UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. __)
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| £ | Preliminary Information Statement | |
| £ | Confidential, for Use of the Commission Only (as permitted by Rule 14c- 5(d)(2)) | |
| S | Definitive Information Statement | |
| AMERICAN SANDS ENERGY CORP. |
| (Name of Registrant as Specified in Its Charter) |
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Date Filed: July 30, 2014
AMERICAN SANDS ENERGY CORP.
4760 South Highland Drive
Suite 341
Salt Lake City, UT 84117
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, AUGUST 21, 2014
July 31, 2014
Dear Stockholders:
The 2014 Annual Meeting of Stockholders of American Sands Energy Corp. (the “Company”) will be held in the Snow Basin Room at the Little America Hotel,500 South Main Street, Salt Lake City,Utah, at 11:00 a.m., local time, on August 21, 2014, for the following purposes:
| 1. | The election of five directors to serve on the Company’s board of directors until the next annual meeting of stockholders and until their respective successors are duly elected and qualified; |
| 2. | The ratification of the appointment of Tanner, LLC to serve as the Company’s independent registered public accounting firm for its fiscal year ending March 31, 2015; and |
| 3. | Such other business as may properly come before the annual meeting and any adjournment or postponement of the meeting. |
The close of business on July 25, 2014, has been fixed by our board of directors as the record date for determining the holders of our common voting stock entitled to notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. Each share of common stock is entitled to one vote per share. For ten days prior to the meeting, a complete list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder, for any purpose germane to the annual meeting, during ordinary business hours at 201 S. Main St, Suite 1800, Salt Lake City, UT 84111.
We are not soliciting proxies for this annual meeting. However, all stockholders are welcome to attend the meeting and vote in person.
| By Order of the Board of Directors, | |
| /s/ Daniel F. Carlson | |
| Daniel F Carlson | |
| Secretary |
AMERICAN SANDS ENERGY CORP.
2014 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, AUGUST 21, 2014
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
This Information Statement contains information related to the Company’s 2014 annual meeting of stockholders to be held in the Snow Basin Room at the Little America Hotel,500 South Main Street, Salt Lake City, Utah, at 11:00 a.m., local time, on August 21, 2014, and at any adjournments or postponements thereof. The approximate date that this Information Statement, the preceding Notice of Annual Meeting and the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014, are first being made available to stockholders is July 31, 2014. We are making this Information Statement available to our stockholders for use at the annual meeting. You should review this Information Statement in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
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TABLE OF CONTENTS
| GENERAL INFORMATION | 3 |
| PROPOSAL NO. 1: ELECTION OF DIRECTORS | 4 |
| NOMINEES FOR DIRECTORS AND EXECUTIVE OFFICERS | 5 |
| EXECUTIVE COMPENSATION | 9 |
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 13 |
| EQUITY COMPENSATION PLAN INFORMATION | 15 |
| SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 15 |
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 15 |
| PROPOSAL NO. 2: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 16 |
| REPORT OF THE AUDIT COMMITTEE | 17 |
| SERVICES PROVIDED BY THE INDEPENDENT PUBLIC ACCOUNTANT AND FEES PAID | 18 |
| ANNUAL REPORT | 18 |
| DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2013 ANNUAL MEETING OF AMSE STOCKHOLDERS | 18 |
| INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON | 18 |
| SHAREHOLDERS SHARING AN ADDRESS | 18 |
| OTHER MATTERS | 19 |
| WHERE YOU CAN FIND MORE INFORMATION | 19 |
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GENERAL INFORMATION
Meeting Information
The annual meeting of stockholders of American Sands Energy Corp. (“AMSE,” the “Company,” “we,” “our” or “us”) will be held in the Sun Valley Room at the Little America Hotel,500 South Main Street, Salt Lake City, Utah, beginning at 11:00 a.m., local time, on August 21, 2014.
Who May Vote
You are entitled to vote in person at the annual meeting if you owned shares of our common stock or Series A Preferred stock as of the close of business (5:00 p.m.) on July 25, 2014, the record date of the annual meeting (“Record Date”). On the Record Date, 32,180,861 shares of our common stock were issued and outstanding and held by 433 holders of record and 4,373,031 shares of Series A Preferred were issued and outstanding and held by 46 holders of record. Holders on the Record Date of our common stock which are (1) held directly in your name as the stockholder of record or (2) held for you as the beneficial owner through a stockbroker, bank or other nominee, are entitled to one vote per share at the annual meeting. Holders on the Record Date of Series A Preferred stock which are held directly in your name as the stockholder of record are entitled to four votes per share at the annual meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
How To Vote
Holders of record may vote in person at the meeting by ballot or grant a proxy to another person to vote in their place. If your shares are not held of record in your name, you must obtain a proxy from the record holder, usually a broker or other nominee, in order to vote in person at the meeting.
Voting Rights
The holders of outstanding shares of our common stock will vote as a single class and each share of common stock will entitle the holder to one vote per share. Also, the holders of outstanding shares of our Series A Preferred stock will vote as the same class as the holders of the common stock and each shares of Series A Preferred stock will entitle the holder to four (4) votes per share. On the Record Date we had outstanding 32,180,861 shares of common stock and 4,373,031 shares of Series A Preferred stock, which represents a total of 49,672,984 votes at the annual meeting.
Quorum
The presence at the annual meeting of the holders of at least one-third of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, outstanding on the Record Date will constitute a quorum. Abstentions are counted as present for the purpose of determining the presence of a quorum. A broker who holds shares in nominee or “street name” for a customer who is the beneficial owner of those shares may be prohibited from voting those shares in person on any proposal to be voted on at the annual meeting without specific instructions from such customer with respect to such proposal.
Votes Needed
Proposal 1: Election of Directors. The affirmative vote of a plurality of the votes cast at the annual meeting is required for the election of each of the five director nominees. You may vote “for” or “against” one or more director nominees or you may “abstain” as to one or more director nominees. A properly executed ballot marked “abstain” as to the election of one or more director nominees will not be counted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Stockholders do not have the right to cumulate their votes for the election of directors.
Proposal 2: Ratification of the Appointment of the Independent Registered Public Accounting Firm. The affirmative vote of a majority of the shares represented at the annual meeting and entitled to vote is required to ratify the appointment of Tanner, LLC as our independent registered public accounting firm for the fiscal year ending March 31, 2015. A properly executed ballot marked “abstain” with respect to this proposal will not be counted, although it will be counted for purposes of determining whether there is a quorum. Abstentions will have the same effect as a vote against this proposal.
