UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



| | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30,
2013



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



For the transition period from ____________ to ____________



Commission File Number 000-53167



|American sands energy Corp.                            
|-------------------------------------------------------
|(Exact name of registrant as specified  in its charter)



|Delaware                                                       | 87-0405708                       
|-------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)



|4760 S. Highland Drive                  
|----------------------------------------
|Suite 341                               
|Salt Lake City, UT  84117               
|(Address of principal executive offices)



|(801) 699-3966                                      
|----------------------------------------------------
|(Registrant’s telephone number, including area code)



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed under Section 13 or 15(d) of the Exchange Act 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 such 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 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 Filer [  ]       
|------------------------------------------------------------------------ | -----------------------------
|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 Exchange Act).   Yes [  ]   No [X]



The issuer had 29,926,419 shares of common
stock, $.001 par value, outstanding as of November 11, 2013.






















TABLE OF CONTENTS







|PART I.
FINANCIAL INFORMATION                                                                  | 3 
|---------------------------------------------------------------------------------------------- | --
|Item 1. Financial Statements                                                                   | 3 
|Item 2.  Management’s Discussion
and Analysis of Financial Condition and Results of Operations | 16
|Item 3.  Quantitative and Qualitative
Disclosures About Market Risk                            | 21
|Item 4.  Controls and Procedures                                                               | 21
|PART II.  OTHER
INFORMATION                                                                    | 22
|Item 2.  Unregistered Sales of Equity
Securities and Use of Proceeds                           | 22
|Item 4.  Mine Safety Disclosures                                                               | 22
|Item 6.  Exhibits                                                                              | 22
|SIGNATURES                                                                                     | 23









2









PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



American Sands Energy Corp.

(A Development Stage Company)

Condensed Consolidated Balance Sheets
(Unaudited)





|                                                                                                                                        |  | September 30, |             |   | March 31, |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | --------- | -
|                                                                                                                                        |  | 2013          |             |   | 2013      |  
|Assets                                                                                                                                  |  |               |             |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Current assets:                                                                                                                         |  |               |             |   |           |  
|Cash                                                                                                                                    |  | $             | 32,435      |   |           | $
|Receivables                                                                                                                             |  |               | –           |   |           |  
|Prepaid and other current assets                                                                                                        |  |               | 82,292      |   |           |  
|Related-party receivable                                                                                                                |  |               | –           |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total current assets                                                                                                                    |  |               | 114,727     |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Property and equipment, net                                                                                                             |  |               | 1,755       |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Other assets                                                                                                                            |  |               | 210,747     |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total assets                                                                                                                            |  | $             | 327,229     |   |           | $
|                                                                                                                                        |  |               |             |   |           |  
|Liabilities and Stockholders' Deficit                                                                                                   |  |               |             |   |           |  
|Current liabilities:                                                                                                                    |  |               |             |   |           |  
|Accounts payable                                                                                                                        |  | $             | 624,063     |   |           | $
|Accrued expenses                                                                                                                        |  |               | 422,898     |   |           |  
|Current portion of note payable                                                                                                         |  |               | 17,548      |   |           |  
|Current portion of convertible notes payable, net of discount of $194,139 and $0, respectively                                          |  |               | 1,804,185   |   |           |  
|Current portion of related-party convertible notes payable, net of discount of $8,047 and $0, respectively                              |  |               | 357,253     |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total current liabilities                                                                                                               |  |               | 3,225,947   |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Convertible notes payable, net of discount $0 and $352,317, respectively                                                                |  |               | –           |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Related-party convertible notes payable, net of discount of $0 and $109,979, respectively                                               |  |               | –           |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Mineral lease payable                                                                                                                   |  |               | 4,881       |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total liabilities                                                                                                                       |  |               | 3,230,828   |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Commitments and contingencies (Notes 5, 6, 7, and 11)                                                                                   |  |               |             |   |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Stockholders' deficit:                                                                                                                  |  |               |             |   |           |  
|Preferred stock, $.001 par value: 10,000,000 shares
    authorized; no shares issued                                                    |  |               | –           |   |           |  
|Common stock, $.001 par value: 200,000,000 shares
    authorized; 29,365,715 and 28,990,715 shares issued and outstanding, respectively |  |               | 29,366      |   |           |  
|Additional paid-in capital                                                                                                              |  |               | 9,540,875   |   |           |  
|Deficit accumulated during the development stage                                                                                        |  |               | (12,473,840 | ) |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total stockholders' deficit                                                                                                             |  |               | (2,903,599  | ) |           |  
|                                                                                                                                        |  |               |             |   |           |  
|Total liabilities and stockholders' deficit                                                                                             |  | $             | 327,229     |   |           | $



See the accompanying notes to condensed consolidated
financial statements.





3







American Sands Energy Corp.

(A Development Stage Company)

Condensed Consolidated Statements of
Operations (Unaudited)



|                                                               |  | For the Three      |            |   | For the Three      |   |            | For the Six        |  |   | For the Six        |   |  | Cumulative From    |           
|-------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | ------------------ |  | - | ------------------ | - |  | ------------------ | ----------
|                                                               |  | Months Ended       |            |   | Months Ended       |   |            | Months Ended       |  |   | Months Ended       |   |  | Inception to       |           
|                                                               |  | September 30, 2013 |            |   | September 30, 2012 |   |            | September 30, 2013 |  |   | September 30, 2012 |   |  | September 30, 2013 |           
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Revenues                                                       |  | $                  | –          |   |                    | $ | –          |                    |  | $ | –                  |   |  | $                  | –         
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Operating expenses:                                            |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Selling, general and administrative                            |  |                    | 591,614    |   |                    |   | 424,878    |                    |  |   | 829,229            |   |  |                    | 933,026   
|Mineral lease                                                  |  |                    | 53,136     |   |                    |   | 106,255    |                    |  |   | 106,271            |   |  |                    | 186,164   
|Research and development                                       |  |                    | –          |   |                    |   | 53,261     |                    |  |   | 49,042             |   |  |                    | 106,522   
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Total operating expenses                                       |  |                    | 644,750    |   |                    |   | 584,394    |                    |  |   | 984,542            |   |  |                    | 1,225,712 
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Loss from operations                                           |  |                    | (644,750   | ) |                    |   | (584,394   | )                  |  |   | (984,542           | ) |  |                    | (1,225,712
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Other income (expense):                                        |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Interest expense                                               |  |                    | (147,061   | ) |                    |   | (139,179   | )                  |  |   | (290,146           | ) |  |                    | (278,387  
|Interest income                                                |  |                    | –          |   |                    |   | –          |                    |  |   | –                  |   |  |                    | –         
|Other income (expense)                                         |  |                    | –          |   |                    |   | –          |                    |  |   | –                  |   |  |                    | –         
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Total other income (expense)                                   |  |                    | (147,061   | ) |                    |   | (139,179   | )                  |  |   | (290,146           | ) |  |                    | (278,387  
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Loss before provision for income taxes                         |  |                    | (791,811   | ) |                    |   | (723,573   | )                  |  |   | (1,274,688         | ) |  |                    | (1,504,099
|Provision for income taxes                                     |  |                    | (100       | ) |                    |   | –          |                    |  |   | (300               | ) |  |                    | –         
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Net loss                                                       |  | $                  | (791,911   | ) |                    | $ | (723,573   | )                  |  | $ | (1,274,988         | ) |  | $                  | (1,504,099
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Net loss per common share - basic and diluted                  |  | $                  | (0.03      | ) |                    | $ | (0.03      | )                  |  | $ | (0.04              | ) |  | $                  | (0.05     
|                                                               |  |                    |            |   |                    |   |            |                    |  |   |                    |   |  |                    |           
|Weighted average common shares outstanding - basic and diluted |  |                    | 29,308,023 |   |                    |   | 28,784,873 |                    |  |   | 29,149,369         |   |  |                    | 28,636,575



See the accompanying notes to condensed consolidated
financial statements.





4







American Sands Energy Corp.

