proceeds of $264,300 and the Company issued 22,500 common shares as employee compensation, valued at the fair value at the date of grant, in the amount of $4,725.

 

During the period from January 1, 2015 to March, 2015, the Company sold 450,000 shares to three accredited investors for total proceeds of $270,000.

 

NOTE 4 - INCOME TAXES

 

Reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S. federal income tax rate and state income tax rate to income from continuing operations before income taxes is as follows:

 

   For the Year ended, 
   December 31, 2014   December 31, 2013 
Net Taxable Loss  $(861,000)  $(908,000)
Income tax computed at combined U.S. and state rates (30%)   (258,000)   (270,000)
Permanent differences          
Changes in valuation allowance   258,000    270,000 
Total  $-   $- 

 

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below:

 

   As of December 31, 
   2014   2013 
Deferred tax assets:          
Net operating loss carryforwards  $1,202,000   $4,770,000 
Other tax attributes   -    1,930,000 
Less valuation allowance   (1,202,000)   (6,700,000)
Total  $-   $- 

 

The valuation allowance increased by approximately $840,000 and $361,000 in the years ended December 31, 2014 and 2013 respectively. Internal Revenue Code Section 382 rules may place annual limitations on the Company’s net operating loss carryforward on a change in ownership. The above estimates are based upon management’s decisions concerning certain elections which could change the relationship between net income and taxable income. Management decisions are made annually and could cause the estimates to vary significantly. Deferred taxes are provided on a liability method for taxable temporary differences resulting from reported amounts of assets and liabilities and their tax basis. Deferred tax assets have resulted from the Company’s net operating loss carry-forward, which has been reduced by an equal valuation allowance. Valuation allowance has been established based on the opinion of management that it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

F-14
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 5 - WARRANTS AND STOCK OPTIONS

 

Class A Warrants.

 

Class A Warrants. The following table summarizes the stock purchase warrants outstanding at December 31, 2014. All figures are after the reverse stock split which occurred on February 22, 2013.

 

    Warrants Outstanding   Warrants Exercisable 
Exercise
Prices
   Number
Outstanding
   Weighted
Average
Remaining
Life (Years)
   Weighted
Average
Exercise
Price
   Number
Exercisable
   Weighted
Average
Exercise
Price
 
$0.40    152,500    1.75   $0.40    152,500   $0.40 
 0.55    500,000    1.65    0.55    500,000    0.55 
 0.60    200,000    1.21    0.60    200,000    0.60 
 1.00    1,050,000    3.80    1.00    1,050,000    1.00 
 1.25    175,000    1.06    1.25    175,000    1.25 
Totals or average    2,077,500    3.00   $0.83    1,052,500   $0.86 

 

Transactions involving the Company’s warrant issuance or expiration are summarized as follows:

 

   Number of
Shares
   Weighted Average
Price Per Share
 
Outstanding at December 31, 2012   152,500    0.40 
Granted or exchanged   900,000    1.00 
Exercised   -    - 
Canceled or expired   -    - 
Outstanding at December 31, 2013   1,052,500   $0.91 
Granted   1,225,000    0.85 
Exercised   -    - 
Canceled or Expired   (200,000)   (1.00)
Outstanding at December 31, 2014   2,077,500   $0.83 

 

For the year ended December 31, 2014, the Company issue a total of 1,225,000 which were fully vested at December 31, 2014. The warrants were issued in conjunction with a common stock offerings and no employee or director warrant expense was recorded in 2014. In 2014, $12,450 in warrant expense who recorded for warrants issued to third parties.

 

For the year ended December 31, 2013 the Company issued 900,000 warrants (on a post reverse split basis) which were fully vested at December 31, 2013. The warrants were issued in conjunction with common stock offerings and no warrant expense was recorded in 2013 for these warrants.

 

The warrants had $0 intrinsic value at December 31, 2014.

 

Stock options.

 

No stock options were issued or exercised during the year ended December 31, 2014.

 

All stock options and warrants issued previously were valued using the Black-Scholes option-pricing model. Variables used in the Black-Scholes pricing model for options issued during the year ended December 31, 2011 include (1) discount rate range of 2.21% to 3.03%, (2) option life of 5 years, (3) expected volatility of 63% to 108% and (4) zero expected dividends.

 

No fair value expense was recorded for the twelve months ending December 31, 2014 and 2013 respectively using the Black-Scholes method of option-pricing model for vested options.

 

F-15
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 5 - WARRANTS AND STOCK OPTIONS (continued)

 

Stock options.

 

The following table summarizes the balances of stock options issued to officers and directors outstanding at December 31, 2014. All figures below are after the 1 for 20 reverse stock split which occurred on February 22, 2013.

 

Exercise
Prices
   Number
of shares
Outstanding
   Weighted
Average
Remaining
Contractual
Life (Years)
   Weighted
Average
Exercise
Price
   Actual
Number
Exercisable
   Weighted
Average
Exercise
Price
 
 0.40    115,000    1.75    0.40    115,000    0.40 
      115,000    1.75   $0.40    115,000   $0.40 

 

Transactions involving the Company’s options issuance are summarized as follows:

 

   Number of
Shares
   Weighted
Average Price
Per Share
 
Outstanding at December 31, 2012   115,000   $0.40 
Granted   -    - 
Exercised   -    - 
Canceled or expired   -    - 
Outstanding at December 31, 2013   115,000   $0.40 
Granted   -    - 
Cancelled or expired   -    - 
Outstanding at December 31, 2014   115,000   $0.40 

 

NOTE 6 - LITIGATION MATTERS

 

The Company’s business and operations may subject the Company to claims, litigation and other proceedings brought by private parties and governmental authorities. Currently we are not a party to any pending litigation matters. Litigation can involve complex factual and legal questions and its outcome is uncertain.

 

Any claim that is successfully asserted against us could result in significant damage claims and other losses. Even if the Company were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which adversely affect our financial condition, results of operations or cash flows. The following is a description of our recent prior litigation:

 

There were no current outstanding litigation matters as of December 31, 2014.

 

NOTE 7 - COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

In May, 2011 the Company leased space on a month-to-month basis at 75-153 Merle Drive, Suite B, at a monthly rental of $250 per month.

 

In July, 2013 the Company leased space located at 1110 Brickell Avenue, Suite 317, Miami FL. The terms of the lease are a monthly rental of $2,750 per month for a two year term.

