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FINANCIAL STATEMENTS Prospect Global Resources Inc. (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS March 31, 2013

As filed with the Securities and Exchange Commission on ~~October~~February 2527, ~~2013~~2014

No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

~~SECURITIES~~FORM ~~AND~~S-1 REGISTRATION ~~EXCHANGE~~STATEMENT UNDER THE ~~COMMISSION~~SECURITIES ACT OF 1933

~~Washington,~~PROSPECT DGLOBAL RESOURCES INC.C. (Exact ~~20549~~name of registrant as specified in its charter)

~~FORM S~~Nevada (State or other jurisdiction of incorporation or organization) 1520 (Primary Standard Industrial Classification Code Number) 26-13024783 (I.R.S. Employer Identification Number)

~~REGISTRATION~~1401 ~~STATEMENT~~17th Street, ~~UNDER~~Suite 1550 Denver, ~~THE~~Colorado ~~SECURITIES~~80202 (303) 990-8444 (Address, ~~ACT~~including OFzip ~~1933~~code, and telephone number, including area code, of registrant's principal executive offices)

~~PROSPECT~~Damon ~~GLOBAL~~G. ~~RESOURCES~~Barber President and Chief Executive Officer Prospect Global Resources ~~INC~~Inc. 1401 17th Street, Suite 1550 Denver, Colorado 80202 Fax: (303) 990-8444 Email: dbarber@prospectgri.com (Name, address, including zip code, and telephone number, including area code, of agent for service)

(Exact name of registrant as specified in its charter)

Nevada	1520	26-3024783
(State or other jurisdiction of incorporation	(Primary Standard Industrial	(I.R.S. Employer Identification Number)
or organization)	Classification Code Number)

1401 17th Street, Suite 1550

Denver, Colorado 80202

(303) 990-8444

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Damon G. Barber

President and Chief Executive Officer

Prospect Global Resources Inc.

1401 17th Street, Suite 1550

Denver, Colorado 80202

(303) 990-8444

DBarber@ProspectGRI.com

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Jeffrey M. Knetsch Brownstein Hyatt Farber Schreck, LLP 410 Seventeenth Street, Suite 2200 Denver, Colorado 80202 (303) 223-1100 Fax: (303) 223-1111 Email: jknetsch@bhfs.com

Email: jknetsch@bhfs.com

Approximate date of commencement of proposed sale to the public:
From time to time after the effectiveness of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:. o x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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 o Accelerated filer o Non-accelerated filer o ~~Smaller reporting company x~~ (Do not check if a smaller reporting company) Smaller reporting company ý

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share ~~or warrant~~ (1)	Proposed maximum aggregate offering price (1)	Amount of registration fee
Common Stock	~~916~~17,~~668~~000,000	$31.0550	$225,~~795~~500,~~837~~000	$~~360~~3,284.1040
Series A Warrants	1,354,027	$4.05	$5,483,810	706.32
Series B Warrants	916,668	$4.05	$3,712,506	478.17
Total	3,187,363		$11,992,153	$1,544.59

(1): Pursuant to Rule 457(c) under the Securities Act, calculated based upon the price for the common stock as quoted on the Nasdaq Capital Market on February 24, 2014.

(1) Estimated solely for the purpose of determining the registration fee pursuant to Rule 457 promulgated under the Securities Act of 1933, as amended.

Pursuant to Rule 429 under the Securities Act of 1933 the prospectus contained in this Registration Statement also relates to shares registered in the Registrant’s registration statement on Form S-1 (File No. 333-180492).

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

Subject to completion, dated February 27, 2014.

PROSPECTUS

Subject to completion, dated October 25, 2013.

PROSPECT GLOBAL RESOURCES INC.

817,~~285~~000,~~480~~000 Shares of Common Stock

~~Series A~~ We ~~Warrants~~are tooffering ~~Purchase 4~~17,~~853~~000,~~346~~000 ~~Shares~~shares of ~~Common~~our ~~Stock~~common stock to the public.

~~Series B~~ An ~~Warrants~~investment in our securities involves serious risks, including the risk that we are unable to ~~Purchase~~raise ~~916~~sufficient capital to continue funding our operations,~~668~~ ~~Shares~~service our debt and complete the exploration, development and build out of ~~Common~~our ~~Stock~~Holbrook potash project and continue our listing on The Nasdaq Capital Market. You should read carefully the "Risk Factors" beginning on page 8 of this prospectus.

~~916~~ Our common stock is traded on The Nasdaq Capital Market under the symbol "PGRX." On [ ],~~668~~ ~~Series A~~2014, ~~Warrants~~the last reported sale price of our common stock was $[ ] per share.

We are offering (a) 3,936,678 shares of our common stock to the holders of our outstanding Series A Warrants, (b) 916,668 shares of our common stock together with Series A Warrants to purchase 916,668 additional shares of our common stock to the holders of our outstanding Series B Warrants, and (c) 916,688 shares of common issuable upon exercise of the Series A Warrants issued upon exercise of the Series B Warrants (the shares of common stock described in clauses (a) through (c) are referred to herein as the Warrant Shares). The exercise price of each Series A Warrant and Series B Warrant is $4.05.

		Per Share		Total




Public offering price

Underwriting discount

Proceeds, before expenses, to us

In We have ~~addition~~retained Roth Capital Partners, LLC to act as our underwriter in connection with this offering. We have granted the underwriter an option, which expires on the 30th day following the date of this prospectus, ~~relates~~to purchase from us, at a price equal to the ~~resale~~public ofoffering ~~916~~price,~~668~~ ~~shares~~less ofthe ~~common~~underwriting ~~stock~~discount, 1up to an additional 2,~~897~~550,~~817~~000 ~~Series A~~shares ~~Warrants~~of common ~~and~~stock ~~916~~to cover over-allotments,~~668~~ ~~Series B~~if ~~Warrants~~any. See the section titled "Underwriting" on page [ ]of this prospectus. The underwriter expects that ~~may~~the shares will be ready ~~offered~~for bydelivery in book-entry form through the ~~holders~~facilities ~~thereof~~of ~~who~~the ~~are~~Depository ~~set~~Trust ~~forth~~Company ~~under~~on ~~“Plan~~or ofabout [ ], ~~Distribution~~2014.”

An investment in our securities involves serious risks, including the risk that we are unable to raise sufficient capital to continue funding our operations, service our debt and complete the development of our Holbrook potash project and continue our listing on The Nasdaq Capital Market. You should read carefully the ‘‘Risk Factors’’ beginning on page 4 of this prospectus. For a description of the Series A Warrants and Series B Warrants see ‘‘Description of Securities—Description of Series A and Series B Warrants” beginning on page 47 of this prospectus.

Our common stock is traded on The Nasdaq Capital Market under the symbol ‘‘PGRX.’’ On October 24, 2013, the last reported sale price of our common stock was $2.96 per share. We do not intend to list the Series A Warrants or the Series B Warrants on any national securities exchange.

Our principal offices are located at 1401 17th Street, Suite 1550, Denver CO 80202 and our telephone number is 303-990-8444.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense.

~~The~~Roth ~~date~~Capital ~~of this prospectus is , 2013~~Partners

The date of this prospectus is [ ], 2014

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TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1	1
FORWARD-LOOKING STATEMENTS	2	1
CAUTIONARY NOTE TO INVESTORS REGARDING MINERAL DISCLOSURES	3	3
RISK FACTORS	4
PROSPECTUS SUMMARY		4
MARKET PRICE FOR OUR COMMON STOCK AND DIVIDEND POLICY	14
RISK FACTORS		8
USE OF PROCEEDS	14
MARKET PRICE FOR OUR COMMON STOCK AND DIVIDEND POLICY		21
CAPITAL STRUCTURE	14
DILUTION		22
DILUTION	14
USE OF PROCEEDS		23
SELECTED FINANCIAL DATA	15
CAPITAL STRUCTURE		23
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
SELECTED FINANCIAL DATA		25
BUSINESS	25
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		26
DIRECTORS AND EXECUTIVE OFFICERS	28
BUSINESS		41
TRANSACTIONS WITH RELATED PERSONS	38
DIRECTORS AND EXECUTIVE OFFICERS		49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	43
TRANSACTIONS WITH RELATED PERSONS		64
DESCRIPTION OF SECURITIES	46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		69
SELLING SECURITY HOLDERS	49
DESCRIPTION OF SECURITIES		72
PLAN OF DISTRIBUTION	50
UNDERWRITING		74
LEGAL MATTERS	51	76
EXPERTS	51	76
INFORMATION WITH RESPECT TO THE REGISTRANT	52	76
WHERE YOU CAN FIND MORE INFORMATION	52	76
FINANCIAL STATEMENTS	~~F-1~~	F-1

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ABOUT THIS PROSPECTUS

We are responsible for the information contained in this prospectus. Neither we, nor any underwriter, have authorized anyone to provide information different from that contained in this prospectus.