As of the Record Date, our directors and executive officers and their affiliates owned and were entitled to vote approximately 12,082,850 shares of our common stock, which represented approximately 38% of the 32,180,861 shares of our common stock outstanding on that date. Also, as of the Record Date, our directors and executive officers and their affiliates owned and were entitled to vote approximately 38,336 shares of our Series A Preferred stock, which represented approximately 0.9% of the 4,373,031 shares of our Series A Preferred stock outstanding on that date. All of these persons have indicated they and their affiliates will vote their shares in favor of the five director nominees and the other proposal.
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Appraisal Rights
Under Delaware law, our stockholders would not be entitled to rights of dissent and appraisal with respect to the proposed items to be voted upon.
Other Matters
The board of directors does not know of any other matter that will be presented for your consideration at the meeting other than the two proposals described herein.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the annual meeting, five nominees will be elected as directors. Our board of directors currently consists of six members, but one of these persons has decided not to stand for re-election for personal reasons. The remaining five directors now serving are standing for re-election at the annual meeting. The directors elected at the annual meeting will serve for a term of one year and until their respective successors are duly elected and qualified. We are always open to adding to the board individuals who have skills and experience that would enable them to contribute to our future development. At present we have no such candidate we would propose for election to the board of directors, so for the time being we will operate with a five-person board following the Annual Meeting.
Our board of directors, based on the recommendation of the Nominating and Governance Committee, has nominated each of William C. Gibbs, William H. Champion, Mark F. Lindsey, Gayle McKeachnie, and Justin Swift to stand for re-election at the annual meeting.
When analyzing whether directors and nominees have the experience, qualifications, attributes and skills, individually and taken as a whole, the Nominating and Governance Committee and the board of directors focus on the information as summarized in each of the directors’ individual biographies set forth on pages 5 and 6 of this Information Statement. The board selected Mr. Gibbs to serve as a director because of his familiarity with our Company and its subsidiary, his familiarity with oil sands in the state of Utah, and his experience with reporting companies in the energy sector. The board selected Mr. Champion to serve as a director because of his experience with mining and mining processes, large project development, and project management. The board selected Mr. Lindsey to serve as a director because of his familiarity with our Company and its subsidiary and his experience with mining and mining processes. The board selected Mr. Mooney to serve as a director because of his extensive experience with clean energy and finance. The board selected Mr. McKeachnie to serve as a director because of his legal experience. The board selected Mr. Swift to serve as a director because of his experience with clean energy.
These director nominees will be voted upon by the holders of our common stock at the annual meeting.
We expect each of the five director nominees to be able to serve, if elected. If any nominee is not able to serve, ballots will be counted to determine the election of the remainder of those nominated.
Vote Required and Recommendation of Our Board of Directors
The affirmative vote of a plurality of the votes cast at the annual meeting is required for the election of each of the five director nominees. You may vote “for” or “against” one or more director nominees or you may “abstain” as to one or more director nominees. A properly executed ballot marked “abstain” as to the election of one or more director nominees will not be counted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Stockholders do not have the right to cumulate their votes for the election of directors.
Our board of directors unanimously recommends that you vote “FOR” the election
of each of the director nominees named above.
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NOMINEES FOR DIRECTORS AND EXECUTIVE OFFICERS
Current Management
The following table sets forth as of July 25, 2014 the name and ages of, and position or positions held by, our executive officers, directors, and nominees, the employment background of these persons, and any directorships held by the current directors during the last five years. The Board believes that all the directors named below are highly qualified and have the skills and experience required for effective service on the Board. The directors’ individual biographies below contain information about their experience, qualifications and skills that led the Board to nominate them.
| Name | Age | Position(s) | Director Since | Employment Background |
| William C. Gibbs* | 56 | Chief Executive Officer, Chairman & Director | 2011 | Mr. Gibbs was appointed as Chairman of our Board of Directors and as President and CEO on June 3, 2011. Mr. Gibbs resigned as President on February 16, 2012, but continues as CEO and Chairman. He has also served as the CEO and a director of Green River Resources, Inc., our wholly owned Utah subsidiary since February of 2004. From 2004 until its dissolution on December 31, 2011, he served as President and Chairman of Green River Resources Corp., a Canadian energy technology company focused on the extraction of oil from oil sands and which became a wholly owned subsidiary of our Company on June 3, 2011, until its dissolution on December 31, 2011. Since March 3, 2011 until October 29, 2012, he also served as a director of Colombia Energy Resources, Inc., a company that was engaged in coal mining operations. Mr. Gibbs received his law degrees from Georgetown University (LLM, Securities Regulation), the University of Utah, and Magdalene College (Oxford University) (J.D.). He earned his undergraduate degree from the University of Utah in economics. |
| William H. Champion* | 62 | Director | 2014 | Mr. Champion was appointed as a director on June 10, 2014. Mr. Champion is a senior mining executive with an experience base that spans multiple geographies, cultures and metal and mineral products. Most recently, Mr. Champion was the Managing Director of Rio Tinto Coal Australia, where he managed all coal mining operations in Australia (2009-2013). Mr. Champion has degrees in both Chemical Engineering and Biological Sciences from the University of Arizona. |
| Mark F. Lindsey* | 58 | Director | 2011 | Mr. Lindsey was appointed as a director on June 3, 2011, and has served as a director of our subsidiary, Green River Resources, Inc., since November 2007. Since 2005 he has been the owner of Nibley and Company Limited, a manufacturer’s representative of large specialty equipment for mining and plant operations. Mr. Lindsey graduated from the University of Utah in 1980 and from the Colorado School of Mines in 1990 with a Masters Degree in Mineral and Energy Economics. |
| Gayle McKeachnie* | 71 | Director | 2011 | Mr. McKeachnie has served as a director since June 3, 2011, and has served as a director of our subsidiary, Green River Resources, Inc., since February 2011. He has been self-employed as an attorney since 2008. Mr. McKeachnie is a former Lt. Governor in the State of Utah and served four terms in the Utah House of Representatives. Mr. McKeachnie graduated from the College of Southern Utah in 1967 with a Bachelor of Arts Degree in Political Science and from the University of Utah College of Law in 1970. |