 

F-16
 

 

SURGE GLOBAL ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (continued)

 

Employment Agreements

 

All employees are currently employed on a month to month basis.

 

Consulting Agreements

 

The Company had no outstanding consulting agreements as of December 31, 2014.

 

Subsequent Events:

 

On February 13, 2015, the Company issued 200,000 common shares and 200,000 stock purchase warrants to an accredited investor for $101,800 in cash and $1,800 of administrative expenses.

 

On February 18, 2015, the Company issued 20,000 common shares and 50,000 stock purchase warrants to an accredited investor for $10,600 in cash and $600 of administrative expenses.

 

On February 23, 2014, the Company concluded a $50,000,000 Capital Advisory Agreement with Omega Street Capital LLC. The agreement is for a term of 12 months and may be extended by mutual agreement of the parties. The agreement provided that Omega will utilize its capital markets platform to fund $50,000,000 in two tranches of $5,000,000 from participating equity financing and $4,500,000 from a revolving line of credit.

 

On February 23, 2015, the Company issued 100,000 common shares and 300,000 warrants to an accredited investor for $50,000 in cash and $900 of administrative expenses.

 

On March 13, 2015, the Company issued 100,000 common shares and 200,000 warrants to an accredited investor for $100,000 in cash and administrative of expenses $2,500.00.

 

In February, 2015, the Company entered into an agreement to acquire a 10% interest in Nikoil Energy Limited which agreement should be finalized in the first quarter of 2015.

 

F-17
 

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, Clark Morton, our chief executive officer, and E. Jamie Schloss, our chief financial officer, to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of, E. Jamie Schloss our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon this evaluation, our chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were ineffective and there was a material weakness due to insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements and ineffective controls over period end financial disclosure and reporting processes.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the management is responsible for establishing and maintaining preparation of financial statements for external purposes consistent with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

Our Chief Financial Officer, E Jamie Schloss, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, Mr. Schloss concluded that, as of December 31, 2014, our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner.

 

The material weakness assessed by our management was that (1) we do not have an audit committee which reviews financial matters, and (2) we have not implemented measures that would prevent the chief executive officer and/or our chief financial officer from overriding the internal control system. We do not believe that these control weaknesses have resulted in deficient financial reporting because the chief executive officer and /chief financial officers are aware of their responsibilities under the SEC’s reporting requirements and personally certify our financial reports.

 

Accordingly, while we have identified certain material weaknesses in our system of internal control over financial reporting, we believe we have taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Our management has determined that current resources would be appropriately applied elsewhere and when resources permit, it will address and remediate material weaknesses through implementing various controls or changes to controls. At such time as we have additional financial resources available to us, we intend to enhance our controls and procedures. We will not be able to assess whether the steps we intend to take will fully remedy the material weakness in our internal control over financial reporting until we have fully implemented them and sufficient time passes in order to evaluate their effectiveness.

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal controls over financial reporting, known to the Chief Executive Officer and Chief Financial Officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

20
 

 

ITEM 9B.  OTHER INFORMATION

 

None.

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Board of Directors

 

The following tables and narrative description sets forth, as of March 1, 2015, the age, principal occupation and employment, position with us, directorships in other public corporations, and year first elected as one of our directors, of each person currently serving as a director and officer. Unless otherwise indicated, each director and officer has been engaged in the principal occupation or occupations described below for more than the past five years. We currently have three vacancies on our board of directors.

 

Name   Age   Director Since   Present Position with Surge
Clark Morton   55   2012   Chief Executive Officer, Chairman of the Board
E. Jamie Schloss   71   2008   Chief Financial Officer, Assistant Secretary
William E. Fitzgerald   73   2012   President

 

Clark Morton, Chief Executive Officer and Chairman of the Board

 

Mr. Clark Morton, 55, was elected a director, Chairman of the Board and Chief Executive Officer of the Company on October 18, 2012. With a background in engineering, executive management, marketing and communication Mr. Morton, has been actively involved in the formation of long-term capital growth projects in oil & gas and has served previously in senior director and officer positions involved in the marketing, sales, operations and management of private equity media and entertainment operations. Mr. Morton owns approximately 42.50% of our outstanding common stock and is not independent.

 

E. Jamie Schloss, Chief Financial Officer and Assistant Secretary

 

Mr. E. Jamie Schloss, 71, was a certified public accountant for more than 30 years before joining the board of Directors of Surge Global Energy, Inc. from October, 2004 to July, 2006 and was reappointed to the Surge Board in February, 2008. Mr. Schloss served as Chief Financial Officer of Surge Global from December 2005 to June 2006 and has served as its Chief Executive Officer and Chief Financial Officer from February, 2008 until October, 2012, at which time he resigned as Chief Executive Officer. He continues to serve as the Company’s Chief Financial Officer. Prior to his positions with Surge, Mr. Schloss’ company, Castle Rock Resources, Inc., raised funds and participated in the drilling of more than 20 deep oil & gas wells in Texas, New Mexico, and Louisiana from 1990 to 1995 through joint venture partnerships. In June 1995, Castle Rock and partners sold seven wells in the Townsend (Sublime) Field in south Texas to Weeks Exploration Company for an aggregate of $16,000,000. Castle Rock continues to own and manage a well in south Texas which has been producing oil and gas for more than 18 years. Mr. Schloss has a Juris Doctorate (JD) degree, a B.A. from the University of Pennsylvania, and an MBA equivalent from Pace College in New York City. Mr. Schloss worked as a Certified Public Accountant in California and New Jersey from 1966-1970. Prior to his experience in the oil & gas drilling and exploration business, Mr. Schloss was an executive and officer of several entertainment industry firms including MCA-Universal., Warner Bros. Television Distribution, Western-World Television, and Hal Roach Studios. Mr. Schloss’ extensive business, financial and leadership experience in the oil and gasoline industry particularly qualifies him for service on the Company Board.