The information contained in this prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus or any sale of securities.

This prospectus is not an offer to sell or solicitation of an offer to buy securities in any circumstances under which or jurisdiction in which the offer or solicitation is unlawful.

All common stock share amounts in this prospectus have been adjusted for the 50:1 reverse stock split that occurred on September 4, 2013 unless otherwise noted.

In this Prospectus, unless the context otherwise requires:

(a): all references to "Prospect" or "Prospect Global" refer to Prospect Global Resources Inc. f/k/a Triangle Castings, Inc., a Nevada corporation incorporated on July 22, 2008.
(b): all references to "old Prospect Global" refer to our wholly owned subsidiary Prospect Global Resources Inc., a Delaware corporation.
(c): all references to "we," "us," "our" and "the Company" refer collectively to Prospect and its subsidiaries old Prospect Global, American West Potash LLC or "AWP" and Apache County Land and Ranch, LLC or "Apache".
(d): all references to "Triangle" refer to Prospect Global prior to the merger, at which time its name was Triangle Castings, Inc.
(e): all references to "Karlsson" or "The Karlsson Group" refer to the independent third party that owned the 50% of AWP that we did not own prior to our acquisition of The Karlsson Group's interest on August 1, 2012 and all references to "The Karlsson Group Acquisition" refer to the August 1, 2012 acquisition.
(f): all references to "2013" mean the fiscal year ended March 31, 2013, "2012" to the fiscal year ended March 31, 2012 and "2011" to the fiscal year ended March 31, 2011.

~~(a) all~~ ~~references~~ to FORWARD-LOOKING ~~“Prospect” or “Prospect Global” refer to Prospect Global Resources Inc. f/k/a Triangle Castings, Inc., a Nevada corporation incorporated on July 22, 2008.~~STATEMENTS

~~(b) all~~ This ~~references~~prospectus toincludes ~~“old~~forward-looking ~~Prospect~~statements. ~~Global”~~Forward-looking ~~refer~~statements toinclude statements concerning our ~~wholly~~plans, ~~owned~~estimates, goals, ~~subsidiary~~strategies, ~~Prospect~~intent, ~~Global~~assumptions, ~~Resources Inc.~~beliefs or current expectations and can be identified by the use of terms and phrases such as "seek," a"is ~~Delaware~~expected," ~~corporation~~"budget," "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future tense or conditional construction ("will," "may," "could," "should," etc.) and the negative forms of any of these words and other similar expressions.

~~(c) all~~ The forward-looking ~~references~~statements toare “based on estimates and assumptions that we,” ~~“us,”~~have “made in light of our” experience and “perception of historical trends. In making the ~~Company”~~forward-looking statements ~~refer~~in ~~collectively~~this prospectus, we have made many assumptions including, but not limited to, ~~Prospect~~assumptions relating to: future demand for and ~~its~~supply ~~subsidiaries~~of ~~old~~potash; ~~Prospect~~our ~~Global~~plan to capitalize on potash demand; our plan to convert our mineral resources into mineral reserves; the environmental and permitting process, ~~American~~preliminary ~~West~~mine ~~Potash~~design and anticipated completion of a definitive feasibility study; our plan of exploration; the economic and legal viability of a potash mine in the Holbrook Basin; future sales of state leases and permits; our ability to raise capital; servicing the debt we owe to The Karlsson Group and affiliates of Apollo Global Management, LLC; orour ~~“AWP”~~ability to further implement our business plan and ~~Apache~~generate ~~County~~revenue; ~~Land~~our ability to satisfy the requirements and ~~Ranch,~~successfully execute ~~LLC~~on orthe ~~“Apache”~~commercial arrangement set forth in the potash supply agreement we have entered into with Sichuan Chemical Industry Holding (Group) Co., Ltd.; our anticipation of investing considerable amounts of capital to establish production from our mining project in the Holbrook Basin in Arizona; our anticipation of our ability to identify

(d) all references to “Triangle” refer to Prospect Global prior to the merger, at which time its name was Triangle Castings, Inc.

(e) all references to “Karlsson” or “The Karlsson Group” refer to the independent third party that owned the 50% of AWP that we did not own prior to our acquisition of The Karlsson Group’s interest on August 1, 2012 and all references to “The Karlsson Group Acquisition” refer to the August 1, 2012 acquisition.

(f) all references to “2013” mean the fiscal year ended March 31, 2013, “2012” to the fiscal year ended March 31, 2012 and “2011” to the fiscal year ended March 31, 2011.

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~~FORWARD-LOOKING~~mineral reserves ~~STATEMENTS~~that are capable of providing an acceptable return for investors that is commensurate with the inherent risks of a mining project; anticipated capital and operating costs; impact of the adoption of new accounting standards and our financial and accounting systems and analysis programs; compliance with and impact of laws and regulations; impact of litigation and other legal proceedings; and effectiveness of our internal control over financial reporting.

This prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning our plans, estimates, goals, strategies, intent, assumptions, beliefs or current expectations and can be identified by the use of terms and phrases such as “seek,” “is expected,” “budget,” “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future tense or conditional construction (“will,” “may,” “could,” “should,” etc.) and the negative forms of any of these words and other similar expressions.

The forward-looking statements are based on estimates and assumptions that we have made in light of our experience and perception of historical trends. In making the forward-looking statements in this prospectus, we have made many assumptions including, but not limited to, assumptions relating to: future demand for and supply of potash; our plan to capitalize on potash demand; our plan to convert our mineral resources into mineral reserves; the environmental and permitting process, preliminary mine design and anticipated completion of a definitive feasibility study; our plan of exploration; the economic and legal viability of a potash mine in the Holbrook Basin; future sales of state leases and permits; our ability to raise capital; funding the approximately $149.4 million we owe to The Karlsson Group as of September 30, 2013, which amount will increase as interest is accrued and potential tax gross-up payments are incurred; funding the approximately $7.2 million we owe to affiliates of Apollo Global Management, LLC; our ability to further implement our business plan and generate revenue; our ability to satisfy the requirements and successfully execute on the commercial arrangement set forth in the potash supply agreement we have entered into with Sichuan Chemical Industry Holding (Group) Co., Ltd.; our anticipation of investing considerable amounts of capital to establish production from our mining project in the Holbrook Basin in Arizona; our anticipation of our ability to identify mineral reserves that are capable of providing an acceptable return for investors that is commensurate with the inherent risks of a mining project; anticipated capital and operating costs; impact of the adoption of new accounting standards and our financial and accounting systems and analysis programs; compliance with and impact of laws and regulations; impact of litigation and other legal proceedings; and effectiveness of our internal control over financial reporting.

Forward-looking statements are inherently subject to known and unknown business, economic and other risks and uncertainties that may cause actual results to be materially different from those expressed or implied by our forward-looking statements, including without limitation risks related to:

•: our history of operating losses and expectation of future losses;
•: our ability to develop a mine that is able to commercially produce potash;
•: our ability to obtain sufficient additional capital to satisfy our significant funding requirements;
•: our ability to pay the amounts due on our indebtedness to The Karlsson Group, Inc. and affiliates of Apollo Global Management, LLC;
•: our ability to obtain all necessary permits and other approvals;
•: our ability to complete a definitive feasibility study and achieve our estimated timetables for production at the Holbrook Basin;
•: the accuracy of our mineral resource estimates;
•: our ability to attract and retain key personnel;
•: competition in the mining industry;
•: acquiring additional properties;
•: our potash supply agreement with Sichuan Chemical;
•: the exploration, development and operation of a mine or mine property;
•: title defects on our mineral properties and our ability to obtain additional property rights;
•: our technical report, preliminary economic assessment and interim engineering study being prepared in accordance with foreign standards that differ from the standards generally permitted in reports filed with the SEC;
•: governmental policies and regulation affecting the agricultural industry;
•: increased costs and restrictions on operations due to compliance with environmental legislation and other governmental regulations;
•: the global supply of, and demand for, potash and potash products;
•: the cyclicality of the crop nutrient markets; and
•: global economic conditions.