| Justin Swift* | 69 | Director | 2011 | Mr. Swift has served as a director since September 13, 2011. Since January 2010, Mr. Swift has been the founder and principal of Swift Global Results, a private consulting firm in the clean energy field. From 2005 through 2009 he served as Deputy Assistant Secretary for International Affairs in the Office of Fossil Fuel, U.S. Department of Energy. |
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| Edward P. Mooney | 54 | Director | 2011 | Edward Mooney has served as a director since April 4, 2011. Mr. Mooney is the President and sole managing member of LIFE Power & Fuels LLC. From 2010 to April 2013, he served as a director of Colombia Energy Resources, Inc., a company engaged in coal mining operations, and served as the Chief Executive Officer from May 2010 through August 2011. Mr. Mooney holds a Masters Degree in Education and a Bachelors Degree in Geography from the California State University System. |
| Daniel F. Carlson | 47 | Chief Financial Officer & Secretary | -- | Mr. Carlson has served as our Chief Financial Officer since February 16, 2012. He also served as a director of the Company from April 4, 2011 through June 10, 2014. He served as the Chief Financial Officer for LIFE Power & Fuels LLC, a former principal stockholder of our company, from 2009 through May of 2014. Mr. Carlson previously was Chief Financial Officer of Colombia Energy Resources from its inception in December 2009 until June 2011and served as a director of the company from December 2009 until July 2013. Mr. Carlson was a Managing Director of European American Equities, Inc., a registered broker-dealer, from January 2009 until June 2010. Mr. Carlson served as a non-executive director for China Precision Steel, Inc., a NASDAQ-listed Chinese steel processor, from 2008 through 2012. Mr. Carlson holds a Bachelor of Arts degree in Economics from Tufts University achieved in 1989. |
| Robin Gereluk | 54 | Chief Operating Officer | -- | Mr. Gereluk was appointed as our Chief Operating Officer on June 3, 2011, and has served as COO and Vice-President of our subsidiary, Green River Resources, Inc., since April 2008. From 2012 until June 2014, Mr. Gereluk also served as a manager for Athabasca Oil Corp. Mr. Gereluk was a project engineer for Excelsior Engineering from 2011 until 2012. From 1987 until 2011, Mr. Gereluk was a manager of conventional engineering for Bower Damberger Rolseth Engineering Ltd. Mr. Gereluk graduated from Northern Alberta Institute of Technology in 1981 with a Diploma in Chemistry and from the University of Wyoming in 1987 with a Bachelor of Science Degree in Petroleum Engineering. Mr. Gereluk holds licenses as a Professional Engineer in Alberta and British Columbia, Canada. |
_______
* Nominee for re-election at the 2014 annual shareholders meeting.
Directors are elected to hold office for one year and until their successors are elected and qualified. Annual meetings of the stockholders, for the selection of directors to succeed those whose terms expire, are to be held at such time each year as designated by the Board of Directors. Officers of the Company are elected by the Board of Directors, which is required to consider that subject at its first meeting after every annual meeting of stockholders. Each officer holds his office until his successor is elected and qualified or until his earlier resignation or removal.
William H. Champion and Daniel F. Carlson are related through marriage. There are no other family relationships between any director, executive officer, or person nominated or chosen by the Company to become a director.
Director Independence
Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent. Therefore, we have adopted the independence standards of the NYSE Amex, now known as the NYSE MKT, to determine the independence of our directors and those directors serving on our committees. These standards provide that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of the company’s board of directors, free of any relationship that would interfere with the exercise of independent judgment. Our board of directors has determined that William H. Champion, Mark F. Lindsey, Gayle McKeachnie, and Justin Swift meet this standard, and therefore, would be considered to be independent.
Legal Proceedings
During the past ten years there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors or executive officers.
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We are not aware of any legal proceedings in which any director, officer or affiliate of our company, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, or affiliate of our company, or security holder is a party adverse to us or our subsidiary or has a material interest adverse to us or our subsidiary.
Code of Ethics
On November 14, 2011, the Board of Directors adopted a Code of Ethics. The purpose of the Code of Ethics is to set the expectations of the highest standards of ethical conduct and fair dealings. The Code of Ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics was attached as an exhibit to our annual report on Form 10-K filed with the SEC on June 30, 2014. Our Code of Ethics is also available on our corporate website atwww.americansands.com.
Meetings and Committees of the Board of Directors
During the fiscal year ended March 31, 2014, the board of directors held seven meetings and acted by unanimous written consent one time. Each of Messrs. Gibbs, Lindsay, Swift, Mooney, and McKeachnie attended at least 75% of the total number of meetings of the board of directors and committees (if any) on which he served that were held during such fiscal year. Mr. Champion was not a board member during the 2014 fiscal year.
The following chart sets forth the current membership of each board committee. The board of directors reviews and determines the membership of the committees at least annually. As of the date of the Annual Meeting, Mr. Mooney will no longer serve on any of the following committees.
| Committee | Members | |
| Audit Committee | Edward P. Mooney (Chairman) | |
| Mark F. Lindsey | ||
| Compensation Committee | Mark F. Lindsey | |
| Gayle McKeachnie | ||
| Nominating and Governance Committee | Gayle McKeachnie (Chairman) | |
| Justin R. Swift | ||
| Edward P. Mooney |
Information about the committees, their respective roles and responsibilities and their charters is set forth below.
Audit Committee
The Audit Committee is currently comprised of Messrs. Mooney and Lindsey. Mr. Mooney is the Chairman of the Audit Committee. The Audit Committee assists our board of directors in fulfilling its responsibility to oversee management’s conduct of our financial reporting process, including the selection of our outside auditors, review of the financial reports and other financial information we provide to the public, our systems of internal accounting, financial and disclosure controls and the annual independent audit of our financial statements. The Audit Committee was first created on November 14, 2011.
One member of the Audit Committee, Mr. Lindsey, is independent within the meaning of the rules and regulations of the SEC. No Audit Committee member meets the qualifications of an “audit committee financial expert” as defined in SEC regulations.
A copy of the charter for the Audit Committee is available on the Company’s website atwww.americansands.com.
Compensation Committee
We have a standing Compensation Committee and the members of the committee are Messrs. Lindsey and McKeachnie. There is currently no Chairman of the Compensation Committee. The Compensation Committee reviews and approves (subject to approval of the independent directors) the executive employment agreement with our Chief Executive Officer, as well as our compensation arrangements for senior management. The Compensation Committee also administers the Company’s stock option and incentive plans, including our 2011 Long-Term Incentive Plan. Both of our Compensation Committee members are independent within the meaning of the rules and regulations of the SEC. The Compensation Committee was first formed on November 14, 2011.