 

William E. Fitzgerald, President

 

William E. Fitzgerald, age 73, was elected President of the Company in October, 2012 and to the Board of directors in March, 2013. Mr. Fitzgerald served as President of The Fitzgerald Group for 20 years specializing in commercial/industrial investments and development, commercial income properties and land acquisition which later expanded to private equity funding and management for oil & gas developments primarily throughout Texas. Mr. Fitzgerald began his investment management career in Chicago where he managed trading floor and pit operations with memberships at the Chicago Mercantile Exchange and Chicago Board of Trade. He later maintained memberships at the International Monetary Market and Mid-America Exchange where he formed and ran his own company trading commodities and authored The Fitzgerald Commodity Trading Report. Mr. Fitzgerald became an author with his novel “Arenas of Greed,” a financial thriller depicting corruption on the Chicago Commodity Markets. William E. Fitzgerald is the father of William A. Fitzgerald and the husband of Carol A. Fitzgerald. Mr. Fitzgerald jointly with his wife, Carol Fitzgerald, owns approximately 42.50% of our outstanding common stock and is not independent.

 

21
 

 

There are no family relationships among any of the directors, executive officers or persons nominated to become a director or executive officer except as set forth above.

 

Independence of the Board of Directors

 

An “independent director” defined by Rule 10A-3 under the Securities Exchange Act of 1934. In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of an issuer that is not an investment company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (A) accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer or any subsidiary thereof, provided that, unless the rules of the national securities exchange or national securities association provide otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the listed issuer (provided that such compensation is not contingent in any way on continued service); or (B) be an affiliated person of the issuer or any subsidiary thereof. Accordingly, an independent director may not be an employee of the Company.

 

Consistent with these considerations, after review of all relevant transactions and relationships between each director and each nominee recommended by the Board, or any of his or her family members, and Surge, its senior management and its independent auditors, the Board has determined further that there are currently no independent directors.

 

Executive Sessions of Independent Directors

 

Previously, our non-employee directors meet occasionally in executive sessions where only non-employee directors are present. Persons interested in communicating with the non-employee directors may address correspondence to a particular director or to the non-employee directors generally, in care of Corporate Secretary, Surge Global Energy, Inc., 75-153 Merle Drive, Suite B, Palm Desert, CA 92211.

 

Board Meetings

 

During the fiscal year ended December 31, 2014, the Board held 2 meetings. Each director then in office attended at least 75% of the aggregate total number of meetings of the Board plus the total number of meetings of all committees of the Board on which he served.

 

Corporate Governance

 

Our business, property and affairs are managed by, or under the direction of, our Board, in accordance with the General Corporation Law of the State of Delaware and our By-Laws. Members of the Board are kept informed of our business through discussions with the Chief Executive Officer and other key members of management, by reviewing materials provided to them by management.

 

We continue to review our corporate governance policies and practices by comparing our policies and practices with those suggested by various groups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we have adopted, and will continue to adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company. We have adopted changes and will continue to adopt changes, as appropriate, to comply with the Sarbanes-Oxley Act of 2002 and subsequent rule changes made by the Securities and Exchange Commission and any applicable securities exchange.

 

Director Qualifications and Diversity

 

The board seeks independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the board’s deliberations and decisions. Candidates shall have substantial experience with one or more publicly traded companies or shall have achieved a high level of distinction in their chosen fields. The board is particularly interested in maintaining a mix that includes individuals who are active or retired executive officers and senior executives, particularly those with experience in the natural resource, finance and capital market industries.

 

In evaluating nominations to the Board of Directors, our Board also looks for certain personal attributes, such as integrity, ability and willingness to apply sound and independent business judgment, comprehensive understanding of a director’s role in corporate governance, availability for meetings and consultation on Company matters, and the willingness to assume and carry out fiduciary responsibilities. Qualified candidates for membership on the Board will be considered without regard to race, color, religion, sex, ancestry, national origin or disability.

 

22
 

 

Risk Oversight

 

Enterprise risks are identified and prioritized by management and each prioritized risk is assigned to a board committee or the full board for oversight as follows:

 

Full Board – Risks and exposures associated with corporate governance, and management and director succession planning, strategic, financial and execution risks and other current matters that may present material risk to our operations, plans, prospects or reputation.

 

Audit Committee – Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, investment guidelines and credit and liquidity matters.

 

Committees of the Board

 

The Board has two committees: an Audit Committee, and a Compensation Committee, with the members of each committee indicated below. The entire Board currently acts as the committees.

 

Audit Committee

 

Our Board has adopted a written Audit Committee Charter. There are currently no audit committee members. The functions of the Audit Committee include reviewing and supervising the financial controls of the Company, appointing the Company’s independent registered public accounting firm, reviewing the books and accounts of the Company, meeting with the officers of the Company regarding the Company’s financial controls, acting upon recommendations of the auditors and taking such further actions as the Audit Committee deems necessary to complete an audit of the books and accounts of the Company.

 

The Board has reviewed the definition of independence for Audit Committee members in Rule 10A-3(b) (1) of the Exchange Act and has determined that each member of our Audit Committee is independent under such standards. Each person also qualifies as a “financial expert,” as defined in applicable Securities Exchange Commission rules. The term “Financial Expert” is defined as a person who has the following attributes: an understanding of generally accepted accounting principles and financial statements; has the ability to assess the general application of such principals in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities; an understanding of internal controls and procedures for financial reporting; and an understanding of audit committee functions.

 

Compensation Committee

 

The Company did not have a compensation committee meeting during the year ended December 31, 2014.

 

The Compensation Committee’s functions include making recommendations to the Board regarding compensation matters and determining compensation for the Chief Executive Officer and Chief Financial Officer. In addition, the Compensation Committee administers the Company’s stock plans (if any) and, within the terms of the respective stock plan, determines the terms and conditions of issuances.

 

Our Board has adopted a written Compensation Committee Charter.

 

The Compensation Committee has the central role in determining all aspects of executive compensation. The Compensation Committee makes recommendations to the Board with respect to the overall compensation program for officers, including incentive compensation plans, equity-based plans, severance plans, deferred compensation arrangements, retirement benefits, perquisites and any other compensation programs that primarily benefit officers.

 

The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of the company’s Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”). The Compensation Committee also evaluates the CEO’s performance in light of these goals and objectives. Based on individual and company performance, competitive compensation information and other considerations, the committee makes recommendations on CEO pay for approval by the Board.

 

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The Compensation Committee tracks the total compensation of each Executive Officer by reviewing, at least once a year, tally sheets that summarize the major elements of compensation. In addition, the Compensation Committee is responsible for reviewing and making recommendations to the Board with respect to new or amended broad-based, “qualified” benefit plans and programs and for reporting to the Board annually on succession planning. The Compensation Committee has sole authority for compensating, retaining and terminating outside consultants and advisors who assist the Compensation Committee in performing its responsibilities. The CEO and CFO do provide input and make recommendations to the Compensation Committee. These recommendations are based on various factors including individual contribution and performance, company performance, labor market conditions, complexity and importance of roles and responsibilities, reporting relationships, retention needs and internal pay relationships.