~~· our~~ This list ~~history~~is not exhaustive of ~~operating~~the ~~losses~~factors that may affect any of our forward-looking statements. Investors are urged to carefully review and ~~expectation~~consider the various risks and uncertainties and other factors referred to under the heading "Risk Factors" beginning on page 6 of ~~future~~this ~~losses;~~prospectus. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. In addition, although we have attempted to identify important risk factors that could cause actual achievements, events or conditions to differ materially from those identified in the forward looking statements, there may be other factors

· our ability to develop a mine that is able to commercially produce potash;

· our ability to obtain sufficient additional capital to satisfy our significant funding requirements;

· our ability to pay the amounts due on our indebtedness to The Karlsson Group, Inc. and affiliates of Apollo Global Management, LLC;

· our ability to obtain all necessary permits and other approvals;

· our ability to complete a definitive feasibility study and achieve our estimated timetables for production at the Holbrook Basin;

· the accuracy of our mineral resource estimates;

· our ability to attract and retain key personnel;

· competition in the mining industry;

· acquiring additional properties, such as difficulties in integrating acquired properties into our business;

· our potash supply agreement with Sichuan Chemical;

· the exploration, development and operation of a mine or mine property;

· title defects on our mineral properties and our ability to obtain additional property rights;

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~~· our~~we have ~~technical~~not ~~report~~considered, ~~preliminary~~or ~~economic~~that ~~assessment~~we ~~and~~currently ~~interim~~deem ~~engineering~~to ~~study~~be ~~being~~immaterial, ~~prepared~~that incause ~~accordance~~achievements, ~~with~~events ~~foreign~~or ~~standards~~conditions ~~that~~not ~~differ~~to ~~from~~be ~~the~~as ~~standards~~anticipated, ~~generally~~estimated ~~permitted~~or inintended. ~~reports filed with the SEC;~~

· governmental policies and regulation affecting the agricultural industry;

· increased costs and restrictions on operations due to compliance with environmental legislation and other governmental regulations;

· the global supply of, and demand for, potash and potash products;

· the cyclicality of the crop nutrient markets; and

· global economic conditions.

This list is not exhaustive of the factors that may affect any of our forward-looking statements. Investors are urged to carefully review and consider the various risks and uncertainties and other factors referred to under the heading “Risk Factors” beginning on page 4 of this prospectus. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. In addition, although we have attempted to identify important risk factors that could cause actual achievements, events or conditions to differ materially from those identified in the forward looking statements, there may be other factors we have not considered, or that we currently deem to be immaterial, that cause achievements, events or conditions not to be as anticipated, estimated or intended.

These forward-looking statements are based on the beliefs, expectation and opinions of management on the date the statements are made. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date made, other than as may be required by applicable law or regulation. For the reasons set out above, investors should not place undue reliance on forward-looking statements.

CAUTIONARY NOTE TO INVESTORS REGARDING MINERAL DISCLOSURES

We commissioned a technical report in accordance with the Canadian Securities Administrator’'s National Instrument 43-101 “ "Standards of Disclosure for Mineral Projects,”" commonly known as NI 43-101, as well as a preliminary economic assessment, or PEA, an interim engineering study and a pre-feasibility study. The Canadian standards are different from the standards generally permitted in reports filed with the SEC. In accordance with NI 43-101, we historically have reported measured, indicated and inferred resources, measurements which are recognized terms under NI 43-101 but are not recognized by the SEC and are generally not permitted in filings made with the SEC. The term “"resource” " does not equate to the term “"reserve.”" Under U.S. standards, mineralization may not be classified as a “"reserve”" unless the determination has been made that the mineralization could be economically and legally produced or extracted. Investors are cautioned not to assume that any part of our resources will ever be converted into economically mineable reserves. In addition, the estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. The SEC’'s disclosure standards normally do not permit the inclusion of information concerning “"inferred resources”" or other descriptions of the amount of mineralization in mineral deposits that do not constitute “"reserves”" by U.S. standards in documents filed with the SEC subject to certain exceptions. The PEA, interim engineering study and pre-feasibility study contain estimates based on our measured, indicated and inferred resources. However, in accordance with both U.S. standards and NI 43-101, estimates of inferred mineral resources cannot form the basis of a feasibility study. We provided the disclosure of resources to provide a means of comparing our projects to those of other companies in the mining industry, many of which are Canadian and report pursuant to NI 43-101. Accordingly, our previously disclosed descriptions of our mineral deposits may not be comparable to similar information made public by other U.S. domestic companies subject to reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder. Further, investors should be aware that the issuer has no “"reserves”" as defined by SEC Industry Guide 7 and are cautioned not to assume that any part or all of the estimated mineral resources will ever be confirmed or converted into SEC Industry Guide 7 compliant “"reserves.”"

Our Current Report on Form 8-K filed on October 18, 2012 refers to our interim engineering study as a “"cost feasibility study.”" It is important to note that the interim engineering study is not a preliminary feasibility study or a final definitive or “"bankable”" feasibility study within the meaning of SEC Industry Guide 7 or NI 43-101. Among other things, the interim engineering study is a preliminary interim study that contains estimates based on inferred resources. As noted above, in accordance with both U.S. standards and NI 43-101, estimates of inferred resources cannot form the basis of a feasibility study. Investors are cautioned not to assume the interim engineering report constitutes a bankable feasibility study. As is common for natural resources development projects, through our ongoing engineering work and analysis, we are continually evaluating multiple methods to increase stockholder value while decreasing development and operating risks through alternative development scenarios. These ongoing efforts could lead to (i) changes in capital expenditures required to build the mine, (ii) projected production levels, (iii) operating costs and (iv) mine life. We will announce any significant changes to our business plan resulting from our ongoing optimization analyses and will continue to make such evaluations.

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PROSPECTUS SUMMARY

This summary contains basic information about us and this offering. This summary is not complete and does not contain all the information you should consider before investing in the securities offered hereby. You should read this summary in conjunction with, and the summary is qualified in its entirety by, the more detailed information contained elsewhere in this prospectus, including the information under "Risk Factors" beginning on page 6 of this prospectus and the financial statements and related notes included in this prospectus.

Company Overview

We are engaged in the exploration and development of a potash mine in the Holbrook Basin of eastern Arizona, which we refer to as the Holbrook Project. Potash is primarily used as an agricultural fertilizer due to its high potassium content. Potassium, nitrogen and phosphate are the three primary nutrients essential for plant growth. The Holbrook Project consists of permits and leases on 143 mineral estate sections spanning approximately 88,175 acres in the Holbrook Basin of eastern Arizona, along the southern edge of the Colorado Plateau.

We completed a pre-feasibility study, or PFS, for the Holbrook Project in July 2013. We are currently working toward a definitive feasibility study, or DFS, for the Holbrook Project. We commenced our phase 4 drilling program in August 2013 and completed the program in October 2013. We believe this drilling program completes the drilling necessary to complete a DFS.

Recent Developments

Recent Financing

In February 2014 we raised $1.1 million of gross proceeds when we and each of the holders of 747,298 of our Series A Warrants issued in our June 26, 2013 public offering agreed that we would reduce the exercise price from $4.05 to $1.50 in exchange for these warrants being exercised immediately and the issuance of a new Series A Warrant for each warrant exercised with an exercise price of $1.50, exercisable for five years only upon stockholder approval of the exercise. Each of the participating warrant holders entered into a separate Series A Warrant exercise agreement. Pursuant to the full ratchet anti-dilution terms in the Series A Warrants, the exercise price of our remaining outstanding Series A Warrants was adjusted to $1.50 and we issued an additional 5,467,779 Series A Warrants with an exercise price of $1.50. As a result of the reduction of the exercise price of the Series A Warrants, the exercise price on the 1,787,171 warrants held by Buffalo Management was reduced from $4.05 to $3.50 and we issued Buffalo Management 280,841 additional warrants with an exercise price of $3.50.