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A copy of the charter for the Compensation Committee is available on the Company’s website atwww.americansands.com.
Nominating and Governance Committee
The Nominating and Governance Committee is currently comprised of Messrs. McKeachnie, Swift, and Mooney. Mr. McKeachnie is the Chairman of the Nominating and Governance Committee. The Nominating and Governance Committee is responsible for recommending qualified candidates to the board for election as directors of our Company, including the slate of directors proposed by our board of directors for election by stockholders at our annual meetings of stockholders. The Nominating and Governance Committee also advises and makes recommendations to the board of directors on all matters concerning directorship practices and recommendations concerning the functions and duties of the committees of the board of directors. Two of our Nominating and Governance Committee members, Messrs. McKeachnie and Swift, are independent within the meaning of the rules and regulations of the SEC. The Nominating and Governance Committee was first formed on November 14, 2011.
When considering the nomination of directors for election at an annual meeting of stockholders or, if applicable, a special meeting of stockholders, the Nominating and Governance Committee takes into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills and the extent to which the candidate would fill a present need on the board of directors. The process may also include interviews and all necessary and appropriate inquiries into the background and qualifications of possible candidates. The Nominating and Governance Committee does not currently have a policy whereby it will consider recommendations from stockholders for its director nominees.
A copy of the charter for the Nominating and Governance Committee is available on the Company’s website at www.americansands.com.
Board Leadership Structure and Role in Risk Oversight
In accordance with our Bylaws, the Board elects our officers, including our Chief Executive Officer, Chief Financial Officer, and such other officers as the Board may appoint from time to time. The Board has not currently separated the positions of Chairman of the Board and Chief Executive Officer, and William C. Gibbs currently serves as our Chairman and Chief Executive Officer. The Board does not believe that separating these positions is necessary at this time in light of the composition of the Board, the management team and our overall leadership structure, the experience of Mr. Gibbs in overseeing our day-to-day business while overseeing the Board, and our current business strategy. Mr. Gibbs has managed the competing demands for his time to effectively lead the Board and the management team. Combining the Chairman and Chief Executive Officer roles fosters clear accountability, effective decision-making, and alignment of corporate strategy. Our Certificate of Incorporation and corporate governance guidelines do not require that our Chairman and Chief Executive Officer positions be separate. The Board periodically considers whether changes to our overall leadership structure are appropriate.
Our Chairman is responsible for chairing meetings of the Board. In his absence, the Board may choose one of the Directors to chair the relevant meeting of the Board. Our Chairman is also responsible for chairing meetings of shareholders. In his absence, the Board may appoint one of the Directors to chair the relevant meeting.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, regulatory risks, and others. Management is responsible for the day-to-day management of risks the company faces, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. Our Chairman meets regularly with our Chief Financial Officer, and other senior officers to discuss strategy and risks facing our business. Senior management attends board meetings and is available to address any questions or concerns raised by our board of directors on risk management-related and any other matters. The Board receives presentations from senior management on strategic matters involving our operations and holds strategic planning sessions with senior management to discuss strategies, key challenges, and risks and opportunities for our business.
While the Board is ultimately responsible for risk oversight at our company, our board committees assist our Board of Directors in fulfilling its oversight responsibilities in certain areas of risk.
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Communications by Stockholders with Directors
The Company encourages stockholder communications to our board of directors and/or individual directors. Stockholders who wish to communicate with our board of directors or an individual director should send their communications to the care of William C. Gibbs, Chairman, American Sands Energy Corp., 201 S. Main St, suite 1800, Salt Lake City, UT 84111. Communications regarding financial or accounting policies should be sent to the attention of the Chairman of the Audit Committee. Mr. Gibbs will maintain a log of such communications and will transmit as soon as practicable such communications to the Chairman of the Audit Committee or to the identified individual director(s), although communications that are abusive, in bad taste or that present safety or security concerns may be handled differently, as determined by Mr. Gibbs.
Director Attendance at Annual Meetings
We will make every effort to schedule our annual meeting of stockholders at a time and date to accommodate attendance by directors taking into account the directors’ schedules. While all directors are encouraged to attend our annual meeting of stockholders, there is no formal policy as to their attendance at annual meetings of stockholders.
EXECUTIVE COMPENSATION
Executive Compensation
The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the named executive officer for all services rendered in all capacities to our company and its subsidiaries for the years ended March 31, 2014 and 2013.
SUMMARY COMPENSATION TABLE
| Name & Principal Position | Year | Salary ($) | Option ($) | All Other Compensation ($) | Total ($) |
| William C. Gibbs, CEO | 2014 | 276,000 | 0 | 32,189(3) | 308,189 |
| 2013 | 369,000 | 27,250(2) | 35,178(3) | 431,428 | |
| Daniel F. Carlson, CFO | 2014 | 175,000 | 0 | 0 | 175,000 |
| 2013 | 43,750 | 27,250(2) | 0 | 71,000 | |
| Andrew Rosenfeld, President(4) | 2014 | 0 | 0 | 120,000 | 120,000 |
| 2013 | 0 | 0 | 120,000 | 120,000 | |
(1)The estimated value of options awarded was determined in accordance with FASB ASC 718; see Note 1 in the footnotes to the Consolidated Financial Statements included in the Form 10-K for the year ended March 31, 2014. Amounts reported do not reflect amounts actually received by the officer.
(2) On June 15, 2012, the Board of Directors granted to each director, including Messrs. Gibbs and Carlson, 75,000 options exercisable at $1.15 and expiring on June 15, 2017. The options vest as follows: 1/3 on grant date, 1/3 one year from grant date, and 1/3 to vest at the end of the second year from grant date.
(3) This compensation represents reimbursement for health insurance in the amounts of $17,484 and $14,684, respectively, for the years ended March 31, 2014 and 2013; for life insurance premiums paid by the Company in the amounts of $4,728 and $9,012, respectively, for the years ended March 31, 2014 and 2013; and $9,977 and $7,636 for automobile allowance for the years ended March 31, 2014 and 2013, respectively.
(4)Mr. Rosenfeld served as President of the Company from January 26, 2012 until June 30, 2013.