 

Nominating Committee

 

The Board does not currently have a nominating committee.

 

Stockholder Nominations

 

The policy of the Board is to consider properly submitted stockholder nominations for candidates for membership on the Board as described below in the section entitled “Identifying and Evaluating Nominees for Directors” and in our Bylaws. In evaluating such nominations, the Board will address the membership criteria set forth below in the section entitled “Director Qualifications.” Any stockholder nominations proposed for consideration by the Board should include the nominee’s name and qualifications for membership on the Board and other information in accordance with the Company’s Bylaws and should be addressed to:

 

Surge Global Energy, Inc.

75-153 Merle Drive, Suite B

Palm Desert, California 92211

Attn: Clark Morton, Board Chairman

 

Director Qualifications

 

Members of the Board should possess certain core competencies, some of which may include broad experience in business, finance or administration, familiarity with national and international business matters, and familiarity with the oil and gas industry. In addition to having one or more of these core competencies, members of the Board are identified and considered on the basis of knowledge, experience, integrity, diversity, leadership, reputation, and ability to understand our business.

 

Identifying and Evaluating Nominees for the Board

 

The Board utilizes a variety of methods for identifying and evaluating nominees for the Board. However, there are no specific minimum qualifications that the Board requires to be met by a director nominee recommended for a position on the Board, nor are there any specific qualities or skills that are necessary for one or more of our Board to possess, other than as are necessary to meet any requirements under rules and regulations applicable to us. Although the Board does not have a specific policy with respect to the diversity, the Board considers the extent to which potential candidates possess sufficiently diverse skill sets and diversity characteristics that would contribute to the Board’s overall effectiveness. The Board has the duty of regularly assessing the composition of the Board, including the size of the Board, diversity, age, skills and experience in the context of the needs of the Board. In addition, the Board also has the duty of identifying individuals qualified to become members of the Board. Candidates may come to the attention of the Board through current members of the Board, professional search firms, stockholders or other persons. These candidates will be evaluated by the Board and may be considered at any point during the year. As described under the terms above, the Board will consider properly submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the Board. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to the Board.

 

We have previously, and we may in the future, review materials provided by professional search firms or other parties to identify, evaluate and recruit potential director nominees who are not proposed by a stockholder. In addition, a professional search firm may be used to make initial contact with potential candidates to assess, among other things, their availability, fit and major strengths.

 

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Communications with the Board

 

Stockholders may communicate with the Company by writing to Surge Global Energy, Inc., Attention: Corporate Secretary, 75-153 Merle Drive, Suite B, Palm Desert, CA 92211. Communications received from stockholders are forwarded directly to the Board, or to any individual member or members, as appropriate, depending on the facts and circumstances outlined in the communication. The Board has authorized the Secretary of the Company to exclude communications that are patently unrelated to the duties and responsibilities of the Board, such as spam, junk mail and mass mailings. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out by the Secretary pursuant to the policy will be made available to any non-management director upon request.

 

Section 16(a)

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the Securities and Exchange Commission. To our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us by reporting persons, and any written representations made to us by such persons that no other reports were required during the fiscal year ended December 31, 2012, all reports were filed by our executive officers and directors in 2012.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Executive Officers

 

The following table identifies persons who served as our executive officers serving during any part of the fiscal year ended December 31, 2014, the positions they hold or held, and the year(s) in which they served. Our officers are elected by the Board, to hold office until their successors are elected and qualified.

 

Name   Position   Age   Served as Officer
Clark Morton   Chief Executive Officer and Chairman of the Board and Director   55   2012-present
E. Jamie Schloss   Chief Financial Officer, Assistant Secretary and Director   71   2008-present
William E. Fitzgerald   President   73   2012-present
William A. Fitzgerald   Senior Vice President   38   2012 to October, 2014

 

Summary Compensation Table

 

The following table sets forth the overall compensation earned over the fiscal years ended December 31, 2014 and 2013 by (1) each person who served as the principal executive officer of the Company during fiscal year 2014; (2) the Company’s two most highly compensated executive officers as of December 31, 2013 with compensation during fiscal year 2012 of $100,000 or more; and (3) those individuals, if any, who would have otherwise been in included in section (2) above but for the fact that they were not serving as an executive of the Company as of December 31, 2014.

 

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   Fiscal
Year
   Salary/
Fees  ($)
   Restricted
Stock
Awards(1)
   Options
Awards
($)(1)
   Non- Equity  
Incentive Plan  Compensation  ($)
   Non- qualified
Deferred
Compensation
Earnings  ($)
   All Other
Compensation
($) (2)
   Total
 ($)
 
Clark Morton, CEO Officer and Chairman   2014   $114,850    -0-    -0-    -0-    -0-    -0-   $114,850 
    2013   $58,750                            $58,750 
                                         
E. Jamie Schloss,   2014   $59,750    -0-    -0-    -0-    -0-    -0-   $59,750 
Chief Financial Officer   2013   $58,750    -0-    -0-    -0-    -0-    -0-   $58,750 
                                         
William E. Fitzgerald, President   2014   $69,000    -0-    -0-    -0-    -0-    -0-   $69,000 
    2013    57,500                             57,500 

 

Employment Agreements

 

Mr. Morton, Mr. Schloss and Mr. William E. Fitzgerald are employed on a month to month basis.

 

Executive Officer Outstanding Equity Awards At Fiscal Year-End

 

The following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards held by each of our named executive officers that were outstanding as of December 31, 2014 restated for the reverse stock split which occurred on February 22, 2013.

 

Name  Number of Securities Underlying Unexercised Options\(#) Exercisable   Number of Securities Underlying unexercised Options  Unexercisable   Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options (#)   Option Exercise Price  ($)   Option Expiration Date   Number of Shares or Units of Stock  That Have Not Vested  Market Value  of Shares or Units of Stock  That Have Not Vested  Equity Incentive Plan Awards: Market or  Payout Value of Unearned Shares,  Units or Other Rights  That Have Not Vested
E. Jamie Schloss (1)   85,000    -0-    -0-   $0.40    4/22/16  N/A  N/A  N/A
E. Jamie Schloss (1)   30,000    -0-    -0-   $0.40    4/22/16  N/A  N/A  N/A

 

 

 

(1) All options issued previously have fully vested as of January 1, 2013 and are shown on a past reverse split basis.