(A Development Stage Company)

Condensed Consolidated Statement of Stockholders'
Deficit

For the Six Months Ended September 30,
2013 (Unaudited)





|                                                          |  |              |            |  |         |   |        |             |  |   | Deficit       |  |  |         |            
|--------------------------------------------------------- |  | ------------ | ---------- |  | ------- | - | ------ | ----------- |  | - | ------------- |  |  | ------- | -----------
|                                                          |  |              |            |  |         |   |        |             |  |   | accumulated   |  |  |         |            
|                                                          |  |              |            |  |         |   |        | Additional  |  |   | during the    |  |  | Total   |            
|                                                          |  | Common stock |            |  | paid-in |   |        | development |  |   | stockholders' | 
|                                                          |  | Shares       |            |  | Amount  |   |        | capital     |  |   | stage         |  |  | deficit |            
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Balance as of March 31, 2013                              |  |              | 28,990,715 |  |         | $ | 28,991 |             |  | $ | 6,706,565     |  |  | $       | (11,198,852
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Stock-based compensation                                  |  |              | –          |  |         |   | –      |             |  |   | 191,434       |  |  |         | –          
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Shares issued for stock offering costs at $0.35 per share |  |              | 375,000    |  |         |   | 375    |             |  |   | 130,875       |  |  |         | –          
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Payroll obligations exchanged for warrants                |  |              | –          |  |         |   | –      |             |  |   | 1,049,350     |  |  |         | –          
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Related-party debt exchanged for warrants                 |  |              | –          |  |         |   | –      |             |  |   | 1,462,651     |  |  |         | –          
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Net loss                                                  |  |              | –          |  |         |   | –      |             |  |   | –             |  |  |         | (1,274,988 
|                                                          |  |              |            |  |         |   |        |             |  |   |               |  |  |         |            
|Balance as of September 30, 2013                          |  |              | 29,365,715 |  |         | $ | 29,366 |             |  | $ | 9,540,875     |  |  | $       | (12,473,840



See the accompanying notes to condensed consolidated financial statements.





5







American Sands Energy Corp.

(A Development Stage Company)

Condensed Consolidated Statements of
Cash Flows (Unaudited)





|                                                                             |  | For the            |            |   | For The            |   |            | Cumulative From    | 
|---------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | ------------------ | 
|                                                                             |  | Six Months Ended   |            |   | Six Months Ended   |   |            | Inception through  | 
|                                                                             |  | September 30, 2013 |            |   | September 30, 2012 |   |            | September 30, 2013 | 
|Cash flows from operating activities:                                        |  |                    |            |   |                    |   |            |                    | 
|Net loss                                                                     |  | $                  | (1,274,988 | ) |                    | $ | (1,504,099 | )                  | 
|Adjustments to reconcile net loss to net cash  used in operating activities: |  |                    |            |   |                    |   |            |                    | 
|Depreciation                                                                 |  |                    | 167        |   |                    |   | 168        |                    | 
|Gain on disposal of property and equipment                                   |  |                    | –          |   |                    |   | –          |                    | 
|Accretion of debt discount                                                   |  |                    | 208,243    |   |                    |   | 159,721    |                    | 
|Straight-line of mineral lease rents                                         |  |                    | (9,759     | ) |                    |   | (9,760     | )                  | 
|Stock issued for services                                                    |  |                    | –          |   |                    |   | 57,500     |                    | 
|Stock-based compensation expense                                             |  |                    | 191,434    |   |                    |   | 219,358    |                    | 
|Stock offering costs                                                         |  |                    | 227,143    |   |                    |   | –          |                    | 
|Special warrants issued as payment for leases                                |  |                    | –          |   |                    |   | –          |                    | 
|Notes payable issued as payment for leases                                   |  |                    | –          |   |                    |   | –          |                    | 
|(Increase) decrease in operating assets:                                     |  |                    |            |   |                    |   |            |                    | 
|Receivables                                                                  |  |                    | 207,046    |   |                    |   | 382,500    |                    | 
|Prepaid and other current assets                                             |  |                    | 13,489     |   |                    |   | 101,676    |                    | 
|Related-party receivable                                                     |  |                    | 22,324     |   |                    |   | –          |                    | 
|Reclamation deposit                                                          |  |                    | –          |   |                    |   | –          |                    | 
|Increase (decrease) in operating liabilities:                                |  |                    |            |   |                    |   |            |                    | 
|Accounts payable                                                             |  |                    | 166,208    |   |                    |   | (333,004   | )                  | 
|Accrued expenses                                                             |  |                    | (80,858    | ) |                    |   | 10,912     |                    | 
|Accrued interest on convertible debt and note payable                        |  |                    | 81,623     |   |                    |   | 118,666    |                    | 
|Net cash used in operating activities                                        |  |                    | (247,928   | ) |                    |   | (796,362   | )                  | 
|Cash flows from investing activities:                                        |  |                    |            |   |                    |   |            |                    | 
|Acquisition of property and equipment                                        |  |                    | –          |   |                    |   | –          |                    | 
|Disposal of property and equipment                                           |  |                    | –          |   |                    |   | –          |                    | 
|Net cash used in investing activities                                        |  |                    | –          |   |                    |   | –          |                    | 
|Cash flows from financing activities:                                        |  |                    |            |   |                    |   |            |                    | 
|Proceeds from issuance of notes payable                                      |  |                    | 19,610     |   |                    |   | –          |                    | 
|Proceeds from issuance of convertible notes payable                          |  |                    | 53,000     |   |                    |   | –          |                    | 
|Proceeds from issuance of related-party notes payable                        |  |                    | 150,000    |   |                    |   | –          |                    | 
|Proceeds from issuance of common stock and special warrants                  |  |                    | –          |   |                    |   | 492,019    |                    | 
|Decrease (increase) in stock offering costs                                  |  |                    | –          |   |                    |   | –          |                    | 
|Increase in deposits for purchase of common stock                            |  |                    | –          |   |                    |   | –          |                    | 
|Net cash received in reverse merger                                          |  |                    | –          |   |                    |   | –          |                    | 
|Principal payments on notes payable                                          |  |                    | (2,228     | ) |                    |   | –          |                    | 
|Net cash provided by financing activities                                    |  |                    | 220,382    |   |                    |   | 492,019    |                    | 
|Net increase (decrease) in cash                                              |  |                    | (27,546    | ) |                    |   | (304,343   | )                  | 
|Cash, beginning of the period                                                |  |                    | 59,981     |   |                    |   | 624,300    |                    | 
|Cash, end of the period                                                      |  | $                  | 32,435     |   |                    | $ | 319,957    |                    | 
|                                                                             |  |                    |            |   |                    |   |            |                    | 
|Supplemental disclosures of cash flow information:                           |  |                    |            |   |                    |   |            |                    | 
|Interest paid                                                                |  | $                  | –          |   |                    | $ | –          |                    | 
|Income taxes paid                                                            |  | $                  | –          |   |                    | $ | –          |                    | 
|                                                                             |  |                    |            |   |                    |   |            |                    | 
|Supplemental schedule of non-cash investing  and financing activities:       |  |                    |            |   |                    |   |            |                    | 
|Conversion of notes payable to common stock                                  |  | $                  | –          |   |                    | $ | –          |                    | 
|Convertible note issued for accrued expenses                                 |  | $                  | –          |   |                    | $ | –          |                    | 
|Issuance of warrants associated with convertible notes payable               |  | $                  | –          |   |                    | $ | –          |                    | 
|Common stock issued for stock offering costs                                 |  | $                  | 131,250    |   |                    | $ | –          |                    | 
|Discount on related-party notes payable                                      |  | $                  | –          |   |                    | $ | –          |                    | 
|Shares issued to satisfy deposits to purchase
    common stock               |  | $                  | –          |   |                    | $ | 710,214    |                    | 
|Related-party convertible note payable exchanged for warrants                |  | $                  | 1,462,651  |   |                    | $ | –          |                    | 
|Warrants issued to satisfy payroll liabilities                               |  | $                  | 1,049,350  |   |                    | $ | –          |                    | 



See the accompanying notes to condensed consolidated
financial statements.





6









American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



Note 1 - Description of Business and Nature of Operations



Green River Resources Corp. (an Alberta, Canada
corporation) (“GRC”), formed on December 1, 2004, and its wholly owned subsidiary, Green River Resources, Inc. (a Utah
corporation) (“GRI”), formed on February 16, 2005, were formed for the purpose of extracting oil from oil sands, oil
shale, and other similar types of naturally occurring hydrocarbons in a cost effective and environmentally safe manner. GRC completed
a merger with American Sands Energy Corp. (formerly Millstream Ventures, Inc.) (“ASEC”), a publicly traded company,
on June 3, 2011. The merger was accounted for as a reverse acquisition with GRC treated as the accounting acquirer.