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William C. Gibbs has an employment agreement dated August 1, 2007, with GRC and GRI that was subsequently assumed by us (the “Gibbs Agreement”). The original term of the Gibbs Agreement was through December 31, 2013, and could be extended for successive terms. Annual base salary payable under the agreement was $400,000 plus benefits, which would increase to $450,000 upon receipt of all necessary permits for the oil sands project. The base salary was to accrue until we received funding of $1,000,000. In addition, Mr. Gibbs has the right under the agreement to convert any unpaid salary into our common stock following a funding event of $1,000,000 or more, at the pricing of the funding, if the outstanding balance is not paid within six months of closing. On January 31, 2012, we completed our non-public offering of 10% convertible promissory notes and warrants (the “Funding”). The agreement also provides for health insurance, personal life insurance in an amount of $3,000,000, and a 401(k) plan with a 50% employer match on up to 6% of the employees contributions. By an amendment to the Gibbs Agreement dated August 12, 2009, the term was extended to December 31, 2015 and Mr. Gibbs was provided a car allowance of $900 per month. Effective January 1, 2013, we modified the Gibbs Agreement. Pursuant to the terms of the amendment, Mr. Gibbs’ salary was reduced from $400,000 per year to $276,000 per year. In addition, Mr. Gibbs’ salary would accrue until we have raised $2,000,000 in a debt or equity financing. At the time the financing was completed, Mr. Gibbs would receive four months of accrued salary in cash and the balance of accrued salary in equity equal to the terms of the financing. Also, at that time, Mr. Gibbs would begin to be paid his salary in cash monthly. The Company completed a qualifying financing in March, 2014, and Mr. Gibbs received 4 months accrued salary in cash and 525,715 shares of common stock in payment for his accrued salary. Furthermore, the Company also entered into an exchange agreement with Mr. Gibbs with respect to his outstanding accrued salary, effective September 30, 2013, pursuant to which we issued to him a warrant to purchase 2,260,000 shares of Common Stock of the Company at a price per share of $0.01. The warrant expires 10 years after the issue date and represents full for accrued salary owing to Mr. Gibbs in the amount of of $1,049,350. The number of shares subject to the warrant was calculated at a value of $0.50 per share. As of March 31, 2014, Mr. Gibbs has no accrued salary. Upon completion of a $10,000,000 or more financing, Mr. Gibbs’ salary will return to $400,000. All other terms of the Gibbs Agreement remained the same.
Daniel F. Carlson, our CFO, has an employment agreement dated February 16, 2012 (the “Carlson Agreement”). The Carlson Agreement was terminable by either party upon 30 days’ notice. Pursuant to the terms of the agreement, the CFO was entitled to a base salary of $120,000 per year upon the first successful fundraising by us of at least $5,000,000 in equity or convertible securities (the “Financing Event”). Upon completion of the Financing Event, Mr. Carlson would also receive 5-year options to purchase 200,000 shares of our common stock. The options would vest 50% upon the Financing Event and 50% upon the completion of a total of $40,000,000 in equity or debt financing during the term of the agreement. The options will have an exercise price equal to the price per share, or per share equivalent, of the Financing Event. Under the Carlson Agreement, Mr. Carlson was entitled to receive an annual bonus of up to $120,000, at the discretion of the board, to be paid on or before December 15th of each year. As of March 31, 2013, the Financing Event had not been successfully completed. The Carlson Agreement originally expired on June 30, 2012 and, on January 14, 2013, we entered into an amendment to the Carlson Agreement whereby to the term was extended through June 30, 2013. The Agreement expired in accordance with its terms on June 30, 2013. On January 14, 2013, we entered into an amendment to the Carlson Agreement whereby to the term was extended through June 30, 2013. On May 15, 2013, we entered into a subsequent amendment to the Carlson Agreement, effective January 1, 2013. Pursuant to the terms of the amendment, the term of the Carlson Agreement was extended until December 31, 2014 and Mr. Carlson was entitled to a base salary of $175,000 per year, which salary would accrue until we have raised $2,000,000 in a debt or equity financing. At the time the financing was completed, Mr. Carlson would receive four months of accrued salary in cash and the balance of accrued salary in equity equal to the terms of the financing. Also, at that time, Mr. Carlson would begin to be paid his salary in cash monthly. The Company completed a qualifying financing in March, 2014, and Mr. Carlson received 4 months accrued salary in cash and 333,333 shares of common stock in payment for his accrued salary. On June 10, 2014, we entered into a subsequent amendment to the Carlson Agreement, under the terms of which Mr. Carlson’s employment was extended until June 30, 2015. On June 10, 2014, we granted 125,000 options to Mr. Carlson exercisable at $0.72 per share. One-third of the options vest on the grant date, one-third vest on the first one-year anniversary of the grant date, and the remaining one-third vest on the second one-year anniversary of the grant date, and all of the options expire June 10, 2019. The options were granted under the 2011 Long-Term Incentive Plan.
Andrew Rosenfeld, our former President, had an employment agreement dated February 16, 2012 (the “Rosenfeld Agreement”). The Rosenfeld Agreement was terminable by either party upon 30 days’ notice. Pursuant to the terms of the agreement, the President was entitled to a base salary of $240,000 per year upon the first successful fundraising by us of at least $5,000,000 in equity or convertible securities (the “Financing Event”). Upon completion of the Financing Event, Mr. Rosenfeld would also receive 5-year options to purchase 400,000 shares of our common stock. The options would vest 50% upon the Financing Event and 50% upon the completion of a total of $40,000,000 in equity or debt financing during the term of the agreement. The Financing Event did not occur during the term of the Rosenfeld Agreement and the Agreement expired in accordance with its terms on June 30, 2013.
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Equity Awards
OUTSTANDING EQUITY AWARDS
As at March 31, 2014
| Name | Option awards | ||||
| Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | |
| William C. Gibbs | 1,975,000(1) | - | - | $0.40 | 3/31/18 |
| 50,000 | 25,000 | 25,000 | $1.15 | 6/15/17 | |
| Daniel F. Carlson | 18,750 | 6,250 | 6,250 | $0.50 | 9/15/16 |
| 50,000 | 25,000 | 25,000 | $1.15 | 6/15/17 | |
| 0 | 200,000 | 200,000 | -(2) | 2/16/17 | |
| Andrew Rosenfeld | 0 | 400,000 | 400,000 | -(2) | 2/16/17 |
| (1) | These options were granted outside of our 2011 Long-Term Incentive Plan. |
| (2) | The exercise price of these options will be determined upon the achievement of certain milestones, as described above. |
2011 Long-Term Incentive Plan
In May 2011, the Board adopted the 2011 Long-Term Incentive Plan (the “Plan”). The Plan was adopted by the shareholders on September 16, 2011. The purpose of the Plan is to provide eligible persons, including our officers and directors, an opportunity to acquire a proprietary interest in our company and as an incentive to remain in our service.