Restructuring of Senior Secured Debt

On December 10, 2013, we entered into a debt restructuring and extension agreement, or Extension Agreement, with The Karlsson Group which restructured the senior first priority secured promissory note, as amended, that we originally issued to Karlsson on August 1, 2012 in connection with our purchase of Karlsson's 50% interest in our subsidiary American West Potash LLC. As of the date of the Extension Agreement, the outstanding principal balance of the Karlsson Note was approximately $120 million and we were liable to Karlsson for accrued and unpaid interest and accrued tax gross-ups totaling approximately $28 million. Under the terms of the Extension Agreement, we have agreed to use our best efforts to raise a sufficient aggregate amount to prepay the entire Karlsson Note

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for an aggregate payment of $25 million, which we refer to as the Discounted Payoff Amount, on or before March 10, 2014. In connection with the Extension Agreement:

•: upon payment of the Discounted Payoff Amount, the Karlsson Note will be deemed paid in full, and the Karlsson Group will release its first priority lien over our assets;
•: The Karlsson Group will retain its 2% royalty interest in us following payment of the Discounted Payoff Amount;
•: our first tax gross up payment is due on March 10, 2014 and such payment will count towards the aggregate $25 million Discounted Payoff Amount;
•: if we do not pay the Discounted Payoff Amount on or before March 10, 2014, we will be in default under the pre-Extension Agreement Karlsson Note without the contractual right to cure such default, which would allow the Karlsson Group to foreclose on all of our assets;
•: the 172,117 warrants currently held by the Karlsson Group (of which 60,000 currently have an exercise price of $6.00 and 112,117 have an exercise price of $12.50 per share) will be repriced to the lowest price per share at which we sell common stock between December 10, 2013 and March 10, 2014 (these options will not be repriced based on this offering);
•: upon payment of the Discounted Payment Amount the Karlsson Group is to receive 750,000 new warrants with an exercise price equal to the lowest price per share at which we sell common stock between November 14, 2013 and March 10, 2014 (these options will not be repriced based on this offering). The new warrants will have a term of five years from the issuance date, a cashless exercise option and basic anti-dilution protection;
•: we have agreed to pay Karlsson's legal fees in connection with the preparation and negotiation of the Extension Agreement and a recent waiver, with $50,000 having been paid on December 13, 2013 and $100,000 on February 2, 2014 and with the balance, which we do not believe to be material, being payable no later than March 10, 2014; Amounts paid for legal fees do not count toward the $25 million Discounted Payoff Amount;
•: we agreed to amend the additional consideration agreement to cover all of our and our affiliates' current and future land holdings pursuant to royalty agreements, and to record all royalty agreements in the real estate records in Arizona; and
•: we agreed to amend the supplemental payment agreement to provide that Karlsson is entitled to a one-time payment of 10% of the net proceeds in excess of $200 million received by us upon a sale of Prospect consummated on or before February 1, 2018. As of February 25, 2014, we are not contemplating a sale of Prospect.

We will not be able to raise the money to pay off the Karlsson Group debt on or before March 10, 2014 and are in discussions with the Karlsson Group to extend the due date of this payment. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

Restructuring of Senior Unsecured Debt

On January 10, 2014 we entered into an agreement with the holders of our Apollo debt pursuant to which we owe an aggregate amount of approximately $7.3 million in principal and interest. The agreement provides that upon repayment or extinguishment of our senior secured debt owing to The Karlsson Group, Inc. on or before March 10, 2014 in accordance with the terms of the Extension Agreement and in any event for consideration with aggregate value less than or equal to 17% of the aggregate amount outstanding thereunder (including in respect of accrued interest and tax gross-up obligations) we may repay the notes by issuance of a number of shares of our common stock with an aggregate value of 17% of all amounts owing under the notes (including accrued interest). We will not

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be able to raise the money to pay off the Karlsson Group debt on or before March 10, 2014 and are in discussions with the Karlsson Group to extend the due date of this payment. In connection with this, we plan to negotiate parallel extensions with Apollo. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

Restatement of Financial Statements

We recently restated our financial statements for the fiscal years ended March 31, 2013 and 2012 and the quarterly periods ending June 30, September 30 and December 31, 2012 and June 30 and September 30, 2013 to (i) reverse stock compensation related to unvested stock option awards for former employees and board members, (ii) expense certain costs that had been previously capitalized and (iii) remove references to us being a development stage company. The restated financial statements are included in this prospectus and have been filed in amendments to our annual report on Form 10-K for the year ended March 31, 2013 and quarterly reports on Form 10-Q for the quarters ended June 30, 2013, September 30, 2013 and December 31, 2013. This restatement does not change our reported cash or business plan.

Proposed Series A Warrant exchange for common stock

We have filed with the SEC a preliminary proxy statement for a special meeting of stockholders. One of the proposals to be voted on at the meeting is an exchange of all 9,404,456 of our outstanding Series A Warrants for an equal number of shares of common stock where no additional consideration will be paid by the Series A Warrant holders. We are asking our stockholders to approve this exchange because we believe, upon the advice of the potential underwriters of our previously announced proposed public offering of up to $25 million of common stock, that the warrant exchange will enhance the likelihood of a successful public offering by eliminating the "market overhang" of such a large number of full ratchet anti-dilution warrants. The issuance of these shares will nearly triple our outstanding number of shares of common stock and will have a significant dilutive effect on our 4,970,578 shares of common stock currently outstanding.

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Summary of the Offering

The following is a brief summary of certain terms of this offering and is not intended to be complete. It does not contain all of the information that will be important to a holder of shares of our common stock.


Shares Offered by us		17,000,000
Issue Price		$[ ] per share
Total Common Stock Outstanding at February [ ], 2014		4,970,578 shares
Total Common Stock Outstanding After Series A Warrant Exchange		[ ] shares
Total Common Stock Outstanding After This Offering		[ ] shares
Use of Proceeds		The net proceeds to us from the sale of the common stock offered hereby are expected to be approximately $[ ] million ($[ ] million if the Underwriters exercise their over-allotment option to purchase additional shares of common stock in full) based on an assumed public offering price of $[ ] per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on [ ], 2014 and after deducting the underwriting discount and our estimated offering expenses. We intend to use the $[ ] of the net proceeds from this offering to extinguish our senior secured debt to The Karlsson Group, $[ ] for funding the development of the Holbrook Project and $[ ] to fund general corporate purposes.
Nasdaq Trading Symbol		PGRX
Risk Factors		Investing in our common stock involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth under "Risk Factors."

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RISK FACTORS

Investing in our securities involves significant risks, including the potential loss of all or part of your investment. These risks could materially affect our business, financial condition and results of operations and cause a decline in the market price of our shares. You should carefully consider all of the risks described in this prospectus, in addition to the other information contained in this prospectus, before you make an investment in our shares. Unless otherwise indicated, references to us, Prospect or Prospect Global include our operating subsidiaries old Prospect Global, AWP and Apache.

Risks Related to Our Financial Condition and Business

We have significant short-term and immediate capital needs as well as significant capital needs over the next few years. Our substantial indebtedness could adversely affect our financial condition and ability to raise additional capital. Failure to secure this capital when needed or on terms that are acceptable to us has raised substantial doubt about the Company’'s ability to continue as a going concern. We have a $125.2 0 million payment onto extinguish our senior secured indebtedness that is due on ~~November~~or before March 1510, ~~2013~~2014 that we are ~~currently~~ unable to pay and will result in an immediate default and allow the Karlsson Group to foreclose on all of our assets, if we are unable to extend this payment due date.

As of ~~the~~February 25, ~~date of this prospectus~~2014, we ~~have~~had approximately $1.0 .3 million available for general corporate purposes. We have a $125.2 0 million payment due to The Karlsson Group on ~~November~~or before March 1510, ~~2013~~2014. We ~~are~~will ~~trying~~not be able to raise ~~additional~~the money to make this payment ~~and~~by ~~avoid~~March 10, ~~defaulting~~2014 onand ~~our~~are ~~debt~~in discussions with The Karlsson Group~~. In~~ ~~addition~~ to extend the ~~November~~ due date of this payment,. weWe ~~have~~may adecide ~~$1.2~~to ~~million~~file ~~payment~~bankruptcy if we cannot extend the due todate ~~The~~or ~~Karlsson~~raise ~~Group~~sufficient onfunds ~~February 10,~~to ~~2014~~continue our operations.