On December 31, 2011, GRC, a wholly owned non-operating
subsidiary of ASEC, was voluntarily dissolved under the Business Corporation Act of the Province of Alberta, Canada. As a result
of the dissolution, ASEC assumed all of the outstanding stock of GRI which was the sole asset of GRC at the time of dissolution.
References to the “Company” refer to GRC and its wholly owned subsidiary, GRI, prior to the reverse merger on June
3, 2011, and GRC, GRI, and ASEC (the legal parent) subsequent to the reverse merger transaction until December 31, 2011, and GRI
and ASEC after December 31, 2011. The Company has not generated revenues from its principal operations and is a development stage
company.



The Company has acquired rights to approximately
1,760 acres of prime oil sand deposits in the Sunnyside area of Utah. Prior to January 24, 2012, the Company had licensed proprietary
extraction technology with Bleeding Rock, LLC (“Bleeding Rock”), which had an exclusive license to a bitumen and hydrocarbon
extraction process to separate oil and other hydrocarbons from sand, dirt and other substances. Our Chief Executive Officer is
the manager of Bleeding Rock and has an indirect ownership interest therein.



Effective January 24, 2012, the Company entered
into a License, Development and Engineering Agreement with Universal Oil Recovery Corp. and SRS International (the “License
Agreement”) whereby the Company was granted an exclusive non-transferable license to use certain technology in its proposed
business to extract bitumen from oil sands. The territory covered by the agreement includes the State of Utah and any other geographic
location in which a future designated project is commenced by or through the Company. In conjunction with the License Agreement,
the Company terminated its operating agreement with Bleeding Rock under which Bleeding Rock had licensed rights to use similar
technology to GRI. The License Agreement also designates the Company as an “authorized agent” in representing the owner
of the technology in future projects. The Chief Executive Officer, a director, and principal stockholder of the Company, is the
manager of Bleeding Rock and has an indirect ownership therein. The term of the License Agreement is for 20 years and thereafter
so long as production of products using the technology is commercially and economically feasible.



Note 2 – Significant Accounting Policies



These financial statements have been prepared
by the Company in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information,
as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by US GAAP
for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting solely of normal
recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included.



The preparation of financial statements in
conformity with US GAAP requires management to make judgments, estimates, and assumptions that could affect the reported amounts
of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ significantly from those estimates.



a) Principles of Consolidation



The condensed consolidated financial statements
include the consolidated operations of GRC through June 3, 2011, the consolidated operations of GRC and ASEC from June 3, 2011
through the GRC dissolution on December 31, 2011 and the consolidated operations of ASEC and GRI through September 30, 2013. All
significant intercompany balances and transactions have been eliminated in consolidation.





7







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



b) Mineral Leases



In certain cases, the Company capitalizes costs
related to investments in mineral lease interests on a property-by-property basis. Such costs include mineral lease acquisition
costs. Costs are deferred until such time as the extent of proved developed reserves has been determined and mineral lease interests
are either developed, the property sold or the mineral lease rights are allowed to lapse. To date, all exploration and lease costs
have been expensed.



c) Research and Development



The Company continues to develop additional
technology related to its licensed proprietary bitumen extraction process. To date, the Company has expensed costs associated with
developing its technology as research and development expenses.



d) Stock-based Compensation



The Company uses the Black-Scholes option-pricing
model to determine the fair value of stock options and warrants granted. For employee stock options, the Company records the grant-date
fair value as expense over the period in which it is earned, typically the vesting period. For consultants, the fair value of the
stock-based award is recorded as expense over the term of the service period, and unvested amounts are revalued using the Black-Scholes
model at each reporting period. For warrants issued to lenders, the Company records the grant-date fair value of the warrants,
and any resulting beneficial conversion feature for convertible debt, as a note discount. The discount is then amortized over the
term of the convertible debt as non-cash interest expense.



e) Earnings or Loss Per Common Share



Basic earnings or loss per common share is
computed on the basis of the weighted average number of shares outstanding during the periods. Diluted earnings or loss per common
share is calculated on the basis of the weighted average number of common shares outstanding during the period plus the effect
of potential dilutive shares during the period. Potential dilutive shares include outstanding stock options and warrants and convertible
debt instruments. For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive.
Therefore, basic loss per common share is the same as diluted loss per common share for the three and six months ended September
30, 2013 and 2012.



f) Recent Accounting Pronouncements



In July 2012, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, Intangibles-Goodwill
and Other (Topic350): Testing Indefinite-Lived Intangible Assets for Impairment.This ASU permits an entity the option to
first assess qualitative factors to determine whether it is more-likely-than-not that an indefinite-lived intangible asset is
impaired. If the qualitative assessment supports the conclusion that it is more-likely-than-not that the fair value of the
asset exceeds its carrying amount, the entity would not need to perform the two-step quantitative impairment test. The focus
of the guidance is to reduce the cost and complexity of performing impairment tests for indefinite-lived intangible assets
other than goodwill, and to improve consistency in impairment testing among long-lived asset categories. This ASU is
effective for annual and interim impairment tests performed prior to the issuance of the final ASU, if an entity’s
financial statements for the most recent annual or interim period have not yet been issued. This ASU did not have a material
impact on the Company’s consolidated financial statements.



In October 2012, the FASB issued ASU 2012-04,
Technical Corrections and Improvements. The amendments in this update cover a wide range of topics in the Accounting Standards
Codification (“ASC”). These amendments include technical corrections and improvements to the ASC and conforming amendments
related to fair value measurements. The amendments in this update were effective for fiscal periods beginning after December 15,
2012. The adoption of ASU 2012-04 did not have a material impact on the Company’s consolidated financial statements.





8







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



In July 2013, the FASB issued ASU 2013-11,
Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax
Loss, or a Tax Credit Carryforward Exists. This update provides guidance on when to classify an unrecognized tax benefit, or
a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for: (1) a net operating loss carryforward, (2)
a similar tax loss, or (3) a tax credit carryforward in the financial statements. Otherwise, such an unrecognized tax benefit,
or a portion of an unrecognized tax benefit, should be classified in the financial statements as a liability. ASU 2013-11 is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption
of this ASU to have a material impact on the Company’s consolidated financial statements.



Note 3 – Going Concern



The Company’s financial statements have
been prepared assuming the Company is a going concern which contemplates the realization of assets and the liquidation of liabilities
in the ordinary course of business. The Company has no revenues, has incurred substantial losses from operations, has negative
working capital, and has negative cash flows from operating activities, which raise substantial doubt about the Company’s
ability to continue as a going concern. The Company sustained a net loss for the three months ended September 30, 2013 of $791,911
and has an accumulated deficit of $12,473,840 as of September 30, 2013. In addition, the Company estimates it will require approximately
$75,000,000 in capital to commence its principal operations.



The Company intends to continue its research
and development efforts, but does not have revenues from which to finance these activities internally. As a result, the Company
intends to seek financing in order to fund its operations.



The Company has been able to meet its short-term
needs primarily through loans from third parties, private placements of equity and debt securities, and deferring certain payment
obligations to related parties.  The Company is actively seeking additional private and public placements of equity and/or
debt securities.  The Company plans to continue to obtain financing through the sale of equity
or debt securities in order to finance operations until it can generate positive cash flows from operating activities.The
private and public equity placements are expected to provide the needed funds for continued operations and further research and
development of the Company’s proprietary oil sands refining methods. The Company can provide no assurance that it will be
able to obtain sufficient additional financing needed to develop its technology and alleviate doubt about its ability to continue
as a going concern. To the extent the Company raises additional funds by issuing equity securities, the Company’s stockholders
may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s
ability to conduct business. The condensed consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



Note 4 – Accrued Expenses



Accrued expenses consist of the following:





|                                           |  | September 30, |         |  | March 31, |  
|------------------------------------------ |  | ------------- | ------- |  | --------- | -
|                                           |  | 2013          |         |  | 2013      |  
|Payroll and benefits                       |  | $             | 367,268 |  |           | $
|Deferred research and development billings |  |               | –       |  |           |  
|Mineral lease payable                      |  |               | 55,530  |  |           |  
|Other                                      |  |               | 100     |  |           |  
|                                           |  |               |         |  |           |  
|Total accrued expenses                     |  | $             | 422,898 |  |           | $



On September 30, 2013, the Company exchanged
warrants to purchase 2,260,000 shares of common stock of the Company for the outstanding payroll obligation of the Company’s
CEO in the amount of $1,049,350. The warrants have a 10-year term and an exercise price of $.01 (see Note 9).





9







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



Note 5 – Mineral Leases



During 2005, the Company acquired three oil
sands mineral leases: (1) an undivided 40% interest in a 1,120-acre parcel, (2) an undivided 20% interest in the same 1,120-acre
parcel, and (3) an undivided 16.666% interest in a 640-acre parcel. These leases are located in Carbon County, Utah, have a 6-year
life, and require minimum yearly lease payments totaling $224,597. Effective March 31, 2013, the lease terms were extended through
2016 and the annual lease payments increased to $268,915.