There are 7,000,000 shares of our common stock authorized for non-statutory and incentive stock options, stock appreciation rights, performance shares, restrictive stock awards, dividend equivalents, and other stock-based awards under the Plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations. The Plan is administered initially by the Board of Directors.
Payments to Executives Upon Termination of Employment Agreements
The aforementioned employment agreement with William C. Gibbs provides “accrued benefits” and a “termination payment” in the event of termination as a result of death and termination for disability. Only “accrued benefits” are available to the executive in the event of termination for cause. In the event of voluntary termination by the executive (subject to notice provisions), whether a “termination payment” is granted depends on whether the executive had “good reason.” Under the employment agreement, Mr. Gibbs is also entitled to a “termination payment” in the event of a “change of control.” For the definitions of “accrued benefits,” “change of control,” “termination payment” and any other terms of the employment agreement, see Exhibit 10.1 to the report on Form 10-K filed with the SEC on June 30, 2014.
The aforementioned employment agreement with Daniel Carlson provides “accrued benefits” in the event of termination as a result of death, for “cause,” and voluntary termination by Mr. Carlson. For the definition of “accrued benefits” and any other terms of the employment agreement, see Exhibit 10.5 to the report on Form 10-K filed with the SEC on June 30, 2014.
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Compensation of Directors
The following table sets forth certain information concerning the compensation of our directors, excluding the named executive officers set forth in the Summary Compensation Table above, for the last fiscal year ended March 31, 2014:
DIRECTOR COMPENSATION
| Name | Salary ($) | Option Awards(1) ($) | Total ($) |
| Mark F. Lindsey | 0 | 43,750(2) | 43,750 |
| Edward P. Mooney | 0 | 43,750(2) | 43,750(3) |
| Justin Swift | 0 | 43,750(2) | 43,750 |
| Gayle McKeachnie | 0 | 43,750(2) | 43,750 |
(1) The estimated value of options awarded was determined in accordance with FASB ASC 718; see Note 12 in the footnotes to the Consolidated Financial Statements included in the Form 10-K for the year ended March 31, 2014. Amounts reported do not reflect amounts actually received by the officer.
(2) The options were granted under the 2011 Long-Term Incentive Plan.
(3) Mr. Mooney is the managing member of LIFE, which is entitled to compensation under a Management and Services Agreement and which is one of our larger shareholders. As such, he may receive compensation from LIFE either from payments pursuant to such agreement or through sales by LIFE of Company shares. Any such compensation is unquantifiable at this time.
On June 10, 2014, we granted 200,000 options to Mr. Champion, a newly elected director of the Company. The options are exercisable at $0.72 per share and expire June 10, 2019. One-third of the options vest on the grant date, one-third vest on the first one-year anniversary of the grant date, and the remaining one-third vest on the second one-year anniversary of the grant date. The options were granted under the 2011 Long-Term Incentive Plan.
On July 11, 2013, we granted, pursuant to a recommendation of our Compensation Committee, each non-executive director options to purchase 125,000 shares of our common stock for prior service on the Board of Directors. These five-year options have a two-year vesting schedule, with 1/3 vesting immediately, 1/3 on the first anniversary date of the grant, and 1/3 on the second anniversary date. The exercise price of the options is $0.35 per share. The options were granted under, and will be subject to the terms and conditions of, our 2011 Long-term Incentive Plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership of our common stock as of July 25, 2014, of (i) each person who is known to us to be the beneficial owner of more than 5 percent of our common stock, without regard to any limitations on conversion or exercise of convertible securities or warrants; (ii) all directors and named executive officers; and (iii) our directors and executive officers as a group:
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percentage of Ownership(2) | ||||||
| William C. Gibbs | ||||||||
4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 18,178,052 | (3) | 45.5% | |||||
Mark F. Lindsey 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 233,334 | (4) | * | |||||
Edward P. Mooney 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 1,095,375 | (5) | 3.4% | |||||
Daniel F. Carlson 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 1,104,904 | (6) | 3.4% | |||||
Gayle McKeachnie 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 195,834 | (7) | * | |||||
Justin Swift 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 158,334 | (8) | * | |||||
William H. Champion 4760 S. Highland Dr. Suite 341 Salt Lake City, Utah 84117 | 66,667 | (9) | * | |||||
| Executive Officers, Named Executive Officers, and Directors as a Group (8 Persons) | 24,282,644 | 51.4% | ||||||
Teymuraz Tkebuchava 110 Stuart St. Boston, MA 02116 | 6,429,574 | (10) | 16.7% | |||||
Bleeding Rock LLC 2610 Hillsden Dr. Holladay, UT 84117 | 9,989,044 | (11) | 30.9% | |||||
Seaside 88 LP William J. Ritger, Managing Member 2700 N. Ocean Dr. Suite 19 Singer Island, FL 33404 | 5,232,684 | (12) | 14.4% |
_______________
*Less than 1%.
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(1)Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this table.
(2)Percentage based on 32,180,860 shares of common stock outstanding as of July 25, 2014.
(3)Includes 2,050,000 shares issuable upon exercise of outstanding options. Also includes 9,835,700 common shares owned by Bleeding Rock LLC, an entity controlled by Mr. Gibbs. Also includes 3,260,000 shares issuable upon exercise of warrants owned by Hidden Peak Partners L.C., an entity controlled by Mr. Gibbs, 76,672 shares issuable upon exercise of warrants owned by Bleeding Rock LLC, an entity controlled by Mr. Gibbs, and 2,260,000 shares issuable upon exercise of warrants owned directly by Mr. Gibbs. Also includes 153,344 common shares issuable upon conversion of 38,336 shares of Series A Convertible Preferred stock owned by Bleeding Rock LLC, an entity controlled by Mr. Gibbs. Also includes 542,336 shares owned directly by Mr. Gibbs.
(4)Represents 233,334 shares issuable upon exercise of vested options.
(5) Includes 482,693 shares owned by Mr. Mooney and 435,598 shares owned by LIFE Power & Fuels LLC, an entity for which Mr. Mooney is the managing member. Also includes 177,084 shares issuable upon exercise of vested options.
(6) Includes 769,487 shares of common stock and 335,417 shares issuable upon exercise of vested options.
(7) Represents 195,834 shares issuable upon exercise of vested options.
(8) Represents 158,334 shares issuable upon exercise of vested options.