 

Director Compensation

 

Director compensation is developed by the Compensation Committee in coordination with management and submitted to the entire Board for approval. As of February 12, 2008, all director fees to be paid to members of the Board were eliminated. Accordingly, directors do not presently receive compensation for serving on the Board or on its committees other than the grant of stock options and/or restricted stock awards. Depending on the number of meetings and the time required for the Company’s operations, the Company may decide to compensate its directors in the future.

 

Compensation Table

 

Name and 
Principal Position
  Stock
Awards ($)
     Option
Awards ($) (1)
      Non- Equity
Incentive Plan
Compensation ($) (2)
      Nonqualified
Deferred
Compensation
Earnings ($)
      All Other
Compensation ($)
      Total ($)
None                        
                         
                         

 

Travel Expenses

 

All directors shall be reimbursed for their reasonable out of pocket expenses associated in the normal course of business and if they are asked to with attend the annual meeting. Such amounts are not reflected in the compensation table below.

 

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Equity Compensation Plan Information

 

The following table sets forth information about shares of our common stock that may be issued upon exercise of options under all of our equity compensation plans as of December 31, 2014, adjusted for the 1 for 20 reverse stock split which occurred on February 22, 2013.

 

Plan category  Number of securities
to be  issued upon
exercise of 
outstanding options,
warrants and rights
   Weighted average
exercise  price of
outstanding options,
 warrants and rights
   Number
of securities
remaining available
for future issuance
 
Equity Compensation Program (1)   600,000   $0.40    232,500 

 

 

 

(1) The Company approved a new Equity Compensation Program in September, 2012.

 

Pension Plans

 

We had not sponsored a voluntary qualified 401(k) savings plan or pension plans available to full-time employees in either 2014 or 2013.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

During the fiscal year ended December 31, 2014 was, during such year or prior thereto, none of th e members of the Compensation Committee was an officer or employee of the Company or any of its subsidiaries. During fiscal 2014, no executive officer of the Company served as a director or member of the compensation committee (or other Board committee performing similar functions, or in the absence of such committee, the entire Board) of another entity, one of whose executive officers served as a director or member of the Compensation Committee of the Company.

 

There was no compensation committee meeting in the year ended December 31, 2014.

 

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

As of March 15, 2015, the following persons were directors, nominees, executive officers (each a “Named Executive Officer”), or others with beneficial ownership of five percent or more of our voting securities. The information set forth below has been determined in accordance with Rule 13d-3 under the Exchange Act based upon information furnished to us or to the Securities and Exchange Commission by the persons listed. Unless otherwise noted the address of each of the following persons is c/o Surge Global Energy, Inc., 75-153 Merle Drive, Suite B, Palm Desert, CA, 92211.

 

All shares listed are after the reverse 1 for 20 stock split which occurred on February 22, 2013.

 

Beneficial Owner  Number of
 shares owned
(post reverse split)
   Percentage Owned 
Directors   None    -0- 
Named Executive Officers/Directors          
           
Clark Morton, CEO   5,108,357    34.60%
William E. Fitzgerald, President   5,108,358    34.60%
E. Jamie Schloss, CFO   107,500    0.01%
Directors and officers as a group (4 persons)   10,324,215    58.11%

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Transactions prior to January 1, 2013:

 

For a description of certain relationships and related transactions that occurred prior to fiscal 2013, the Company incorporates by reference Item 13 of its Form 10-K for its fiscal year ended December 31 2012.

 

Transactions with Officers and Directors

 

None.

 

Independence of Directors

 

Reference is made to Item 10 for a definition of independent directors and management’s identification of which directors the board has determined to be independent. The Company had no independent directors at December 31, 2013 or 2014.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

On December 20, 2012, the Company was informed that our registered independent public accountant, Peter Messineo CPA of Palm Harbor, Florida (“PM”), declined to stand for reappointment in that PM had merged the firm into the registered firm of Drake and Klein CPA’s PA as stated below.

 

Also on December 20, 2012, the Company engaged DKM Certified Public Accountants (“DKM”) of Clearwater, Florida, as its new registered independent public accountant. During the year ended December 31, 2011 and 2010 and prior to December 20, 2012 (the date of the new engagement), we did not consult with DKM (or Drake & Klein CPA’s PA regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by DKM, in either case where written or oral advice provided by DKM would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).

 

Audit Fees

 

During fiscal year ended December 31, 2014, we incurred $19,000 in fees to our principal independent accountant for professional services rendered in connection with the audit of our financial statements for fiscal year ended December 31, 2013 and for the review of our financial statements for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014.

 

During fiscal year ended December 31, 2013, we incurred approximately $17,500 in fees to our principal independent accountant for professional services rendered in connection with the audit of our financial statements for fiscal year ended December 31, 2012 and for the review of our financial statements for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013.

 

Audit-Related Fees

 

For the years ended December 31, 2014 and 2013, our principal accountants did not render any audit-related services.

 

Tax Fees

 

For the years ended December 31, 2013 and 2012, our principal accountants did not render any tax services.

 

All Other Fees

 

For the years ended December 31, 2013 and 2012, our principal accountants did not render any other services.

 

Prior to engaging its accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures.

 

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PART IV

  