In 2009, a fourth lease was entered into with
William G. Gibbs, a relative of the Chief Executive Officer of the Company, for an additional undivided 5% interest in the 640-acre
parcel (for a total 21.666% undivided interest in the 640-acre parcel). This lease is located in Carbon County, Utah, adjacent
to the 1,120-acre parcel. This lease has a 6-year life with a minimum yearly lease payment of $7,965 and is scheduled to terminate
by October 2015 if the property has not reached commercial production. Effective October 31, 2013, the payment due date for this
lease was extended to December 31, 2013.



The Company’s interest in these leases
is conditioned upon the payments of royalties, minimum yearly investment in development, tax payments, and other obligations to
the owners of the leases.



Upon commencement of operations, each lease
requires a production royalty of 10% of the market value of the minerals sold, net of applicable costs and expenses. The Company
has the right, but not the obligation, to pool or unitize the leases, such that the ore mined is allocated between, and the royalties
paid, on their proportionate interests. If not pooled, the owners will be paid royalties only to the extent the oil sand ore is
mined on their respective property. Through September 30, 2013, no production royalties were accrued or paid because production
on these properties had not commenced. After three consecutive calendar years of production on the 1,120-acre parcel, the production
royalty on the 1,120-acre parcel shall be the greater of the 10% royalty or $1,000,000 annually.



Future minimum lease payments are as follows
for the years ending:





|September 30,                       |  |   |        
|----------------------------------- |  | - | -------
|2014                                |  | $ | 284,845
|2015                                |  |   | 276,880
|2016                                |  |   | 268,915
|                                    |  |   |        
|Total future minimum lease payments |  | $ | 830,640



Note 6
– Convertible Notes Payable



As a result of the reverse merger, the Company
assumed convertible notes payable of $770,000 on June 3, 2011. In addition, the Company has issued $745,000 of convertible notes
payable subsequent to the reverse merger. These notes were issued pursuant to a $1,750,000 private offering. As of September 30,
2013, there was $1,515,000 of convertible notes payable outstanding with accrued interest of $330,389. This offering was closed
by the Company effective January 31, 2013.



The notes bear interest at 10% per annum and
all principal and interest are due and payable by April 30, 2014. The notes and all accrued interest are convertible into the Company’s
common stock at any time by the lender at approximately $0.50 per common share until the due date. The notes automatically convert
upon completion of a financing of $10,000,000 or more.



In connection with the terms of the
offering, holders of the notes also received 100,286 warrants for each $50,000 loaned to the Company. Through September 30,
2013, the Company granted 3,038,667 warrants in connection with this offering (see Note 9). The Company recorded a debt
discount related to the warrants and resulting beneficial conversion feature of $873,589. The unamortized debt discount was
$194,139 and $352,317 as of September 30, 2013 and March 31, 2013, respectively.





10







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



In May 2013, the Company borrowed a combined
$150,000 from three individuals. The notes bear interest at 6%, are due by June 30, 2014 and are convertible into the Company’s
common stock at the same rate as the Company completes a future offering of $2,000,000 or more. On November 7, 2013, the notes
and accrued interest were converted into Series A preferred shares as a result of the Series A Preferred Offering, resulting in
109,908 shares of Series A preferred shares being issued, together with warrants to purchase 109,908 common shares at $0.45 per
share and warrants to purchase 109,908 common shares at $0.70 per share (see Note 12).



Note 7 – Convertible Notes Payable,
Related Party



On May 31, 2011, the Company converted $214,281
of its outstanding payable to Bleeding Rock into a 6% convertible promissory note. The note is convertible into 535,704 shares
of the Company’s common stock. Effective January 1, 2013, the Company modified the terms of the note such that all of the
outstanding principal which totaled $214,281 and accrued interest which totaled $20,712 were converted into a new note totaling
$234,993 that is non-interest bearing. The Company imputed interest on the new note using a discount rate of 6% and recorded a
debt discount of $18,006 which is being amortized over the remaining life of the loan using the interest method. As of September
30, 2013 and March 31, 2013, the carrying balance of the note was $226,946 and $220,221, respectively, net of the unamortized remaining
discount. Effective January 1, 2013, the note was modified and the due date was extended to April 30, 2014. On October 10, 2013,
the Company issued 535,704 shares of common stock as full satisfaction of the obligation (see Note 12).



Effective January 24, 2012, the Company entered
into a Termination Agreement with Bleeding Rock (the “Termination Agreement”). The purpose of the agreement was to
terminate the Operating Agreement dated May 31, 2005, as amended, between Bleeding Rock and GRI (the “Operating Agreement”).
Pursuant to the Operating Agreement, GRI had obtained the rights through Bleeding Rock to utilize a process for the development,
engineering and extraction of hydrocarbons from oil sands. In light of conversations with potential investors, the Company determined
that having the technology licensed directly to the Company (rather than through Bleeding Rock and the Operating Agreement) would
be beneficial to fund raising prospects.



Effective on the date of termination, Bleeding
Rock assigned its interest in the note to Hidden Peak Partners LC (“Hidden Peak”), a related party and member of Bleeding
Rock. Contemporaneous with the execution of the License Agreement and the Termination Agreement described above, the Company entered
into a Gross Royalty Agreement with Bleeding Rock whereby the Company is obligated to pay a royalty equal to 1.5% of the gross
receipts from future projects using the technology, excluding the current project in Sunnyside, Utah. The Gross Royalty Agreement
was similarly assigned to Hidden Peak.



As of the date of
the Termination Agreement, GRI owed $1,446,551 to Bleeding Rock, payable under the terms of the Operating Agreement. In connection
with the termination of the Operating Agreement, GRI issued a 5% convertible promissory note to Bleeding Rock for this amount.
Initially, the note was due one year from the date of the note. The note was subsequently modified and is currently due and payable
on April 30, 2014 and is convertible into shares of the Company’s common stock any time before maturity at the rate of one
share for each $0.50 of principal or interest converted.Effective January 1, 2013, the Company further modified the terms
of the note such that all of the outstanding principal, which totaled $1,446,551, and accrued interest, which totaled $67,965,
were converted into a new note totaling $1,514,516 that is non-interest bearing. The Company imputed interest on the new note using
a discount rate of 6% and recorded a debt discount of $116,047 which is being amortized over the remaining life of the loan using
the interest method.



On September 30, 2013, the Company exchanged
warrants to purchase 3,260,000 shares of common stock of the Company for the note and simultaneously canceled the note. The warrants
have a 10-year term and an exercise price of $.01. As of September 30, 2013 and March 31, 2013, the carrying balance of the note
was $0 and $1,419,311, respectively, net of the unamortized remaining discount.



In January 2013, the Company borrowed $74,000
from C14 Strategies, a company controlled by the Company’s former President. The note bears interest at 6% and is due and
payable by the earlier of June 30, 2014 or when the Company completes a $2,000,000 equity or debt bridge financing transaction.
The note is convertible into common stock of the Company upon completion of a bridge financing transaction at the same price and
terms as the bridge financing. As of September 30, 2013 and March 31, 2013, the carrying value of the note was $76,968 and $74,742
including accrued interest of $1,849 and $742, respectively. On November 7, 2013, the note and accrued interest were converted
into Series A preferred shares as a result of the Series A Preferred Offering, resulting in 55,307 shares of Series A preferred
shares being issued, together with warrants to purchase 55,307 common shares at $0.45 per share and 55,307 common shares at $0.70
per share (see Note 12).





11







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



In July 2013, the Company borrowed $53,000
from Bleeding Rock, a company controlled by the Company’s CEO. The note bears interest at 6% and is due and payable by the
earlier of June 30, 2014 or when the Company completes a $2,000,000 equity or debt bridge financing transaction. The note is convertible
into common stock of the Company upon completion of a bridge financing transaction at the same price and terms as the bridge financing.
As of September 30, 2013, the carrying value of the note was $53,340 including accrued interest of $340. On November 7, 2013, the
note and accrued interest were converted into Series A preferred shares as a result of our Series A preferred Offering, resulting
in 38,336 shares of Series A preferred shares being issued, together with warrants to purchase 38,336 common shares at $0.45 per
share and 38,336 common shares at $0.70 per share (see Note 12).