~~Our~~ On December 10, ~~debt~~2013, towe ~~The~~entered into the Extension Agreement with the Karlsson Group, ~~including~~under ~~principal,~~which ~~accrued~~we ~~interest~~can ~~and~~retire ~~compensation~~all ~~for~~amounts ~~tax~~owing ~~matters,~~under ~~totaled~~the ~~approximately~~Karlsson Note for $~~145~~25 million provided we pay this amount on or before March 10, 2014.4 We will be unable to pay the $25 million aton ~~September~~or before March 3010, ~~2013~~2014, and iswe ~~secured~~will bybe ~~substantially~~in default of The Karlsson Group debt and the Karlsson Group could foreclose on all of our assets. A default on The Karlsson Group debt would ~~make~~cause the entire undiscounted amount then owing (approximately $150.0 million as of January 14, 2014) to become immediately due and payable and also cause a cross-default onof our Apollo debt, which totaled approximately $7.2 3 million as of ~~debt~~January 14, ~~with Apollo~~2014. If Since we ~~are~~will be unable to raise sufficient funds orto ~~receive~~pay athe ~~waiver~~Karlsson ~~for~~Group ~~such~~debt ~~payment~~and ~~from~~the ~~The~~Apollo ~~Karlsson~~debt ~~Group~~on or before ~~November~~March 1510, ~~2013~~2014, if we are unable to extend the due date of these payments we anticipate that we would voluntarily file for bankruptcy protection rather than permit The Karlsson Group to initiate foreclosure proceedings.

If we are able to avoid defaulting on our debt, we will continue our capital raising and debt restructuring efforts. Future work on our ~~project~~Holbrook Project will require significant capital and will require the issuance of additional debt and/or equity securities. These requirements and the potential lack of available funding raise substantial doubt as to the Company’'s ability to continue as a going concern~~. The~~ ~~consolidated~~and our auditors EKS&H LLLP have issued a going concern opinion on our financial statements ~~reflect~~for the ~~Company~~year ended March 31, 2013. Our consolidated financial statements reflect Prospect as a going concern. Our current cash situation has slowed the development of our Holbrook Project. We need significant amounts of cash to further develop the Holbrook Project.

~~Our current cash situation has slowed the development of our Holbrook Project. We need significant amounts of cash to further develop the Holbrook Project.~~ There can be no assurance that we will be able to obtain ~~these~~needed funds on terms acceptable to us, or at all. In addition, there can be no assurance that our cash needs will not increase significantly in connection with the additional engineering studies required to complete a definitive feasibility study. Failure to raise the capital required for further development of the Holbrook Project will result in the delay or indefinite postponement of further development work and the potential loss of our interests in the Holbrook Project.

As of September 30, 2013, we had total indebtedness of $152.6 million, including the $17.6 million of tax compensation due under the Karlsson Note. $151.4 million of this indebtedness is due on the earlier of July 1, 2015 or 12 months from the completion of a definitive feasibility study. This amount will continue to increase between now and maturity with the accumulation of additional interest expense. This substantial indebtedness will make raising new capital more difficult for us. If we are unable to raise sufficient funds or receive a waiver for such payment from The Karlsson Group before this indebtedness is due, we anticipate that we would voluntarily file for bankruptcy protection rather than permit The Karlsson Group to initiate foreclosure proceedings.8

Our senior debt with The Karlsson Group contains significant covenants and development milestones that could cause us to default on the debt or make raising additional capital difficult.

Under the terms of our debt with The Karlsson Group, we are required to achieve the following development milestones: (i) complete total depth on at least eight wells on or before November 1, 2013 (this first milestone has already been met), (ii) deliver a completed and updated final NI 43-101 resource report on or before February 1, 2014, (iii) deliver completed metallurgical and rock mechanic test work results that will be used to complete the mine and processing plant designs for the definitive feasibility study on or before June 1, 2014 and (iv) deliver a completed and published definitive feasibility study on or before December 31, 2014.

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We do not have sufficient capital to meet all of the development milestones. The Karlsson Note also contains many other covenants that we must adhere to. A failure to meet any of the development milestones or a breach of any of these covenants constitutes a default and The Karlsson Group would be entitled to foreclose on all of our assets. If we are unable to raise sufficient funds or receive a waiver for any breach from The Karlsson Group before any potential default, we anticipate that we would voluntarily file for bankruptcy protection rather than permit The Karlsson Group to initiate foreclosure proceedings. These debt restrictions make raising capital to fund our operations more difficult.

Although we have negotiated waivers and extensions under our debt agreements allowing us to avoid defaults, we may not be able to secure future waivers or extensions.

We have successfully negotiated multiple extensions, amendments and waiver with The Karlsson Group and Apollo since March 2013 in order to avoid a default and bankruptcy. We can provide no assurance that we will be able to negotiate extensions, amendments or waivers in the future that will allow us to avoid defaults.

~~The~~ ~~substantial~~Most ~~majority~~ of our outstanding warrants contain full ratchet anti-dilution protection and have an exercise price ~~higher~~close ~~than~~to the recent trading price of our common stock as of February 25, ~~the date of this prospectus~~2014, which makes it highly likely that issuances of our ~~securities~~common stock, at least in the short term, will trigger these highly dilutive provisions.

We have issued warrants to purchase an aggregate of approximately 611.2 9 million shares of our common stock, of which approximately 59.2 4 million ofare ~~which~~Series A ~~have~~Warrants containing full-ratchet anti-dilution protection. ~~Under~~for ~~the~~issuances ~~warrants~~below ~~with~~$1.50 ~~full~~per ~~ratchet~~share. ~~anti-dilution~~Under ~~protection~~the Series A Warrants, any issuances of common stock (or securities exercisable or convertible into common stock) at a price below the exercise price of the warrants results in a reduction in the exercise price of the warrants to the new issuance price and a corresponding increase in the number of warrants issued. For example, if an investor held 300 warrants with an exercise price of $4.00 and we issued new shares of common stock at $3.00 per share, the strike price on the warrants would be reduced to $3.00 and the investor would receive an additional 100 warrants with a $3.00 exercise price. The ~~current~~sale ~~exercise price~~ of ~~the~~common ~~warrants~~stock ~~containing~~by ~~full~~existing holders ~~ratchet~~and ~~anti-dilution protection is $4.05, which is above~~ the ~~recent~~exercise ~~trading price~~ of ~~our common stock as of~~ the ~~date~~Series A ofWarrants ~~this~~at ~~prospectus~~$1. We50 ~~require~~per ~~significant~~share ~~additional~~will ~~capital~~not totrigger ~~continue development of~~ the ~~Holbrook~~full ~~facility~~ratchet ~~which, based on the trading price of our common stock as of the date of this prospectus, will most likely trigger these~~ anti-dilution ~~provisions if the trading price of our common stock remains below $4~~protection.~~05.~~

A The current ~~claim~~exercise ~~for~~price ~~rescission~~ of athe Series A Warrants is $101.050, ~~million~~which ~~investment~~is innear ~~our~~the ~~November,~~recent ~~2012~~trading ~~public~~price ~~offering~~of ~~could~~our ~~require~~common ~~that~~stock weas ~~raise~~of February 25, 2014. We require significant additional capital to continue development of the Holbrook facility which, based on the trading price of our common stock as of February 25, 2014, will most likely trigger these anti-dilution provisions.

We ~~have~~Approval ~~received~~by ~~correspondence~~our ~~from~~stockholders ~~a stockholder who purchased $10.0 million~~ of ~~shares~~a inproposed ~~our November~~Series ~~2012~~A ~~public~~Warrant ~~offering~~exchange asserting a right to rescind the purchase based on violation of securities laws in connection with that offering. While we believe the claim is without merit and no litigation has been commenced, the costs of defending the claim and paying any judgment resulting from the litigation could require that we raise additional capital. There can be no assurance that other investors will ~~not~~have ~~bring~~a ~~claims~~significantly ~~against~~dilutive useffect ~~based~~ on ~~federal or state securities laws alleging that~~ our ~~prior~~outstanding ~~offerings~~common or our filings under the Exchange Act contain defective disclosure or that our insurance carrier will provide coverage for any claims if alleged. Further, even if coverage is available, we would be liable for our retention under our policy and it is possible that any liability we ultimately incur could exceed our coverage limits. Even if we are successful in defending any such claims, securities litigation is distracting to our management, may cause harm to our reputation and could adversely affect our stock ~~price and our ability to raise capital in the future~~.