(9) Represents 66,667 shares issuable upon exercise of vested options.
(10) Includes 4,285,716 shares issuable upon conversion of Series A Convertible Preferred and 2,142,858 shares issuable upon exercise of warrants.
(11) Includes 9,835,700 shares of common stock and 153,344 shares of common stock issuable upon conversion of Series A Convertible Preferred. These shares are included with the shares beneficially owned by Mr. Gibbs above.
(12) Includes 1,005,150 shares of common stock controlled by Mr. Ritger, 2,818,356 shares issuable upon conversion of Series A Convertible Preferred, and 1,409,178 shares issuable upon exercise of warrants.
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Securities Authorized for Issuance under Equity Compensation Plan
The following table sets forth as of March 31, 2014, certain information with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance:
EQUITY COMPENSATION PLAN INFORMATION
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) and (b)) (c) |
| Equity compensation plans approved by security holders | 2,035,000(1)(2) | $0.64 | 4,965,000(2)(3) |
| Equity compensation plans not approved by security holders | 3,087,500 | $0.40 | 0 |
| Total | 5,123,500 |
| (1) | Represents options granted under our 2011 Long-Term Incentive Plan. |
| (2) | The Company has granted 600,000 options to the President and its Chief Financial Officer based upon the achievement of certain financing milestones described above. The option price will be at the price of the Financing Event and the expiration date will be five years from the date of issuance. |
| (3) | Represents shares available for future issuance under the 2011 Long-Term Incentive Plan. |
Change of Control
There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who own more than 10% of our outstanding Common Stock to file with the Securities and Exchange Commission initial reports of ownership and changes in ownership of our Common Stock. Such individuals are also required to furnish us with copies of all such ownership reports they file.
During the fiscal year ended March 31, 2013, there were no instances in which a director, officer, or beneficial owner of more than 10% of our common stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew Rosenfeld is the former president of the Company. The Company entered into a consulting agreement dated October 1, 2011, with C14 Strategy (the “2011 Consulting Agreement”), an entity controlled by Mr. Rosenfeld. This Agreement provided that it would remain in force until a Financing Event, at which time it will be immediately terminated. Pursuant to the Consulting Agreement, C14 provides assistance with respect to strategic objectives of the Company. As compensation for such services, C14 was paid $10,000 per month. The contract is terminable any time on 60 days’ notice, or by mutual consent. On March 14, 2014, the Company and C14 Strategy amended the 2011 Consulting Agreement such that past due fees of $30,000 were paid in cash and the balance of accrued fees were paid off by issuance of 150,000 shares of the Company’s common stock. In addition, starting April 1, 2014, the monthly payment for services to C14 was reduced to $5,000. As of March 31, 2014, there were no accrued fees owed to C14 Strategy under the 2011 Consulting Agreement.
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In January 2013, the Company borrowed $74,000 from C-14 Strategies. In November 2013, the note converted into 55,307 units, each unit consisting of one share of Series A preferred stock, one warrant to purchase a share of the Company’s common stock at $0.45, and one warrant to purchase the Company’s common stock at $0.70 per share.
On June 15, 2012, we approved a Management and Services Agreement (the “LIFE Agreement”) with Life Power & Fuels LLC (“LIFE”). Under the LIFE Agreement, LIFE will provide us with general corporate advisory services, financial advisory services, merger acquisition services, equipment leasing, lines of credit, equipment financing, and other debt or credit facilities. In exchange for services, we will pay LIFE a monthly fee of $25,000 which will be accrued until we raise a minimum of $3,500,000 in an equity or debt offering. At such time, LIFE will have the option to convert all outstanding accrued amounts into the equity or debt instruments issued by us in such offering. The term of the 36-month LIFE Agreement commenced on April 1, 2012, and renews automatically for an additional 12 months on each succeeding anniversary unless terminated in writing by either party. Various members of LIFE’s management and limited partners are also affiliated with our company including Messrs. Carlson, our Chief Financial Officer and Mooney, our Audit Committee Chairman. On May 15, 2013, we amended the LIFE Agreement, The amendment provides that, effective January 1, 2013, any amounts then accrued and payable to LIFE Power & Fuels, LLC were reduced by $200,000. In addition, the monthly fee payable under our agreement with LIFE was reduced to $5,000 until Mr. Carlson, our Chief Financial Officer, is no longer employed by us, at which time the monthly fee will increase to $25,000. The monthly fee will accrue until we complete a financing of at least $10,000,000, at which time the accrued amount will convert into debt or equity instruments under the same terms as the financing.
Effective January 24, 2012, we entered into a Termination Agreement with Green River Resources, Inc. (“GRR”), our wholly owned subsidiary (the “Termination Agreement”). The purpose of the agreement was to terminate the Operating Agreement dated May 31, 2005, as amended, between Bleeding Rock LLC (“Bleeding Rock”) and GRR (the “Operating Agreement”). William C. Gibbs, our Chief Executive Officer, a director, and principal shareholder of the Company, is an owner and manager of Bleeding Rock. Pursuant to the Operating Agreement, GRR had obtained the rights through Bleeding Rock to utilize a process for the development, engineering and extraction of hydrocarbons from tar sands. We effectuated the termination of the Operating Agreement because in January 2012 we entered into a license for similar technology from an unrelated third party. In partial consideration for Bleeding Rock agreeing to terminate the Operating Agreement, we agreed to pay a royalty to Bleeding Rock equal to 1.5% of the gross receipts from future projects using the technology, excluding the current project in Sunnyside,
As of the date of the Termination Agreement, GRR owed $1,446,551.00 to Bleeding Rock payable under the terms of the Operating Agreement. In connection with the termination of the Operating Agreement, GRR issued a 5% convertible promissory note to Bleeding Rock for this amount (“GRR Note”). The note is due and payable in one year from the date of the note and is convertible into shares of our common stock any time before maturity at the rate of one share for each $0.50 of principal or interest converted. We are not responsible for the repayment of the note issued by GRR. Effective on the date of termination, Bleeding Rock assigned its interest in the note to Hidden Peak Partners LC (“HPP”). Hidden Peak Partners LLC is owned by William C. Gibbs, our CEO, Chairman, and a principal stockholder, by Brigham Gibbs, the brother of William C. Gibbs, and by William G. Gibbs, the father of William C. Gibbs. Hidden Peak owns 50% of Bleeding Rock LLC, which owns 9,989,044 shares of the Company. William C. Gibbs is the Manager of Hidden Peak. Effective September 30, 2013, the Company entered into an Exchange Agreement (the “HPP Agreement”) with HPP. The HPP Agreement provides that the GRR Note, as amended, is exchanged for a warrant to purchase 3,260,000 shares of Common Stock of the Company (the “HPP Warrant”), at a price per share of $0.01. The HPP Warrant has a term of ten (10) years.