Note 8 – Common Stock



On July 1, 2013, the Company entered into a
consulting agreement with Great Bear, LLC (“Great Bear”) to provide corporate, advisory, and marketing services to
the Company. The agreement calls for the Company to issue Great Bear 100,000 shares of restricted common stock as consideration
for the services to be provided and to pay a one-time $5,000 fee upon completion of an offering of at least $2,000,000. The term
of the agreement is for one year. In connection with the Series A preferred stock offering, the Company issued 75,000 shares to
Great Bear on July 15, 2013 and the balance of the shares was issued on November 6, 2013.



Effective July 11, 2013, the Company entered
into a financial advisory agreement (the “Merriman Agreement”) with Merriman Capital, Inc. ("Merriman"),
a wholly owned subsidiary of Merriman Holdings, Inc. (OTCQX: MERR). The Merriman Agreement is for a 12-month period and during
the three months ended September 30, 2013, the Company issued 300,000 shares of restricted common stock to Merriman in connection
with the Series A preferred stock offering. Under the Merriman Agreement, Merriman will advise the Company on strategic initiatives
to increase shareholder value, analyze the Company’s operating projections and market conditions and provide the Company
with recommendations for the proper positioning of the Company with potential investors. Merriman will also assist the Company
in raising its next round of capital. The Company has agreed that Merriman will have unlimited "piggyback" registration
rights for a period of three years after the issuance of the shares at the Company's expense (provided that such rights shall not
apply to a public offering of the Company’s common stock upon any underwriter’s reasonable assertion in writing that
the inclusion of such stock in a public offering would materially impair the marketability of such public offering).



Neither the shares issued to Merriman or to
Great Bear have been registered under the Securities Act and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.



In March 2012, the Company initiated a private
placement to raise an aggregate maximum of $7,000,000 through the sale of up to 140 units at $50,000 per unit. Each unit is composed
of 43,478 shares of common stock and two-year warrants to purchase another 10,870 shares of common stock at $1.15 per share. As
of September 30, 2013, the Company had sold 1,089,781 shares of common stock under the private placement agreement resulting in
gross proceeds of $1,253,248. As more fully described in Note 9, the Company issued 272,402 warrants in connection with this private
placement.





12







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



Note 9 – Warrants



The Company has issued four classes of warrants;
namely, bridge warrants, convertible debt warrants, private placement warrants, and debt exchange warrants.



|a) | Bridge Warrants
        
        In connection with the issuance of certain
        notes payable, the Company granted bridge warrants to the note holders. These bridge warrants give the holders the right to purchase
        shares of the Company’s common stock at $0.40 per share. All of the bridge warrants are expired as of September 30, 2013.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | Convertible Debt Warrants
        
        In connection with the Company’s $1,750,000
        convertible note private offering (see Note 7), the Company granted warrants to the note holders. These warrants give the holders
        the right to purchase shares of the Company’s common stock at approximately $0.50 per share. The warrants expire on April
        30, 2014. As of September 30, 2013 and March 31, 2013, there were 3,038,667 convertible debt warrants outstanding.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|c) | Private Placement Warrants
        
        In connection with the Company’s $7,000,000
        private placement (see Note 8), the Company granted warrants to the stock purchasers. These warrants give the holders the right
        to purchase shares of the Company’s common stock at $1.15 per share for a 2-year period. As of September 30, 2013 and March
        31, 2013, there were 333,571 private placement warrants outstanding of which 61,169 were issued to brokers associated with the
        transaction.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d) | Debt Exchange Warrants
        
        On September 30, 2013, the Company exchanged
        warrants to purchase 3,260,000 shares of common stock of the Company for a related party convertible note payable (see Note 7)
        and simultaneously canceled the note. On September 30, 2013, the Company exchanged warrants to purchase 2,260,000 shares of common
        stock of the Company for the outstanding payroll obligation owed to the Company’s CEO in the amount of $1,049,350. The warrants
        give the holders the right to purchase the Company’s common stock at $0.01 for a 10-year period.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 10 – Stock Option Plan



In April 2011, the Company adopted the 2011
Long-Term Incentive Plan (the “2011 Plan”) which reserves for the issuance of up to 7,000,000 shares of the Company’s
common stock. During the three months ended September 30, 2013, the Company issued 760,000 options under the 2011 Plan.



The summary of option activity for the six
months ended September 30, 2013 is presented below:



|                                     |  | Number of Shares |           |  | WeightedAverageExercisePrice |   |      | WeightedAverageRemainingLife (years) | 
|------------------------------------ |  | ---------------- | --------- |  | ---------------------------- | - | ---- | ------------------------------------ | 
|Balance as of March 31, 2013         |  |                  | 3,662,500 |  |                              | $ | 0.49 |                                      | 
|Granted                              |  |                  | 760,000   |  |                              |   | 0.35 |                                      | 
|Exercised                            |  |                  | –         |  |                              |   | –    |                                      | 
|Canceled                             |  |                  | –         |  |                              |   | –    |                                      | 
|Expired                              |  |                  | –         |  |                              |   | –    |                                      | 
|Balance as of
    September 30, 2013 |  |                  | 4,422,500 |  |                              |   | 0.47 |                                      | 



The weighted average
grant-date fair value of options granted during the six months ended September 30, 2013 was $0.35.





13







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



Outstanding and exercisable options presented
by price range as of September 30, 2013 are as follows:



|         |             |  | Options Outstanding |  |           | Options Exercisable | 
|-------- | ----------- |  | ------------------- |  | --------- | ------------------- | 
|         |             |  |                     |  |           | Weighted            | 
|         |             |  |                     |  |           | Average             | 
|         |             |  | Number of           |  |           | Remaining           | 
|Exercise |             |  | Options             |  |           | Life                | 
|Price    |             |  | Outstanding         |  |           | (Years)             | 
|         | 0.40        |  |                     |  | 3,087,500 |                     | 
|         | 0.50        |  |                     |  | 75,000    |                     | 
|         | 0.25        |  |                     |  | 50,000    |                     | 
|         | 1.15        |  |                     |  | 450,000   |                     | 
|         | 0.35        |  |                     |  | 685,000   |                     | 
|         | 0.35        |  |                     |  | 75,000    |                     | 
|         |             |  |                     |  |           |                     | 
|         | $0.25-$1.15 |  |                     |  | 4,422,500 |                     | 



The estimated fair value of the Company’s
stock options, less expected forfeitures, is amortized over the options’ vesting period on the straight-line basis. The Company
recognized $191,434 and $219,358 of equity-based compensation expense during the six months ended September 30, 2013 and 2012,
respectively.



As of September 30, 2013, there was $288,348
of total unrecognized compensation cost with a weighted-average vesting period of approximately 1.50 years.



As of September 30, 2013 and 2012, the intrinsic
values of outstanding and vested stock options were as follows:





|                                      |  | September 30, |      
|------------------------------------- |  | ------------- | -----
|                                      |  | 2013          |      
|Intrinsic value - options outstanding |  | $             | 4,000
|Intrinsic value - options exercisable |  |               | 2,000
|Intrinsic value - options exercised   |  |               | –    



Note 11 – Commitments



Effective January 1, 2013, the Company modified
its employment contract with the Chief Executive Officer. Pursuant to the terms of the modification, the CEO’s salary was
reduced from $400,000 per year to $276,000 per year. In addition, the CEO’s salary will accrue until the Company has raised
$2,000,000 in a debt or equity financing. At the time the financing is completed, the CEO will receive four months of accrued salary
and will begin to be paid monthly. Any remaining unpaid salary in excess of four months’ salary will be converted to common
stock under the same terms once the Company has completed a $5,000,000 or more equity raise. Upon completion of a $10,000,000 or
more capital raise, the CEO’s salary will increase to $400,000. On September 30, 2013, the CEO’s unpaid salary from
inception through 2011 totaling $1,049,350 was exchanged for 2,260,000 warrants to purchase the Company’s common stock for
$0.01 per share (see Note 9). The term of the employment agreement is in effect through December 31, 2015. As of September 30,
2013 and March 31, 2013, the total accrued commitment for past wages was $0 and $1,070,788, respectively, which is included as
accrued expenses in the accompanying consolidated financial statements.



On March 31, 2011, the Company entered into
an employment agreement with the Chief Operating Officer, replacing all previous employment agreements, that provides for initial
compensation at an hourly rate of $175 and expense reimbursements. Upon the completion of a financing by the Company of not less
than $10,000,000, his compensation will increase to $300,000 annually plus all other benefits normally provided to an employee.
This employment agreement terminates March 31, 2014.





14







American Sands Energy Corp.