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

3.1   Certificate of Incorporation filed with the State of Delaware on November 25, 1997, as amended (including Certificate of Merger, filed November 25, 1997, Certificate of Designation, filed February 2, 1998, Certificate of Amendment, filed May 12, 1998, Certificate of Renewal, filed August 20, 2003, Certificate of Amendment, dated August 20, 2003 and Certificate of Amendment, filed September 30, 2004) (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
3.2   Certificate of Amendment to Certificate of Incorporation filed with the State of Delaware on February 22, 2007 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed February 22, 2007)
3.3   Amended and Restated Certificate of Designations, Preferences, Rights and Limitations of Special Voting Preferred Stock filed with the State of Delaware on March 7, 2007 (incorporated herein by reference to Exhibit 3(i).1 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
3.4   Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3(ii).1 to the Company’s Current Report on Form 8-K, filed October 25, 2006)
9.1   Voting Trust Agreement by and among the Company, Northern Alberta Oil Ltd. and Deep Well Oil and Gas (Alberta) Ltd. dated November 15, 2005 (incorporated herein by reference to Exhibit 10.20 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.01   Employment Agreement by and between the Company and David Perez dated November 30, 2004 (incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.02   Sublease by and between the Company and Granite Financial Group dated November 22, 2004 (incorporated herein by reference to Exhibit 10.4 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.03   Farmout Agreement by and among the Company, Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.), Northern Alberta Oil Ltd. and Deep Well Oil & Gas, Inc. dated February 25, 2005 (incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.04   Farmout Amending Agreement by and among the Company, Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.), Northern Alberta Oil Ltd. and Deep Well Oil & Gas, Inc. dated November 15, 2005 (1) (incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.05   Form of Note and Warrant Purchase Agreement by and between the Company and each of Mark C. Fritz, Victor G. Mellul and Irving L. Plaksin dated March 17, 2005 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed March 24, 2005)
10.06   Form of Convertible Note by and between the Company and each of Mark C. Fritz, Victor G. Mellul and Irving L. Plaksin dated March 17, 2005 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed March 24, 2005)
10.07   Form of Warrant by and between the Company and each of Mark C. Fritz, Victor G. Mellul and Irving L. Plaksin dated March 17, 2005 (incorporated by reference to Exhibit 4.3 to the Company’s Report on Form 8-K, filed March 24, 2005)
10.08   Letter Agreements by and between the Company and each of Mark C. Fritz, Victor G. Mellul and Irving L. Plaksin dated July 17, 2005 (incorporated herein by reference to Exhibit 10.10 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.09   Form of Securities Purchase Agreement by and among the Company, Mark Fritz, Chet Idziszek, Gary Vandergrift, Burton Gersh and Irving Plaksin effective as of August 19, 2005, relating to the private placement offering of common stock and warrants for an aggregate purchase price of $300,000 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 25, 2005)
10.10   Form of Warrant by and among the Company, Mark Fritz, Chet Idziszek, Gary Vandergrift, Burton Gersh and Irving Plaksin effective as of August 19, 2005 (incorporated herein by reference to Exhibit 10.12 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.11   Form of Registration Rights Agreement by and among the Company, Mark Fritz, Chet Idziszek, Gary Vandergrift, Burton Gersh and Irving Plaksin effective as of August 19, 2005 (incorporated herein by reference to Exhibit 10.13 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.12   Securities Purchase Agreement by and between the Company and Pawnee Holding Corporation dated October 24, 2005 (incorporated herein by reference to Exhibit 10.14 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)

 

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10.13   Warrant by and between the Company and Pawnee Holding Corporation dated October 24, 2005 (incorporated herein by reference to Exhibit 10.15 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.14    Registration Rights Agreement by and between the Company and Pawnee Holding Corporation dated October 24, 2005 (incorporated herein by reference to Exhibit 10.16 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.15   Form of Subscription Agreement for 7% Convertible Debentures, by and between Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd) and certain purchasers dated November 15, 2005 (incorporated herein by reference to Exhibit 10.17 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.16   Agency Agreement by and among the Company, Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.), and MGI Securities Inc. dated November 15, 2005 (incorporated herein by reference to Exhibit 10.18 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.17   Shareholders Agreement by and among the Company, Leigh Cassidy, Fred Kelly and Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) dated November 15, 2005 (incorporated herein by reference to Exhibit 10.19 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.18   Trust Indenture by and among the Company, Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and Valiant Trust Company dated November 15, 2005 (incorporated herein by reference to Exhibit 10.21 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.19   Registration Rights Agreement by and among the Company and MGI Securities, Inc., as agent to the purchasers of the debentures dated November 15, 2005 (incorporated herein by reference to Exhibit 10.22 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.20   Release and Indemnification Agreement by and between the Company and Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.), dated November 15, 2005 (incorporated herein by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-KSB, filed April 17, 2006)
10.21   Escrow Agreement by and among the Company, Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and Valiant Trust Company, dated November 15, 2005 (incorporated herein by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-KSB, filed April 17, 2006)
10.22   Securities Purchase Agreement by and between the Company and the Zemer Family Trust dated November 16, 2005 (incorporated herein by reference to Exhibit 10.23 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.23   Warrant by and between the Company and the Zemer Family Trust dated November 16, 2005 (incorporated herein by reference to Exhibit 10.24 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.24   Registration Rights Agreement by and between the Company and the Zemer Family Trust dated November 16, 2005 (incorporated herein by reference to Exhibit 10.25 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.25   Securities Purchase Agreement by and between the Company and Benjamin Financial Limited Partnership dated November 30, 2005 (incorporated herein by reference to Exhibit 10.26 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.26   Warrant by and between the Company and Benjamin Financial Limited Partnership dated November 30, 2005 (incorporated herein by reference to Exhibit 10.27 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.27   Registration Rights Agreement by and between the Company and Benjamin Financial Limited Partnership dated November 30, 2005 (incorporated herein by reference to Exhibit 10.28 to the Company’s Registration Statement on Form SB-2, filed December 30, 2005)
10.28   Indenture by and between Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and Valiant Trust Company dated December 20, 2005 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed December 28, 2005)
10.29   Form of 7% Secured Convertible Debentures Certificate dated December 20, 2005 (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed December 28, 2005)
10.30   Form of Subscription Agreement for Flow-Through Shares by and between Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and certain purchasers dated December 20, 2005 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 28, 2005) 

 

30
 

 