We have nofiled ~~current~~with ~~revenue~~the ~~source~~SEC ~~and~~a preliminary proxy statement for a ~~history~~special meeting of ~~operating~~stockholders. ~~losses,~~One ~~and~~of wethe ~~expect~~proposals to ~~generate~~be ~~operating~~voted ~~losses~~on at the meeting is an exchange of all 9,404,456 of our outstanding Series A Warrants for an equal number of shares of common stock where no additional consideration will be paid by the Series A ~~foreseeable~~Warrant ~~future~~holders. WeSee ~~may~~"Prospectus ~~not~~Summary—Recent ~~achieve~~Events—Proposed ~~profitability~~Series A Warrant exchange for common ~~some~~stock." ~~time~~The issuance of these shares will nearly triple our outstanding number of shares of common stock and will have a significant dilutive effect on our 4,970,578 ifshares atof ~~all~~common stock currently outstanding.

We ~~have~~A ~~incurred~~claim ~~losses~~for ~~each~~rescission ~~year since our inception. We expect to continue incurring operating losses until several months after production occurs, if ever. As~~ of ~~June 30,~~a ~~2013, our accumulated losses were~~ $~~130~~10.0 million, ~~which~~investment ~~included derivative losses of $53.8 million that relate to the change~~ in ~~the fair value of the compound embedded derivatives of~~ our ~~convertible~~November ~~notes~~2012 ~~and~~public ~~warrants~~offering ~~(see~~could “Management’s Discussion and Analysis” included elsewhere in this prospectus). The process of exploring, developing and bringing into production a producing mine is time-consuming and requires significant up-front and ongoing capital. We have not defined or delineated any proven or probable reserves at any of our properties. The development of the Holbrook Project into a producing mine will require ~~further studies~~ that demonstrate the economic viability of the project, necessary permits obtained, production decisions to be made and the arrangement of financing for construction and development. Our engineering work to date has been based on estimates of mineral resources, which are not mineral reserves and do not have demonstrated economic viability. There can be no assurance that a DFS will be completed on schedule or at all or that the economic feasibility of the Holbrook Project will be confirmed by a DFS. Few properties that are explored are ultimately developed into producing mines. We expect that we ~~will~~raise ~~continue~~additional ~~to incur operating losses for the foreseeable future~~capital.

5 We have received correspondence from a stockholder who purchased $10.0 million of shares in our November 2012 public offering asserting a right to rescind the purchase based on violation of securities laws in connection with that offering. While we believe the claim is without merit and no litigation has been commenced, the costs of defending the claim and paying any judgment resulting from the litigation could require that we raise additional capital. There can be no assurance that other investors will not bring claims against us based on federal or state securities laws alleging that our prior offerings or our filings under the Exchange Act contain defective disclosure or that our insurance carrier will provide coverage for any claims if alleged. Further, even if coverage is available, we would be liable for our retention under our policy and it is possible that any liability we ultimately incur could exceed our coverage limits. Even if we are successful in defending any such claims, securities litigation is distracting

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to our management, may cause harm to our reputation and could adversely affect our stock price and our ability to raise capital in the future.

We have no current revenue source and a history of operating losses, and we expect to generate operating losses for the foreseeable future. We may not achieve profitability for some time, if at all.

We have incurred losses each year since our inception. We expect to continue incurring operating losses until several months after production occurs, if ever. As of December 31, 2013, our accumulated losses were $198.2 million, which included derivative losses of $54.5 million that relate to the change in the fair value of the compound embedded derivatives of our convertible notes and warrants (see "Management's Discussion and Analysis" included elsewhere in this prospectus). The process of exploring, developing and bringing into production a producing mine is time-consuming and requires significant up-front and ongoing capital. We have not defined or delineated any proven or probable reserves at any of our properties. The development of the Holbrook Project into a producing mine will require further studies that demonstrate the economic viability of the project, necessary permits obtained, production decisions to be made and the arrangement of financing for construction and development. Our engineering work to date has been based on estimates of mineral resources, which are not mineral reserves and do not have demonstrated economic viability. There can be no assurance that a DFS will be completed on schedule or at all or that if completed the economic feasibility of the Holbrook Project will be confirmed by a DFS. Few properties that are explored are ultimately developed into producing mines. We expect that we will continue to incur operating losses for the foreseeable future.

We have no history of commercially producing potash and there can be no assurance that we will ever make it to the production stage or profitably produce potash.

We have no history of commercially producing potash and no ongoing mining operations or revenue from mining operations. Many early stage mining companies never make it to the production stage. As a result, we are subject to all of the risks associated with establishing new mining operations and business enterprises, including:

•: the timing and cost, which can be considerable, of the construction of mining and processing facilities and related infrastructure;
•: the availability and cost of skilled labor and mining equipment;
•: the need to obtain necessary environmental and other governmental approvals and permits, and the timing of those approvals and permits;
•: the availability of funds to finance construction and development activities;
•: potential opposition from non-governmental organizations, environmental groups or local groups which may delay or prevent development activities; and
•: potential increases in construction and operating costs due to changes in the cost of fuel, power, labor, materials and supplies and foreign exchange rates.

· We currently are working toward the ~~timing~~completion ~~and~~of ~~cost~~a DFS; however, ~~which~~there ~~can~~is no guarantee that such a study will be ~~considerable~~completed on schedule, ofor at all, or that a completed study will confirm the ~~construction~~economic feasibility of the Holbrook Project. Cost estimates may increase significantly as more detailed engineering work and studies are completed on a project. It is common in new mining operations to experience unexpected costs, problems and ~~processing~~delays ~~facilities~~during development, construction and ~~related~~mine ~~infrastructure;~~start-up. Accordingly, there are no assurances that our activities will result in profitable mining operations or that we will successfully establish mining operations or enter into commercial production. Our failure to enter successfully into commercial production would materially and adversely affect our business,

~~· the availability and cost of skilled labor and mining equipment;~~10

~~· the~~Table ~~need to obtain necessary environmental and other governmental approvals and permits, and the timing~~ of ~~those approvals and permits;~~Contents

~~· the~~prospects, financial ~~availability~~condition and results of ~~funds~~operations. toIn ~~finance~~addition, ~~construction~~there ~~and~~can ~~development~~be no assurance that our activities; will produce natural resources in commercially viable quantities. There can be no assurance that sales of our natural resources production will ever generate sufficient revenues or that we will be able to sustain profitability in any future period.

· potential opposition from non-governmental organizations, environmental groups or local groups which may delay or prevent development activities; and

· potential increases in construction and operating costs due to changes in the cost of fuel, power, labor, materials and supplies and foreign exchange rates.

We currently are working toward the completion of a DFS; however, there is no guarantee that such a study will be completed on schedule, or at all, or that a completed study will confirm the economic feasibility of the Holbrook Project. Cost estimates may increase significantly as more detailed engineering work and studies are completed on a project. It is common in new mining operations to experience unexpected costs, problems and delays during development, construction and mine start-up. Accordingly, there are no assurances that our activities will result in profitable mining operations or that we will successfully establish mining operations or enter into commercial production. Our failure to enter successfully into commercial production would materially and adversely affect our business, prospects, financial condition and results of operations. In addition, there can be no assurance that our activities will produce natural resources in commercially viable quantities. There can be no assurance that sales of our natural resources production will ever generate sufficient revenues or that we will be able to sustain profitability in any future period.

Our potash supply agreement with Sichuan Chemical is subject to risks that may prevent us from realizing the benefit of the agreement or that may have a material adverse effect on our business, results of operations and financial condition.

Our agreement with Sichuan Chemical for its purchase of potash over a 10-year period may be terminated if the Holbrook Project has not achieved production by December 31, 2015. We will not achieve production by that date, and there can be no assurance that Sichuan Chemical will extend the December 31, 2015 deadline or that we will be able to commence production at all. In the event that Sichuan Chemical terminates its agreement with us, there is no guarantee that we will be able to enter into a similar agreement with another entity to purchase our potash and such an event could have a material adverse effect on our results of operations and financial condition.