(A Development Stage Company)

Notes to Condensed Consolidated Financial
Statements (Unaudited)



The consulting agreement dated October 1, 2011,
between the Company and C14 Strategies (the “Consulting Agreement”), an entity controlled by the former President,
will remain in force until a Financing Event at which time it will be immediately terminate. Pursuant to the Consulting Agreement,
C14 Strategies provides assistance with respect to strategic objectives of the Company. As compensation for such services, C14
Strategies is paid $10,000 per month. The contract is terminable any time on 60 days’ notice, or by mutual consent.



On February 16, 2012, the Company entered into
an employment agreement with the Chief Financial Officer. The agreement is terminable by either party upon 30 days’ notice.
Under his employment agreement, the Chief Financial Officer is 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. Effective January 1, 2013, the CFO’s employment
agreement was modified and his annual salary was increased to $175,000. The salary will be accrued until the Company completes
a debt or equity fund raising of $2,000,000 or more. At the time the financing is completed, the CFO will receive four months of
accrued salary and will begin to be paid monthly. Any remaining unpaid salary in excess of four months’ salary will be converted
to common stock under the same terms once the Company has completed a $5,000,000 or more capital raise.



Note 12 – Subsequent Events



On October 10, 2013, the Company converted
its convertible promissory note owed to Bleeding Rock into 535,704 shares of the Company’s common stock as full satisfaction
of the obligation.



On November 6, 2013, the Company issued 25,000
shares of common stock to Great Bear in connection with its consulting agreement with Great Bear more fully described in Note 8.



On November 6, 2013, the Company raised $625,000
from the sale of Series A preferred stock and warrants for shares of common stock. Series A preferred stock holders are entitled
to receive dividends of 6% and have a liquidation preference equal to $1.40 per share for each outstanding share of Series A preferred
stock (as adjusted for stock splits, stock dividends and recapitalizations) plus an amount equal to declared but unpaid dividends
thereon. The Company is planning to use the proceeds to complete required test drilling at its Sunnyside site location in order
to get the project permitted and for general corporate purposes.



On November 7, 2013, the $74,000 note payable
to C14 Strategies was converted, along with accrued interest, into Series A preferred stock, resulting in 55,307 shares of Series
A preferred shares being issued, together with warrants to purchase 55,307 shares at $0.45 per share and warrants to purchase an
additional 55,307 shares at $0.70 per share.



On November 7, 2013, the $53,000 note payable
to Bleeding Rock, was converted, along with accrued interest, into Series A preferred stock, resulting in 38,336 shares of Series
A preferred being issued, together with warrants to purchase 38,336 shares at $0.45 per share and warrants to purchase an additional
38,336 shares at $0.70 per share.



On November 7, 2013, the $150,000 notes payable
to three individuals were converted, along with accrued interest, into Series A preferred stock, resulting in 109,908 shares of
Series A preferred shares being issued, together with warrants to purchase 109,908 shares at $0.45 per share and warrants to purchase
an additional 109,908 shares at $0.70 per share.



On November 16, 2013, the Company
entered into an Addendum to the Hydrocarbon and Mineral Lease with William Gibbs dated October 2009. Under the Addendum, the
payment due on October 31, 2013 was waived, and is now due on December 31, 2013 and the term was extended to December 31,
2016. Mr. Gibbs is a relative of the CEO.



On November 18, 2013, the Company entered into
an Amended and Restated License, Development and Engineering Agreement with Universal Oil Recovery LLC (“Amendment”).
The Amendment amends and restates the License, Development and Engineering Agreement dated as of January
24, 2012 (the “Original Agreement”). Pursuant to the terms of the Amendment, the previous royalties of 75% on projects
outside of Utah and the minimum royalty of $1,000,000 per year on such agreements have been eliminated. Pursuant to the Amendment,
the Company will now pay royalties on projects outside of Utah of 15% of the net fees (net of all costs other than G&A) collected
by the Company on any license of the technology. In addition, the $25,000 per month management fee is eliminated until a permanent
financing is closed (minimum of $25 million), at which time the payment will be reinstated. In consideration of the amendment,
the Company has agreed toissue to Universal Oil Recovery LLC, 575,000 warrants to purchase common stock of the Company
for $0.01 per share, exercisable for ten years. The Company has also agreed to the following license
fee payments to UOR:



| | 1. | $25,000 upon execution of this Amended Agreement;
| | -- | -------------------------------------------------

| | 2. | $25,000 upon the Company raising not less than $500,000 in equity or debt from the date of the
Amendment;
| | -- | ---------------------------------------------------------------------------------------------------------

| | 3. | $25,000
upon the Company raising not less than $1,000,000 in equity or debt from the Amendment;
| | -- | -----------------------------------------------------------------------------------------------

| | 4. | $50,000 upon the Company of ASEC raising not less than $2,000,000 in
equity or debt from the date hereof.
| | -- | ---------------------------------------------------------------------------------------------------------



15







Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations



The following discussion and analysis should
be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
section and audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for
the year ended March 31, 2013, and with the unaudited consolidated financial statements and related notes thereto presented in
this Quarterly Report on Form 10-Q.



Forward-Looking Statements



The statements contained herein that are not
historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available
information. Forward-looking statements include the information concerning our current and future operations, business strategies,
need for financing, competitive position, ability to retain and recruit personnel, and the effects of competition. Forward-looking
statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology
such as the words “believes,” “intends,” “may,” “should,” “anticipates,”
“expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances
that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly
affect expected results, and actual future results could differ materially from those described in such forward-looking statements.



Among the factors that could cause actual future
results to differ materially are the risks and uncertainties discussed in this report. While it is not possible to identify all
factors, we continue to face many risks and uncertainties including, but not limited to, our ability to secure adequate funding
or to secure funding on favorable terms, scaling up facilities based on pilot plant testing, the cyclicality of the oil industry,
global economic and political conditions, global productive capacity, customer inventory levels, changes in product pricing, changes
in product costing, competitive technology positions and operating interruptions (including, but not limited to, labor disputes,
leaks, fires, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities). Mining operations
are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety
precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental
protection controls, all of which are subject to change and are becoming more stringent and costly to comply with. Should one or
more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove
incorrect, actual results could differ materially from those expected. We disclaim any intention or obligation to update publicly
or revise such statements whether as a result of new information, future events or otherwise.



Overview



American Sands Energy Corp. (“ASEC”
or the “Company”) is a development stage company that proposes to engage in the clean extraction of bitumen from oil
sands prevalent in the Mountain West region of North America using proprietary technology. Since the project’s inception,
we have been engaged in the business of acquiring and developing oil sands assets and technologies used to separate the oil contained
in oil sands. The Company anticipates that its primary operations will include the mining of oil sands, the separation of oil products
therefrom and the sale of oil and oil by-products.



We have obtained a license for a hydrocarbon
extraction process that separates oil and other hydrocarbons from sand, shale, dirt and other substances, without leaving behind
toxins or other contaminants. We are currently developing our first project on certain hydrocarbon and mineral leases which cover
approximately 1,760 acres near Sunnyside, Utah (the “Sunnyside Project”). In accordance with the standards contained
in Rule 4-10(a) of the SEC’s Regulation S-X, these leases contain no proven reserves of oil or gas. However, we have obtained
an independent Resource Audit and Classification report dated May 29, 2009, from a major international geology and mining consulting
firm describing the quantity and quality of the bitumen resource estimated to be located on our leases.