10.31   Form of Subscription Agreement for 7% Secured Convertible Debentures by and between Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and certain purchasers dated December 20, 2005 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed December 28, 2005)
10.32   Agency Agreement by and between Signet Energy, Inc. (f/k/a Surge Global Energy (Canada) Ltd.) and MGI Securities, Inc. dated December 20, 2005 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed December 28, 2005)
10.33   Form of Securities Purchase Agreement effective as of March 14, 2006, relating to the private placement offering of common stock and warrants for an aggregate purchase price of $1,800,000 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 23, 2006)
10.34   Form of Warrant, effective as of March 14, 2006, relating to the private placement offering of common stock and warrants for an aggregate purchase price of $1,800,000 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed March 23, 2006)
10.35   Form of Registration Rights Agreement, effective as of March 14, 2006, relating to the private placement offering of common stock and warrants for an aggregate purchase price of $1,800,000 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed March 23, 2006)
10.36   Form of Non-Employee Director Agreement (incorporated herein by reference to Exhibit 10.37 to the Company’s Registration Statement on Form SB-2, filed December 20, 2006)
10.37   Form of Nonstatutory Stock Option Agreement (incorporated herein by reference to Exhibit 10.38 to the Company’s Registration Statement on Form SB-2, filed December 20, 2006)
10.38   Consulting Agreement by and between the Company and Richard Collato dated October 6, 2006 (incorporated herein by reference to Exhibit 10.39 to the Company’s Registration Statement on Form SB-2, filed December 20, 2006)
10.39   Securities Purchase Agreement by and between the Company and each of Gemini master Fund Limited and Mark C. Fritz dated November 28, 2006 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 4,2006)
10.40   Registration Rights Agreement by and between the Company and each of Gemini Master Fund Limited and Mark C. Fritz dated November 28, 2006 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed December 4, 2006)
10.41   Common Stock Purchase Warrants dated November 28, 2006 issued by the Company to each of Gemini Master Fund Limited and Mark C. Fritz (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed December 4, 2006)
10.42   “Greenshoe” Common Stock Purchase Warrants dated November 28, 2006 issued by the Company to each of Gemini Master Fund Limited and Mark C. Fritz (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed December 4, 2006)
10.43   Stock Purchase Agreement among Cold Flow Energy ULC, the Company, Peace Oil Corp., and Shareholders of Peace Oil Corp. dated November 30, 2006 (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed December 4, 2006)
10.44   Employment Agreement between the Company and William Greene dated December 14, 2006 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, filed with the Securities and Exchange Commission on December 18, 2006)
10.45   First Amendment to Stock Purchase Agreement by and among Cold Flow Energy ULC, the Company, Peace Oil Corp., and the shareholders of Peace Oil dated March 2, 2007 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.46   Voting and Exchange Trust Agreement by and among the Company, Cold Flow Energy ULC, and Olympia Trust Company dated March 2, 2007 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.47   Support Agreement by and among the Company, Cold Flow Energy ULC, and 1294697 Alberta Ltd. dated March 2, 2007 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.48   Promissory Note dated March 2, 2007 issued by Cold Flow Energy ULC in the principal amount of CDN$1,500,000 with a maturity date of June 30, 2007 (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed March 8, 2007)

 

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10.49   Promissory Note dated March 2, 2007 issued by Cold Flow Energy ULC in the principal amount of CDN$1,000,000 with a maturity date of July 30, 2007 (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.50   Promissory Note dated March 2, 2007 issued by Cold Flow Energy ULC in the principal amount of CDN$1,500,000 with a maturity date of August 30, 2007 (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.51   Promissory Note dated March 2, 2007 issued by Cold Flow Energy ULC in the principal amount of CDN$1,600,000 with a maturity date of December 31, 2007 (incorporated herein by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.52   Petroleum, Natural Gas and General Rights Conveyance by and among 1304146 Alberta Ltd., Peace Oil Corp., Cold Flow Energy ULC, and the Company dated March 2, 2007 (incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.53   Escrow Agreement by and among Burstall Winger LLP, Peace Oil Corp., the Company, Cold Flow Energy ULC, and 1304146 Alberta Ltd. dated March 2, 2007 (incorporated herein by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.54   Royalty Agreement by and between 1304146 Alberta Ltd. and Peace Oil Corp. dated March 2, 2007 (incorporated herein by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.55   Warrant to purchase 1,000,000 shares of Surge common stock dated March 2, 2007 (incorporated herein by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed March 8, 2007)
10.56   Second Amendment to Stock Purchase Agreement among Cold Flow Energy ULC, the Company, Peace Oil Corp. and the Shareholders of Peace Oil Corp. dated April 16, 2007 (incorporated herein by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K/A, filed May 16, 2007)
10.57   Exchange, Purchase and Amendment Agreement dated as of April 19, 2007 by and between the Company and Gemini Master Fund, Ltd. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed April 25, 2007)
10.58   Convertible Note Due May 1, 2008 Issued to Gemini Master Fund, Ltd. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed April 25, 2007)
10.59   Agreement to Vote dated May 22, 2007 between the Company, Signet Energy, Inc., Andora Energy Corporation and David Perez (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed May 29, 2007)
10.60   Letter Agreement dated June 13, 2007 between the Company, Peace Oil Corp. and North Peace Energy Corp. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 15, 2007)
10.61   Agreement of Purchase and Sale dated as of June 25, 2007 among Peace Oil Corp., North Peace Energy Corp. and the Company (incorporated herein by reference to Exhibit 10.63 to the Company’s Registration Statement on Form SB-2, filed July 3, 2007)
10.62   Addendum to Employment Agreement between William Greene and the Company, dated as of June 29, 2007 (incorporated herein by reference to Exhibit 10.64 to the Company’s Registration Statement on Form SB-2, filed July 3, 2007)
10.63    Stock Option Agreement dated July 17, 2007 between the Company and David Perez (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 23, 2007)
10.64    Stock Option Agreement dated July 17, 2007 between the Company and William Greene (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed July 23, 2007)
10.65    Escrow Agreement dated August 8, 2007 between the Company and Gemini (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed August 10, 2007)
10.66    Redemption Agreement dated August 8, 2007 between the Company and Gemini (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 10, 2007)
10.67    Agreement to Vote dated August 17, 2007 between Signet Energy Inc., Andora Energy Corporation, the Company and David Perez (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB/A, filed March 25, 2008)
10.68   First Supplemental Trust Indenture dated August 17, 2007 between the Company, Signet Energy, Inc., and Valiant Trust Company (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-QSB/A, filed March 25, 2008)

 