In addition, the selling price of our potash to Sichuan Chemical is subject to factors beyond our control including the market price for potash in the People’'s Republic of China. There can be no assurance that this selling price will be profitable to us and could have a material adverse effect on our results of operations and financial condition.

Furthermore, our agreement with Sichuan Chemical limits our ability to sell potash in the People’'s Republic of China. This may make it more difficult for us to enter into supply agreements with other parties in the future, which could have a material adverse effect on our business, financial condition and results of operations.

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Our ability to attract and retain qualified contractors and staff is critical to our success. The departure of key personnel or loss of key contractors could adversely affect our business and financial condition.

We are dependent on the services of key executives including Damon Barber, our president and chief executive officer, and several key contractors. The construction and operation of a mine and mill of the size we have planned for the Holbrook Project is expected to require hundreds of workers during the construction phase and once the mine is in production. We will require many of the same skill sets sought by other natural resource companies and we will be competing with these other natural resource companies in finding qualified contractors, consultants and staffing. Since many of these skills sets are highly specialized, the market for and availability of individuals possessing these skills will be impacted by the overall health of the natural resource sector. Due to our relatively small size, the loss of these persons or the inability to attract and retain additional highly skilled employees required for the development of our activities may have a material adverse effect on our business or future operations.

Title and other rights to our mineral properties cannot be guaranteed, and we may be at risk of loss of ownership of one or more of our properties.

We cannot guarantee that legal title to our properties or mineral interests will not be challenged and, if challenged, that we would be the prevailing party with respect to such challenge. Certain of the private leases and permits we have obtained are subject to uncertain title, or title which may, in the past, have not been assigned properly. We may not have, or may not be able to obtain, all necessary property rights to develop a property. Certain of our mineral properties are, or may be, subject to prior agreements, transfers or claims, and title may be affected by, among other things, undetected defects. We have not conducted surveys of all of the claims in which we hold a direct or indirect interest. Title insurance is generally not available for mineral properties and our ability to ensure that we have obtained secure claims to individual leases or permits may be constrained. A successful challenge to the precise area and location of these claims could result in us being unable to explore on our properties as permitted or being unable to enforce our rights with respect to our properties. This may result in us not being compensated for our prior expenditure relating to the property or may impact our ability to develop the Holbrook Project.

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obtained secure claims to individual leases or permits may be constrained. A successful challenge to the precise area and location of these claims could result in us being unable to explore on our properties as permitted or being unable to enforce our rights with respect to our properties. This may result in us not being compensated for our prior expenditure relating to the property or may impact our ability to develop the Holbrook Project.

We do not currently have the right to mine our properties. We are pursuing permits for the right to mine our properties but we may ultimately be unable to secure these rights. Failure to secure these rights would have a material adverse effect on our business, financial condition or results of operation.

We commissioned a technical report and an updated report in accordance with NI 43-101, which differs from the standards generally permitted in reports filed with the SEC.

We have prepared a technical report and an updated report in accordance with NI 43-101, which differs from the standards generally permitted in reports filed with the SEC. Under the first resource estimate completed in 2011, we reported indicated and inferred resources and under the updated resource estimate completed in 2012, we reported measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. The estimation of measured or indicated resources involves greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves. Investors should be aware that we have no “"reserves”" as defined by SEC Industry Guide 7 and much or all of the potential target mineral resources may never be confirmed or converted into SEC Industry Guide 7 compliant “"reserves.”" The PEA, Interim Report and PFS contain estimates based on our inferred resources. However, in accordance with both Canadian statutes and NI 43-101, estimates of inferred mineral resources cannot form the basis of a feasibility study. See “ "Cautionary Note to Investors Regarding Mineral Disclosures”" elsewhere in this prospectus.

We recently restated our financial statements and have concluded that our disclosure controls and procedures were not effective as of March 31, 2013.

We recently restated our financial statements for the fiscal years ended March 31, 2013 and 2012 and the quarterly periods ending June 30, September 30 and December 31, 2012 and June 30 and September 30, 2013 to (i) reverse stock compensation related to unvested stock option awards for former employees and board members, (ii) expense certain costs that had been previously capitalized and (iii) remove references to us being a development stage company. As a result of this restatement, our management has re-evaluated and amended its conclusions regarding the effectiveness of disclosure controls and procedures and internal control over financial reporting and concluded that our disclosure controls and procedures and internal control over financial reporting was not effective as of March 31, 2013.

Risk Related to this Offering

There is no guarantee this offering will be successful.

There is no guarantee that we will be successful in selling securities in this offering, and we may raise little or no funds from this offering.

We are currently exploring and will continue to explore additional equity financing alternatives which could result in significant future dilution.

We need to raise additional capital to ~~satisfy~~fund ~~the development milestones in~~ our ~~senior~~operations ~~secured debt~~ and todevelop ~~fund~~the ~~our~~Holbrook ~~operations,~~Project and we are currently exploring alternatives that could involve issuing additional equity on terms ~~substantially~~that could be less favorable to us than the terms of ~~previous~~this ~~offerings~~offering. To such extent, you will experience ~~significant~~ dilution.

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The offering price determined for this offering is not an indication of our value.

The offering price of $[ ] per share (which represents approximately a [ ]% discount to the Nasdaq Capital Market closing price per share of our common stock on February 20, 2014, the last trading day before the announcement of this offering) may not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or any other established criteria for value. You should not consider the offering price as an indication of the value of our common stock. After the date of this prospectus, our common stock may trade at prices above or below the offering price.

Risks Related to the Mining Industry

Potash is a commodity whose selling price is highly dependent on and fluctuates with the business and economic conditions and governmental policies affecting the agricultural industry. These factors are outside of our control and may significantly affect our profitability.

Our future revenues, operating results, profitability and rate of growth will depend primarily upon business and economic conditions and governmental policies affecting the agricultural industry, which we cannot control. The agricultural products business can be affected by a number of factors. The most important of these factors, for U.S. markets, are:

•: weather patterns and field conditions (particularly during periods of traditionally high crop nutrients consumption);
•: quantities of crop nutrients imported to and exported from North America;
•: current and projected grain inventories and prices, both of which are heavily influenced by U.S. exports and world-wide grain markets; and
•: U.S. governmental policies, including farm and bio-fuel policies and subsidies, which may directly or indirectly influence the number of acres planted, the level of grain inventories, the mix of crops planted or crop prices.

· weather patterns and field conditions (particularly during periods of traditionally high crop nutrients consumption);

· quantities of crop nutrients imported to and exported from North America;

· current and projected grain inventories and prices, both of which are heavily influenced by U.S. exports and world-wide grain markets; and

· U.S. governmental policies, including farm and bio-fuel policies and subsidies, which may directly or indirectly influence the number of acres planted, the level of grain inventories, the mix of crops planted or crop prices.

International market conditions, which are also outside of our control, may also significantly influence our future operating results. The international market for crop nutrients is influenced by such factors as the relative value of the U.S. dollar and its impact upon the cost of importing crop nutrients, foreign agricultural policies, the existence of, or changes in, import barriers, or foreign currency fluctuations in certain foreign markets, changes in the hard currency demands of certain countries and other regulatory policies of foreign governments, as well as the laws and policies of the United States affecting foreign trade and investment.

In addition, as noted above, our agreement with Sichuan Chemical for the sale of potash is valued based on factors beyond our control including the then market price for potash in the People’'s Republic of China. If that market price would be materially lower than current prices, it could have a material adverse effect on our results and operations and financial condition. Also, Sichuan may terminate the agreement if we have not produced and sold an aggregate of 100,000 tonnes of potash from the Holbrook Basin in a 45 consecutive day period by December 31, 2015. We will not meet this condition by December 31, 2015.

Government regulation may adversely affect our business and results of operations.