16







To date, we have acquired extensive bitumen
resources, have successfully operated a pilot plant using our process technology on oil sands ore from our bitumen resources and
have initiated applications for mining, environmental and other permits required to build a commercial plant (the “Commercial
Facility”). Additional work to be completed as part of the project development phase is dependent upon obtaining necessary
funding and includes the following plans:



| | 1. | Final mine planning and civil engineering for the Sunnyside Project.
| | -- | --------------------------------------------------------------------



| | 2. | Acquisition of additional property in areas of interest in order to block-up properties into logical
and economical mining units.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



| | 3. | Determination of technical and economic parameters for the commercial scale use of the process,
including engineering.
| | -- | ----------------------------------------------------------------------------------------------------------------------



| | 4. | Preparation and receipt of federal and state regulatory agency approval for the Commercial Facility.
| | -- | ----------------------------------------------------------------------------------------------------



| | 5. | Completion of environmental and permitting work for the Commercial Facility.
| | -- | ----------------------------------------------------------------------------



As of November 6, 2013, the Company raised
$625,000 from the sale of Series A preferred stock and we are continuing the offering until the earlier of December 31, 2013 or
until $2 million in gross proceeds is received. The Company is planning to use the proceeds to complete required test drilling
at its Sunnyside site location in order to get the project permitted and for general corporate purposes. Contemporaneously with
the pursuit of the permitting of the project, we intend to finalize engineering and equipment for a 5,000 barrel per day plant.
We initially retained a leading engineering firm in the North American oil sands extraction industry, AMEC BDR Limited, to complete
an engineering and feasibility study with respect to a commercial plant that would produce up to 3,000 barrels of oil per day.
We engaged a mining engineering firm to prepare a mine plan and feasibility study. We retained an engineering firm to demonstrate
the technology through a new pilot plant. The pilot test runs resulted in removing in excess of 99% of the bitumen from the sand
and leaving less than the two parts per million (“ppm”) of solvent in the sand. This means that the sand is suitable
to be put back into the environment without tailing ponds or other environmental restrictions. Based on additional findings from
the recent pilot tests and recommendations from our mining engineers, we are also proposing to expand the size of the initial Commercial
Facility from the 3,000 barrels per day proposed in the AMEC BDR study, to 5,000 barrels per day. We have retained an environmental
engineering and consulting firm to assist us in preparing and filing the necessary mine and environmental permits required to operate
a large mine. Based on the information from our consultants, we believe that additional financing of approximately $75,000,000
will be required to procure and install the necessary equipment to begin operations of a plant that we believe will produce approximately
5,000 barrels per day of bitumen.



We have performed lab and pilot plant tests
on oil sands from the Utah Green River Formation in which the Sunnyside Project is located to prove the viability of the technology
and to understand several key elements in the process. Initial pilot plant test runs were conducted in 2006-2007. We hired AMEC
BDR, to witness the initial pilot plant tests and to manage the lab work and review the results. In addition to the initial pilot
test, we ran pilot tests on a new system designed by SRS Engineering International from July through September of 2012 and from
May through June of 2013. In connection with those tests, we ran oil sands from Utah and Africa to acquire additional information
on the efficiency of the solvent in removing the bitumen from the sand, the recovery of solvent from the bitumen and sand, and
the overall efficiency and energy use of the system. The current test results are summarized as follows:



| | · | Virtually all of the bitumen was separated from the sand, leaving the sand “oil” free.
| | - | --------------------------------------------------------------------------------------



| | · | The compositional characteristics of the bitumen were not altered by the process; therefore, management
believes the bitumen will be suitable for upgrading and refining to saleable products by conventional refining technology.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The sand product contained less than 2 ppm of solvent residue, presents no environmental liability,
and can be returned to the mine site or sold.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Solvent losses to the bitumen product were insignificant. Consequently, because the solvent is
recycled with minimal loss in a closed loop system, make-up solvent costs should be minimal.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The composition and properties of the solvent recovered by the process were not altered by the
process; therefore, the solvent should be recycled through the process without further conditioning or processing.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





17







Based on the pilot test results and recommendations
from our mining engineer and SRS Engineering, we have evaluated the feasibility and costs of scaling the process into a plant that
will initially process up to 5,000 barrels per day, with possible future expansion of facilities of up to 50,000 barrels per day,subject to market conditions and the availability of financing on terms acceptable to us.



Our pilot test also confirms lab tests that
our process works on oil sands from other locations in the world. This may allow us to use our process in other locations around
the world where other “oil wet” oil sands are located.



We anticipate initially that our entire estimated
output of 5,000 barrels per day (“bbl/d) will be delivered to refineries located in the Salt Lake City area with one to two
refiners as our customer(s). As we develop new facilities with a view to expanding production to 50,000 bbl/d, we will evaluate
supplying product to multiple refineries and more distant locations versus Salt Lake City, based on price and transportation costs.



Business Developments



During the second quarter of the current fiscal
year ending March 31, 2014, we had the following major developments:





| | · | The Company continued to focus on reducing expenses and eliminating debt from its balance sheet. During the quarter, the
Company exchanged warrants to purchase 5,520,000 shares of the Company’s common stock for a related party note and payroll
obligations totaling $2,512,001 and subsequently cancelled the notes and payroll obligations.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The Company worked on raising additional capital. As more fully described in Note 12 to the condensed consolidated financial
statements, the Company raised $625,000 from the sale of Series A preferred stock. With this capital, the Company plans to drill
test wells to enable the Company to obtain a mining permit for its project as well as reduce outstanding payables.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Critical Accounting Policies and Estimates



The selection and application of accounting
policies is an important process that has developed as our business activities have evolved and as the accounting rules have changed.
Accounting rules generally do not involve a selection among alternatives, but involve an implementation and interpretation of existing
rules, and the use of judgment, to the specific set of circumstances existing in our business. Discussed below are the accounting
policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions
involved and the magnitude of the asset, liability, revenue or expense being reported. See Notes 2 and 3 to our unaudited condensed
consolidated financial statements included in this Form 10-Q for a discussion of those policies.



Going Concern - The Company’s
financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization
of assets and the liquidation of liabilities in the ordinary course of business. The Company has no revenues, has incurred substantial
losses from operations, has negative working capital (current liabilities exceed current assets), and has negative operating cash
flows, which raise substantial doubt about the Company’s ability to continue as a going concern. The Company sustained a
net loss for the quarter ended September 30, 2013 of $791,911 and has an accumulated deficit of $12,473,840 as of September 30,
2013. As of November 6, 2013, the Company raised $625,000 from the sale of Series A preferred stock and is continuing the offering
until the earlier of December 31, 2013 or until $2 million in gross proceeds are received. The Company is planning to use the proceeds
to complete required test drilling at its Sunnyside site location in order to get the project permitted and for general corporate
purposes. In addition, the Company will require approximately $75,000,000 to fund capital expenditures to commence principal operations.



Since inception of the development stage, the
Company has not generated any revenue and its financial position is not sufficient to fund its planned business objective for an
extended period of time. The Company is dependent on the sale of equity or debt securities in the next twelve months in order to
obtain the requisite capital to continue to pursue its business objectives. If the Company is not able to obtain additional capital
through the sale of equity or debt securities, it will not be able to commence production.





18







Mineral Leases – Due to the uncertainty
regarding the recoverability of costs to acquire, maintain, and develop mineral leases, to date all costs to acquire, maintain,
and develop mineral leases have been expensed as incurred.



Stock-Based Compensation – The
Company uses the Black-Scholes option-pricing model to determine the fair value of stock options and warrants granted. For employee
stock options, the Company records the grant-date fair value as expense over the period in which it is earned, typically the vesting
period. For consultants, the fair value of the stock-based award is recorded as expense over the term of the service period, and
unvested amounts are revalued using the Black-Scholes model at each reporting period. For warrants issued to lenders, the Company
records the grant-date fair value of the warrants and any resulting beneficial conversion feature for convertible debt, as a note
discount. The discount is then amortized over the estimated life of the warrant as non-cash interest expense.



Results of Operations



Three Months Ended September 30, 2013 compared
to September 30, 2012



During the three months ended September 30,
2013, the Company incurred a net loss of $791,911 compared to a net loss of $723,573 for the three months ended September 30, 2012.
During the three months ended September 30, 2013, operating expenses were $644,750, which represented a 10.3% increase, compared
to the three months ended September 30, 2012 when we incurred operating expenses of $584,394. Selling, general and administrative
expenses increased by 39.2% from $424,878 during the three months ended September 30, 2012 to $591,614 during the three months
ended September 30, 2013. Non-cash stock compensation expense decreased by $27,924 from $219,358 for the three months ended September
30, 2012 to $191,434 for the three months ended September 30, 2013. Expenses for salaries and benefits decreased by $27,327 to
$71,991 for the three months ended September 30, 2013 from $99,318 for the three months ended September 30, 2012 as a result of
cost cutting measures implemented by the Company during the fourth quarter of the fiscal year ended March 31, 2013. Overall expenses
in the current period are higher because of increased costs associated with the Company’s efforts to raise capital. The Company
incurred an increase in financing fees of $290,367 for the quarter. These costs related to failed offerings that did not result
in any funds being raised by the Company. A significant amount of these costs related to non-cash costs for common stock issued
to investment advisors. Once the Company is funded, going forward, the Company believes that the obligations placed upon it as
a result of growth coupled with its reporting requirements under SEC rules and regulations will result in operating expenses increasing.



