Subsequent Events

6 Months Ended

Jun. 30, 2011

Subsequent Events [Abstract]

Subsequent Events

Note 11 — Subsequent Events

On July 5, 2011, we entered into an Investor Relations Consulting Agreement (the “Consulting Agreement”) with COR Advisors LLC (“COR”), pursuant to which COR will provide to us investor relations services. The compensation paid to COR under the Consulting Agreement is 300,000 shares of our common stock. 100,000 shares were fully vested upon execution of the Consulting Agreement, 100,000 shares will be fully vested six months after the execution of the Consulting Agreement, and 100,000 shares will fully vest on the one year anniversary of the execution of the Consulting Agreement.

On July 5, 2011, we entered a Fee Agreement with Brownstein Hyatt Farber Schreck LLP (“BHFS”), pursuant to which BHFS will provide government relations services to us. As compensation under the Fee Agreement, we will issue 100,000 fully vested shares of our common stock to BHFS. Additionally, BHFS will purchase 200,000 shares of our common stock by issuing a promissory note (the “BHFS Note”) to us in the amount of $750,000 (representing the fair market value of the stock on the purchase date). The BHFS Note bears interest at the short term applicable federal rate and matures in one year. The BHFS Note is secured by the common stock purchased, and 20% of the outstanding principal balance constitutes a recourse obligation. If BHFS is not representing us on August 15, 2011, we have the right to acquire 200,000 shares by cancellation of the BHFS Note. If BHFS represents us on August 15, 2011, but is not representing us as of February 3, 2012, we have the right to acquire 100,000 shares for $375,000. If BHFS is representing us on August 15, 2011, the principal amount of the BHFS Note will be reduced by $375,000. If BHFS is representing us on February 3, 2012, the principal amount of the BHFS Note will be reduced by $375,000.

On July 27, 2011 the Company’s 50% owned subsidiary, American West Potash LLC, entered into a potash sharing agreement and related mineral leases covering 100 private mineral estate sections on approximately 62,000 acres adjacent or in close proximity to the Company’s existing mineral rights covering 50 mineral estate sections in the Holbrook Basin of eastern Arizona. The sharing agreement provides that American West Potash will pay the mineral estate owners specified dollar amounts during development of American West Potash’s mining and processing facility, an annual base rent and a royalty for potash extracted from these estates. The term of the agreement will continue in perpetuity or until the earliest of cessation of operations by American West Potash for 180 consecutive days or abandonment of the potash mining operation by American West Potash. The owners of the mineral estates can also terminate the agreement upon specified defaults by American West Potash, some following cure periods. The mineral estate owners party to the agreement are two Hortenstine family limited partnerships, members of the Spurlock-Lucking family and American General Life Insurance Company.

On August 3, 2011 the Company issued a $1,500,000 convertible secured note due August 3, 2012 to Avalon Portfolio, LLC (the “Avalon Note”) which accrues interest at 10% per annum. The Avalon Note is secured pari passu by all of our assets with our other $5,000,000 of outstanding convertible notes. The principal amount plus accrued interest on the Avalon Note may convert at Avalon’s option at any time during the term into shares of our common stock at $3.00 per share, subject to adjustment solely for capital reorganization events. The principal amount plus accrued interest will automatically convert into shares of our common stock at $3.00 per share upon completion by us of the issuance of at least $10,000,000 of securities; provided, that if such issuance of securities occurs at a per share purchase price of less than $3.60, additional shares will be issued upon conversion such that the total shares received by the holder upon conversion equals the aggregate principal amount (X) plus all accrued interest (Y) divided by 0.8 times the per share purchase price of the securities issuance (Z). For clarity, the total shares received by the holder shall be equal to (X + Y)÷(0.8 * Z).

We also issued Avalon warrants exercisable until February 3, 2014 to purchase up to $5,700,000 of shares at a purchase price per share equal to the conversion price per share of the Avalon Note.

In connection with issuance of the convertible notes we granted piggy-back registration rights to Avalon for the shares issuable upon conversion of the note and exercise of the warrants.