American Sands Energy Corp. company history: the story so far

History

American Sands Energy bought a Utah oil sands developer in 2011, licensed solvent extraction technology, and funded itself through notes, warrants and preferred stock, still with no revenue by April 2014.

2011-2012: Becoming an oil sands company

The company, formerly Millstream Ventures, set out to enter Utah oil sands. In May 2011 it agreed to buy Green River Resources, Inc., which held an undivided interest in Utah mining leases, from its Alberta parent for 35,600,000 new shares. The deal also involved cancelling 17,608,203 existing shares, and control passed to the seller. It closed on June 3, 2011, and the company stopped being a shell company. A one-for-two reverse share split followed on October 19, 2011.

In January 2012 the company took a direct 20-year licence from Universal Oil Recovery Corp. and SRS International for solvent technology that extracts bitumen (a thick oil) from oil sands. This replaced an earlier arrangement run through Bleeding Rock LLC, which is partly owned by President William C. Gibbs. Bleeding Rock received a 1.5% gross royalty on future projects excluding Sunnyside, and the $1,446,551 owed to it became a 5% convertible note. The company believed direct licensing would help fundraising.

In February 2012 it completed a $1,515,000 offering of 10% convertible notes, convertible into 3,030,000 shares, with warrants for 3,038,667 shares at $0.50 to April 30, 2014.

2013-2014: Warrants, preferred stock and equipment

The record is quiet for most of 2012 and 2013. In October 2013 the company cancelled the 5% note, held by Hidden Peak Partners LC, for a 10-year warrant over 3,260,000 shares at $0.01. It also cancelled $1,049,349.54 of salary owed to Gibbs for a similar warrant over 2,260,000 shares. These removed the debts but could add shares if exercised. The warrant form showed 3,030,000 shares, which did not match the agreement text.

Funding then shifted to Series A preferred stock, created in November 2013. Each share carries a $1.40 liquidation preference, ranks ahead of common stock, and converts to four common shares. From January to March 5, 2014 the company sold $450,000 of units, and raised the authorised Series A shares from 3,250,000 to 4,750,000. In March it sold about $2.14 million more to 15 investors.

On March 31, 2014 it bought a trailer-mounted mobile oil recovery system from Elemax, Inc. for $50,000 and 214,285 Series A units. On April 1 it issued common shares for owed pay: 525,715 to Gibbs, 333,333 to CFO Daniel F. Carlson and 150,000 to C14 Strategy, LLC.

As of April 2, 2014, the company had no revenue. The $1,515,000 10% notes fell due April 30, 2014, and the demonstration project with its technology licensors was still to be completed.

Written from the 8 story beats below (2011 to 2 Apr 2014), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

shares on issue market cap (log scale)

201430.9m shares · US$27.5m market cap

2 Apr
On March 28, 2014 (closed March 31) the company bought a trailer-mounted mobile oil recovery system from Elemax, Inc. for $50,000 cash and 214,285 Series A preferred units. It also sold 155,178 more units to four investors at $1.40 each ($217,250), and on April 1 issued common stock to pay accrued pay: 525,715 shares to CEO William C. Gibbs ($184,000), 333,333 shares to CFO Daniel F. Carlson ($116,667) and 150,000 shares to C14 Strategy, LLC, a consulting firm controlled by the former CEO. Each Series A share has a $1.40 liquidation preference over common and converts to four common shares. This adds equipment and converts some owed pay to shares, which increases the common share count.
asset acquisition disposition
30.9m shUS$27.5m
21 Mar
In March 2014 the company sold more Series A preferred stock units to 15 investors, with listed sales of $1,500,000 on March 13 and smaller amounts on March 18 to 21, about $2.14 million in total. The units carry the same $0.45 and $0.70 warrants as before. This continues the Series A fundraising, and the amount raised in this filing is much larger than earlier batches. Because the issuances add preferred stock with priority over common, existing common holders are further subordinated and diluted (inference).
capital raising announcement
29.9m shUS$12.0m
7 Mar
Between January 31 and March 5, 2014 the company sold four more batches of Series A preferred stock units to four individuals, totalling $450,000 (321,429 units). Each unit includes a preferred share and warrants at $0.45 and $0.70 per common share; a placement agent is owed a $45,000 commission plus 128,572 warrants at $0.35. The board also raised the authorised Series A shares from 3,250,000 to 4,750,000. The filing states that Series A has priority over common stock on dividends and in liquidation, which limits what common holders could receive.
capital raising announcement
29.9m shUS$12.0m

201329.0m shares · US$9.6m market cap

16 Oct
Effective September 30, 2013, the company cancelled the 5% convertible note (original $1,446,551, outstanding balance $1,514,516.48), now held by Hidden Peak Partners LC, in exchange for a 10-year warrant for 3,260,000 shares at $0.01. It also cancelled $1,049,349.54 of salary owed to CEO William C. Gibbs in exchange for a 10-year warrant for 2,260,000 shares at $0.01. This resolves the GRR convertible note and the accrued salary as debts, but the new warrants could add shares if exercised, which would dilute existing holders (inference). The attached form of warrant in the exhibit shows 3,030,000 shares, which differs from the 3,260,000 in the agreement text.
capital raising announcement
29.0m shUS$9.6m

201227.7m shares

3 Feb
The company completed a private offering of 10% convertible notes totalling $1,515,000, convertible into 3,030,000 shares, plus warrants for 3,038,667 shares at $0.50 through April 30, 2014. The notes are due April 30, 2014 and would add shares if converted or exercised, which dilutes existing holders. The terms reflect a one-for-two reverse stock split effective October 19, 2011.
capital raising announcement
27.7m sh
30 Jan
American Sands Energy took a direct 20-year licence from Universal Oil Recovery Corp. and SRS International for solvent technology to extract bitumen from oil sands, in Utah and future projects. It ended the earlier operating agreement under which subsidiary Green River Resources got the technology through Bleeding Rock LLC, which is owned in part by President William C. Gibbs. In exchange it granted Bleeding Rock a 1.5% gross royalty on future projects (excluding Sunnyside, Utah), and the subsidiary's $1,446,551 owed to Bleeding Rock became a 5% note convertible at $0.50 per share, due in one year, which the parent is not responsible for repaying. The filing says the company believed direct licensing would help fundraising.
material agreement termination
27.7m sh

201111.3m shares

10 June
The Green River Resources acquisition closed on June 3, 2011 after an amendment to the exchange agreement, and the company stopped being a shell company. The filing gives no new terms and refers to the 2011 annual report (10-K) for the details, including the amendment terms.
asset acquisition disposition
11.3m sh
10 May
The company agreed to buy Green River Resources, Inc. (a Utah oil sands extraction developer holding an undivided interest in Utah mining leases) from its Alberta parent, GreenRiver Resources Corp., for 35,600,000 new shares. Closing was set for May 20, 2011, conditional on at least $1,500,000 of net cash and audited GRI financials. The company would cancel 17,608,203 existing shares, grant options on 6,175,000 shares at $0.20 and warrants on 488,480 shares, and White, Nestripke and Carlson would resign with control passing to the Seller.
material agreement
11.3m sh