During the three months ended September 30,
2013, the Company incurred $0 of research and development expenses compared to $53,261 for the three months ended September 30,
2012. The Company reduced its research and development activities due to its limited funding. Research and development expenses
incurred are for engineering and related expenses incurred to obtain the necessary licenses and permits for the Company to develop
its mining assets. In addition, the Company has incurred expenses to develop a pilot test unit to further develop and prove the
viability of the Company’s proprietary technology to separate the bitumen from the sand.



Interest expense increased to $147,061 for
the three months ended September 30, 2013 as compared to $139,179 for the three months ended September 30, 2012. The increase in
interest expense is due to the Company having increased debt as a result of the convertible notes payable issued during the current
year coupled with higher non-cash interest expense as a result of amortization of warrants issued in connection with the convertible
notes payable.





19







Six Months Ended September 30, 2013 compared
to September 30, 2012



During the six months ended September 30, 2013,
the Company incurred a net loss of $1,274,988 compared to a net loss of $1,504,099 for the six months ended September 30, 2012.
During the six months ended September 30, 2013, our operating expenses were $984,582 which represented a 19.7% decrease, compared
to operating expenses of $1,225,712 for the six months ended September 30, 2012. Current year operating expenses included research
and development costs of $49,042 for the six months ended September 30, 2013 compared to $106,522 for the six months ended September
30, 2012. These costs related to the Company developing its technology and mining plans. Selling, general and administrative expenses
decreased to $829,229 for the six months ended September 30, 2013 from $933,026 for the six months ended September 30, 2012. Additional
decreases in selling, general and administrative expenses were from decreased salaries and benefits from the Company’s cost
cutting measures implemented during the current year coupled with decreased costs for professional fees, management fees and stock
based compensation. These cost decreases were partially offset, by increases for financing fees which consisted primarily of non-cash
costs for common stock issued to certain investment advisors. These costs related to failed offerings that did not result in any
funds being raised by the Company. Going forward, we believe that the obligations placed upon us as a result of our reporting requirements
under the Exchange Act will continue to result in our operating expenses increasing.



Interest expense increased to $290,146 for
the six months ended September 30, 2013 as compared to $278,387 for the six months ended September 30, 2012. The increase in interest
expense is due to the Company having increased debt as a result of the convertible notes payable issued during the six months ended
September 30, 2013 coupled with higher non-cash interest expense as a result of amortization of warrants issued in connection with
the convertible notes payable.



Liquidity and Capital Resources



As of September 30, 2013, the Company had cash
of $32,435 and negative working capital of $3,111,220. As of September 30, 2013, the Company had total liabilities of $3,230,828.
As of September 30, 2013, the Company’s total assets were $327,229 consisting of cash, prepaid and other current assets,
property and equipment, and other assets.



The Company has established a resource position,
a working knowledge of the process technology and an initial list of environmental and other permits required to build a commercial
plant. Additional work to be completed as part of the project development phase includes:



| | 1. | Final mine planning and civil engineering for the Sunnyside Project.
| | -- | --------------------------------------------------------------------



| | 2. | Acquisition of additional property in areas of interest in order to block-up properties into logical
and economical mining units.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



| | 3. | Determination of technical and economic parameters for the commercial scale use of the process,
including engineering.
| | -- | ----------------------------------------------------------------------------------------------------------------------



| | 4. | Completion of environmental and permitting work for the commercial facility.
| | -- | ----------------------------------------------------------------------------



| | 5. | Receipt of federal and state regulatory agency approval for the commercial facility.
| | -- | ------------------------------------------------------------------------------------



The Company requires additional funding to
complete these items. This funding is expected to be raised through a private or public offering of common stock. Upon completion
of the financing, the Company will be in a position to initiate items 1 through 5 above. As of November 6, 2013, the Company raised
$625,000 from the sale of Series A preferred stock and we are continuing the offering until the earlier of December 31, 2013 or
until $2 million in gross proceeds is received. The Company is planning to use the proceeds to complete required test drilling
at its Sunnyside site location in order to finalize and file permits and for general corporate purposes. Further financing of approximately
$75,000,000 will be required to procure and install the necessary equipment to begin operations of a plant that the Company believes
will produce approximately 5,000 barrels per day of bitumen.





20







Management anticipates that the Company will
be dependent, for the near future, on additional capital to fund operating expenses and anticipated growth. The report of the Company’s
independent registered public accounting firm for the year ended March 31, 2013, expressed substantial doubt about the Company’s
ability to continue as a going concern. The Company’s operating losses have been funded through the issuance of equity securities
and borrowings. The Company will need additional funding in the future in order to continue its business operations. While the
Company continually looks for additional financing sources, in the current economic environment, the procurement of outside funding
is extremely difficult and there can be no assurance that such financing will be available, or, if available, that such financing
will be at a price that will be acceptable to the Company. Failure to generate sufficient revenue or raise additional capital would
have an adverse impact on the Company’s ability to achieve its longer-term business objectives, and would adversely affect
its ability to continue operating as a going concern.



Item 3. Quantitative and Qualitative Disclosures
About Market Risk



As a smaller reporting company, we have elected
not to provide the disclosures required by this item.



Item 4. Controls and Procedures



Disclosure Controls and Procedures



Our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of
the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures as of the end of the period covered by this report were effective in ensuring that
information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and
(ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



Changes in Internal Control over Financial
Reporting



There were no changes in our internal control
over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September
30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



It should be noted that any system of controls,
however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system will
be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls
will succeed in achieving their stated goals under all potential future conditions.





21







PART II. OTHER INFORMATION



Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds



In July 2013, the Company borrowed $53,000
from Bleeding Rock, a company controlled by the Company’s CEO. The note bears interest at 6% and is due and payable by the
earlier of June 30, 2014 or when the Company completes a $2,000,000 equity or debt bridge financing transaction. The note is convertible
into common stock of the Company upon completion of a bridge financing transaction at the same price and terms as the bridge financing.



On July 15, 2013, the Company issued 75,000
shares of common stock to Great Bear, LLC as consideration for services to be provided under a consulting agreement.



On July 15, 2013, the Company issued 300,000
shares of common stock to Merriman Capital, Inc. as consideration for services to be provided under a financial advisory agreement.



The above note and shares were issued pursuant
to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. At the time of the issuance
of the note and shares, the Company had a reasonable belief that the note holder and the grantee were accredited investors as defined
in Regulation D and obtained such securities without a view to distribution of the same. No selling commissions or underwriting
fees were paid in connection with any of these transactions.



Item 4. Mine Safety Disclosures



There are no reportable events required pursuant
to this item.



Item 6. Exhibits



The following exhibits are furnished with this
report:





|10.1*     | Warrant Agreement with William Gibbs                                                                                                                                    
|--------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2*     | Warrant Agreement with Hidden Peak Partners LC                                                                                                                          
|10.3*     | Addendum #6 to Hydrocarbon and Mineral Leases dated January 14, 2005, as amended, and assignment dated November 8, 2005, Meany Land & Exploration, Inc.                 
|10.4*     | Addendum #8 Hydrocarbon and Mineral Lease dated February 23, 2005, as amended, and assignment dated November 8, 2005, with Osterbroen Family Limited Partnership, et al.
|10.5*     | Addendum to Hydrocarbon and Mineral Lease dated October 2009, with William G. Gibbs                                                                                     
|10.6*     | Amended and Restated License, Development and Engineering Agreement dated November 18, 2013                                                                             
|31.1*     | Rule 13a-14(a) Certification by Principal Executive Officer                                                                                                             
|31.2*     | Rule 13a-14(a) Certification by Principal Financial Officer                                                                                                             
|32.1*     | Section 1350 Certification of Principal Executive Officer                                                                                                               
|32.2*     | Section 1350 Certification of Principal Financial Officer                                                                                                               
|99.1*     | Temporary Hardship Exemption                                                                                                                                            
|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                                                                                                                  





|*    Furnished with this Form 10-Q                                                     
|---------------------------------------------------------------------------------------
|**  To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.





22







SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.







|                        | American Sands Energy Corp. |                                          
|----------------------- | --------------------------- | -----------------------------------------
|                        |                             |                                          
|Date: November 19, 2013 | By:                         | /s/ William C. Gibbs                     
|                        |                             | William C. Gibbs, Chief Executive Officer
|                        |                             | (Principal Executive Officer)            
|                        |                             |                                          



|Date: November 19, 2013 | By: | /s/ Daniel F. Carlson                      | 
|----------------------- | --- | ------------------------------------------ | 
|                        |     | Daniel F. Carlson, Chief Financial Officer | 
|                        |     | (Principal Financial Officer)              | 





































23