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10.69    Addendum to Employment Agreement dated December 31, 2007 by and between the Company and William Greene (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed January 4, 2008)
10.70    Purchase and Sale Agreement dated March 18, 2008, by and among Surge Global Energy, Inc.; Oromin Enterprises, Ltd.; Irie Isle Limited; Cynthia Holdings Ltd.; and Chet Idziszek (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 24, 2008)
10.71    Stock Option Agreement between the Company and Charles V. Sage dated February 27, 2008 and entered into on or about April 10, 2008
10.72    Stock Option Agreement between the Company and Barry Nussbaum dated February 27, 2008 and entered into on or about April 10, 2008
10.73    Stock Option Agreement between the Company and Jeffrey Lewis Bernstein dated February 27, 2008 and entered into on or about April 10, 2008
10.74    Stock Option Agreement between the Company and E. Jamie Schloss dated February 27, 2008 and entered into on or about April 10, 2008.
10.75    Stock Option Agreement between the Company and Kenneth Polin dated March 18, 2008 and entered into on or about April 10, 2008.
10.76    Employment Agreement for E. Jamie Schloss dated as of June 17, 2008. (Incorporated by reference to Form 8-K/A - June 17, 2008 - date of earliest event filed on April 15, 2009)
10.77   Purchase and Sale Agreement dated October 1, 2010, by and between Surge Global Energy, Inc. and David McGuire. (Also included are an Engagement Agreement, Promissory Note, Security Agreement, Form of Stock Option and Non-Competition, Non-Solicitation and Confidentiality Agreement.) Incorporated by reference to Form 8-K - date of earliest event - October 1, 2010.
10.78   Share Purchase Agreement – Purchase of 1,405,145 CFE Preferred Shares owned by Fisher Family Trust (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.79   Share Purchase Agreement – Purchase of 1,905,145 CFE Preferred Shares owned by Stouthearted Family Trust (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.80   Share Purchase Agreement – Purchase of 500,000 common shares of the Registrant from the Fisher Family Trust (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.81   Share Purchase Agreement – Purchase of 1,905,145 CFE Preferred Shares owned by Cairns Family Trust. (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.82   Share Purchase Agreement – Purchase of 806,886 common Shares of the Registrant from the Liu Family Trust. (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.83   Share Purchase Agreement – Purchase of 1,882,732 common Shares of the Registrant from the Ma Family Trust. (Incorporated by reference to the Company’s Form 8-K filed June 23, 2008 - date of earliest event – June 17, 2008)
10.84   Purchase and Sale Agreement dated June 27, 2008 by and among Cold Flow Energy ULC., Peace Oil Corp, and CPO Acquisition Corp. (Incorporated by reference to the Company’s Form 8-K filed July 2, 2008 - date of earliest event – June 27, 2008)
10.85   Complaint filed June 23, 2008 David Perez vs. Surge Global Energy, Inc. (Incorporated by reference to the Company’s Form 8-K filed July 2, 2008 - date of earliest event – June 27, 2008)
10.86   Share Purchase Agreement – Purchase of 500,000 shares owned by Fisher Family Trust. (Incorporated by reference to the Company’s Form 8-K filed July 16, 2008 - date of earliest event – July 11, 2008)
10.87   Amendment to Employment Agreement of E. Jamie Schloss dated November 30, 2010 (Incorporated by reference to this 2010 Form 10-K)

 

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10.89   Settlement Agreement dated February 2, 2010 by and among Surge Global Energy, Inc., 1358026 Alberta Ltd., Signet Energy and Andora Energy Corporation. (Incorporated by reference to Form 8-K dated February 2, 2010 filed with the SEC on February 8, 2010.)
10.90   Consulting Agreement of February 19, 2010 - Jeffrey Bernstein. (Incorporated by reference to Form 8-K - date of earliest event - February 19, 2010 filed with the SEC on February 23, 2010.)
10.91   Consulting Agreement of February 19, 2010 - Barry Nussbaum. (Incorporated by reference to Form 8-K - date of earliest event - February 19, 2010 filed with the SEC on February 23, 2010.)
10.92   Consulting Agreement of February 19, 2010 - Kenneth Polin. (Incorporated by reference to Form 8-K - date of earliest event - February 19, 2010 filed with the SEC on February 23, 2010.)
10.93   Purchase and Sale Agreement dated October 1, 2010, by and between Surge Global Energy, Inc. and David McGuire. (Also included is an Engagement Agreement, Promissory Note, Security Agreement, Form of Stock Option and Non-Competition, Non-Solicitation and Confidentiality Agreement (Incorporated by reference to Form 8-K –date of earliest event - October 1, 2010 filed with the SEC on October 6, 2010
10.94   Rescission Agreement by and among Surge Global Energy, Inc., David McGuire and McGuire Consulting Services, Inc. (Incorporated by reference to Form 8-K - date of earliest event – January 25, 2011 filed with the SEC on January 27, 2011).
10.95   May 5, 2011 Amendment to E. Jamie Schloss Employment Agreement. 
10.96   July 22, 2011 Amendment to E. Jamie Schloss Employment Agreement.
10.97   September 27, 2011 Amendment to E. Jamie Schloss Employment Agreement (Incorporated by reference to Form 8-K - filed with the SEC on September 30, 2011
10.98   Securities Purchase Agreement between the Company and Asher Enterprises, Inc. dated August 17, 2011 but effective as of September 23, 2011 (Incorporated by reference to From 8-K -date of earliest event September 23, 2011) filed with the SEC on September 30, 2011
10.99   Convertible Promissory Note issued to Asher Enterprises, Inc. (Incorporated by reference to From 8-K date of earliest event - August 17, 2011 amended to September 23, 2011, filed with the SEC on September 30, 2011
10.100   Purchase and Assignment Agreement between the Registrant and Gel Properties LLC (Incorporated by reference to Form 8-K filed with the SEC on January 25, 2012)
10.101   Common Stock Purchase Agreement, dated October 16, 2013 with The Fitzgerald Group of Southwest Florida, Inc., a Florida corporation, Clark Morton II, William E. and Carol A. Fitzgerald, jointly as husband and wife, and William A. Fitzgerald. Incorporated by reference to form 8-K filed with the SEC on October 21, 2013
10.103   Schedule 14C under Rule 14c-101, notice to shareholders of an increase in the authorized common shares from 200,000,000 common shares to 400,000,000 shares and a 1 for 20 reverse common stock split.
     
31.1   Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(filed herewith)
31.2   Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(filed herewith)
32.1   Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(filed herewith)
32.2   Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(filed herewith)

 

101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema Document
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed Herewith.

 

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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.

 

SIGNATURE   TITLE   DATE
         
/s/ Clark Morton   Principal Executive Officer and Chairman of the Board   March 31, 2015
Clark Morton        
         
/s/ E. Jamie Schloss   Principal Financial Officer and Assistant Secretary   March 31, 2015
E. Jamie Schloss        
         
/s/ William E. Fitzgerald   President   March 31, 2015
William E. Fitzgerald        

 

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