PROPOSAL NO. 2: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Tanner, LLC audited our consolidated financial statements for the years ended March 31, 2014 and 2013. Tanner, LLC has served as our independent registered public accounting firm since April 5, 2011, following the dismissal of Child, Van Wagoner & Bradshaw, PLLC. As such, we had no disagreements with Tanner, LLC on accounting and financial disclosures. Tanner, LLC’s work on our audit for the years ended March 31, 2013 and 2012 was performed by full time, permanent employees and partners of Tanner, LLC. The audit committee has appointed Tanner, LLC to serve as our independent registered public accounting firm for the year ending March 31, 2014.
While we are not required to submit the appointment of our independent registered public accounting firm to a vote of stockholders for ratification, our board of directors is doing so, based upon the recommendation of the audit committee, as a matter of good corporate practice. If stockholders fail to ratify the appointment, the audit committee will reconsider whether to retain Tanner, LLC, and may retain that firm or another without re-submitting the matter to our stockholders. Even if our stockholders ratify the appointment, the audit committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be advisable and in the best interests of us and our stockholders.
Representatives of Tanner, LLC are not expected to be present at the annual meeting.
Vote Required and Recommendation of our Board of Directors
The affirmative vote of the holders of a majority of all shares casting votes at the annual meeting is required to ratify the appointment of Tanner, LLC as our independent registered public accounting firm for the year ending March 31, 2015.
Our board of directors unanimously recommends a vote “FOR” this proposal.
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REPORT OF THE AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the Company’s audited financial statements for its fiscal year ended March 31, 2014. The information contained in this report shall not be deemed to be soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.
Effective November 14, 2011, the Audit Committee oversees our financial reporting process on behalf of the board of directors; prior to this date, the function of the audit committee was fulfilled by the full board. Management has the primary responsibility for the consolidated financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the board has reviewed and discussed the audited consolidated financial statements in the Annual Report on Form 10-K for the fiscal year ended March 31, 2014, with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the consolidated financial statements.
The board also has reviewed and discussed with our independent registered public accounting firm, Tanner, LLC, which is responsible for expressing an opinion on the conformity of those consolidated financial statements with accounting principles generally accepted in the United States, its judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the committee by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the board has received the written disclosures and the letter from Tanner, LLC required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Tanner, LLC its independence.
Based on the considerations and discussions referred to above, the board of directors approved the audited consolidated financial statements for years ended March 31, 2014 and 2013 and their inclusion in our Annual Report on Form 10-K for the year ended March 31, 2014, as filed with the Securities and Exchange Commission. This report is provided by the following directors, who comprise the audit committee:
Edward P. Mooney, Chairman
Mark F. Lindsey
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SERVICES PROVIDED BY THE INDEPENDENT PUBLIC ACCOUNTANT AND FEES PAID
Audit fees are comprised of amounts billed for the audit of our annual financial statements, review of our quarterly financial statements and other fees that are normally provided in connection with statutory and regulatory filings or engagements. The aggregate audit fees billed by our independent registered public accounting firm, Tanner, LLC for the years ended March 31, 2014 and March 31, 2013, were as follows:
| Fiscal Year Ended | Amount | |
| March 31, 2014 | $62,500 | |
| March 31, 2013 | $59,700 |
Audit related fees are comprised of amounts billed for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements, other than those previously reported as audit fees. We were not billed any such fees.
Tax fees are comprised of amounts billed for the preparation of our federal and state tax returns. We were not billed any such fees.
All other fees represent amounts billed for products or services provided by our independent registered public accounting firm, of which there were none. During the year ended March 31, 2014, we were billed a total of $7,600 for reviews of draft registration statements.
Audit Committee Pre-Approval of Services Provided by the Independent Registered Public Accounting Firm
The Audit Committee of the board of directors maintains a pre-approval policy with respect to material audit and non-audit services to be performed by the Company’s independent registered public accounting firm in order to assure that the provision of such services does not impair the accountant’s independence. Before engaging the independent registered public accounting firm to render a service, the engagement must be either specifically approved by the Audit Committee, or entered into pursuant to the pre-approval policy.
ANNUAL REPORT
The Company’s Annual Report on Form 10-K for the year ended March 31, 2014, is being mailed to each shareholder of record on July 25, 2014, with this Information Statement.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2015 ANNUAL MEETING OF AMSE STOCKHOLDERS
Stockholders may present proper proposals for inclusion in the Company’s information statement and for consideration at the next annual meeting of its stockholders by submitting their proposals to the Company in a timely manner. In order to be considered for inclusion for the 2015 annual stockholders’ meeting, stockholder proposals must be received by the Company no later than April 3, 2015.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director or executive officer of the Company at any time since the beginning of the last fiscal year, nor any individual nominated to be a director of the Company, nor any associate or affiliate of any of the foregoing, has any material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the annual meeting.
SHAREHOLDERS SHARING AN ADDRESS
The Company will deliver only one Information Statement to multiple shareholders sharing an address unless the Company has received contrary instructions from one or more of the shareholders. The Company undertakes to deliver promptly, upon written or oral request, a separate copy of the Information Statement to a shareholder at a shared address to which a single copy of the information statement is delivered. A shareholder can notify the Company that the shareholder wishes to receive a separate copy of the Information Statement by contacting the Company at the address or phone number set forth below. Conversely, if multiple shareholders sharing an address receive multiple Information Statements and wish to receive only one, such shareholders can notify the Company at the address or phone number set forth above.
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OTHER MATTERS
Our board of directors does not intend to bring any matters before the annual meeting other than those specifically set forth in the notice of the annual meeting and, as of the date of this Information Statement, does not know of any matters to be brought before the annual meeting by others. If any other matters properly come before the annual meeting, or any adjournment or postponement of the annual meeting, it is the intention of the persons named in the accompanying proxy to vote those proxies on such matters in accordance with their best judgment.
WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the Exchange Act and files reports and other information with the SEC. Such reports and other information filed by the Company may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, as well as in the SEC’s public reference rooms in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the SEC’s public reference rooms. The SEC also maintains an Internet site that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of the SEC’s web site ishttp://www.sec.gov.
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