Our operations and exploration and development activities are subject to extensive federal, state and local government laws and regulations, which may be changed from time to time. These laws and regulations primarily govern matters relating to:

•: protection of human health and the environment;

~~· protection of human health and the environment;~~13

~~· handling,~~Table ~~storage, transportation and disposal~~ of ~~natural resources, including potash, or its by-products and other substances and materials produced or used in connection with mining operations;~~Contents

•: handling, storage, transportation and disposal of natural resources, including potash, or its by-products and other substances and materials produced or used in connection with mining operations;
•: handling, processing, storage, transportation and disposal of hazardous materials;
•: management of tailings and other waste generated by our operations;
•: price controls;
•: taxation and mining royalties;
•: labor standards and occupational health and safety, including mine safety; and
•: historic and cultural preservation.

· handling, processing, storage, transportation and disposal of hazardous materials;

· management of tailings and other waste generated by our operations;

· price controls;

· taxation and mining royalties;

· labor standards and occupational health and safety, including mine safety; and

· historic and cultural preservation.

We may incur substantial additional costs to comply with environmental, health and safety law requirements related to these activities. Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining, curtailing or closing operations or requiring corrective measures, the installation of additional equipment or remedial actions, any of which could result in us incurring significant expenditures. We may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws or regulations. It is also possible that future laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the exploration or development of our properties.

Our activities are subject to environmental laws and regulations that may increase our costs of doing business and restrict our operations.

All of ~~the~~our ~~Company’s~~ exploration and potential development and ~~potential~~ production activities are subject to regulation by governmental agencies under various environmental laws. Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, we could be held jointly and severally responsible for the removal or remediation of any hazardous substance contamination at future facilities, at neighboring properties to which such contamination may have migrated and at third-party waste disposal sites to which we have sent waste. We could also be held liable for natural resource damages. Liabilities under these and other environmental health and safety laws involve inherent uncertainties. Violations of environmental, health and safety laws are subject to civil, and, in some cases, criminal sanctions. As a result of liabilities under and violations of environmental, health and safety laws and related uncertainties, we may incur unexpected interruptions to operations, fines, penalties or other reductions in income, third-party claims for property damage or personal injury or remedial or other costs that may negatively impact our financial condition and operating results. Finally, we may discover currently unknown environmental problems or conditions that have been caused by previous owners or operators or that may have occurred naturally. The discovery of currently unknown environmental problems may subject us to material capital expenditures or liabilities in the future.

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Environmental legislation in the United States is evolving and the trend has been toward stricter standards of enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and increasing responsibly for companies and their officers, directors and employees. There can be no assurance that future changes in environmental laws and regulations will not adversely affect our business.

In Continued government ~~addition,~~and ~~portions~~public ofemphasis ~~the~~on ~~area~~environmental ~~for~~issues ~~the~~can ~~Holbrook~~be ~~Project~~expected ~~border,~~to orresult ~~are within, the expanded boundaries of the Petrified Forest National Park. The National Park Service recently acquired certain surface rights~~ in ~~this~~increased ~~expansion~~future ~~area~~investments ~~that are included~~ in ~~the~~environmental ~~Holbrook~~controls ~~Project.~~at Weongoing hold the mineral rights for some of this land and we will need to work closely with both the State of Arizona and park officials regarding those portions of the Project. This coordination could potentially delay the issuance of necessary permitsoperations, orwhich ~~lead~~may lead to ~~the~~increased ~~imposition of restrictions to some of our operations that could adversely affect the viability of portions of the Holbrook Project~~expenses. ItPermit ~~could~~renewals ~~also~~and ~~lead~~compliance towith ~~the~~present ~~denials of, approvals~~ and ~~permits~~future ~~necessary~~environmental tolaws ~~develop portions of the Holbrook Project. Furthermore the expansion of the Petrified Forest National Park could limit our ability to acquire additional mineral rights,~~ and ~~additional acquisitions of lands or interests in land by the National Park Service could lead to further overlap with our current holdings.~~

Continued government and public emphasis on environmental issues can be expected to result in increased future investments in environmental controls at ongoing operations, which may lead to increased expenses. Permit renewals and compliance with present and future environmental laws and regulations applicable to our operations may require substantial capital expenditures and may have a material adverse effect on our business, financial condition and operating results.14

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regulations applicable to our operations may require substantial capital expenditures and may have a material adverse effect on our business, financial condition and operating results.

Our current and anticipated future operations are dependent on receiving the required permits and approvals from governmental authorities. Denial or delay by a government agency in issuing any of our permits and approvals, imposition of restrictive conditions on us with respect to these permits and approvals or a failure to comply with the terms of any such permits that we have obtained may have a material effect on our business and operations.

We must obtain numerous environmental, mining and other permits and approvals from various United States federal, state and local government authorities authorizing our future operations, including further exploration and development activities and commencement of production on our properties. There can be no assurance that all permits that we require for the construction of mining facilities and to conduct mining operations will be obtainable on reasonable terms, or at all. A decision by a government agency to delay or deny a permit or approval, or a failure to comply with the terms of any such permits or approval that we have obtained, may delay the completion of a DFS on the Holbrook Project or may interfere with our planned development of this property and have a material adverse effect on our business, financial condition or results of operations.

Our properties may not yield resources in commercially viable quantities or revenues that are sufficient to cover our cost of operations.

Resource figures presented in our filings with the SEC, press releases and other public statements that may be made from time to time are based upon estimates made by independent technical experts. These estimates are imprecise and depend upon geologic interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. Even the use of geological data and other technologies and the study of producing mines in the same area will not enable us to know conclusively prior to mining whether resources will be present or, if present, whether in the quantities and grades expected. There can be no assurance that our estimates will be accurate or that any of our properties will yield resources in sufficient grades or quantities to recover our mining and development costs.

~~Because we have not commenced commercial production at any of our properties, resource~~ Resource estimates for our properties may require adjustments or downward revisions based upon further exploration or development work or actual production experience. There can be no assurance that recovery of minerals in small scale tests will be duplicated in large scale tests under on-site conditions or in production scale.

The resource estimates contained in our public filings have been determined and valued based on assumed future prices, cut-off grades, recovery rates, extraction rates and operating costs that may prove to be inaccurate. Extended declines in market prices for potash may render portions of our mineralization and resource estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of one or more of our properties. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our results of operations or financial condition.

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We are subject to the risks of doing business internationally as we attempt to enter into contracts with international companies.

Our business operations are primarily conducted in the United States. However, we plan to do business with companies outside of the United States. The laws, regulations and policies in these countries may be different from those typically found in the United States. For example, our current potash supply agreement with Sichuan Chemical is governed by the laws of Hong Kong. Our international business relationships are subject to the financial and operating risks of conducting business internationally, including, but not limited to: unexpected changes in or impositions of legislative or regulatory requirements; potential hostilities and changes in diplomatic and trade relationships; local economic and political conditions; and political instability. The risks inherent in doing business internationally may have a material adverse effect on our business, operating results, and financial condition.

We face competition from larger companies having access to substantially more resources than we possess.

Our competitors include other mining companies and fertilizer producers in the United States and globally, including state-owned and government-subsidized entities. Many of these competitors are large, well-established companies having substantially larger operating staffs and greater capital resources than we do. We may not be able to conduct our operations successfully, evaluate and select suitable properties and consummate transactions in this highly competitive environment. Specifically, these larger competitors may be able to pay more for exploratory prospects and productive mineral properties and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. We may also encounter increasing competition from other mining companies in our efforts to hire the experienced mining professionals necessary to conduct our operations and advance our properties. In addition, such companies may be able to expend greater resources on the existing and changing technologies that we believe are and will be increasingly important to attaining success in the industry. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operations, financial condition and cash flows.

Our business is inherently dangerous and involves many operating risks that are beyond our control, which may have a material adverse effect on our business.

Our operations are subject to hazards and risks associated with the exploration, development and mining of natural resources and related fertilizer materials and products, such as:

•: fires;
•: flooding;
•: power outages;
•: explosions;
•: inclement weather and natural disasters;
•: mechanical failures;
•: rock failures and mine roof collapses;
•: unscheduled downtime;
•: industrial accidents;
•: environmental hazards such as chemical spills, discharges or release of toxic or hazardous substances, storage tank leaks; and

~~· fires;~~16

~~· flooding;~~Table of Contents

•: availability of needed equipment at acceptable prices.

· power outages;

· explosions;

· inclement weather and natural disasters;

· mechanical failures;

· rock failures and mine roof collapses;

· unscheduled downtime;

· industrial accidents;

· environmental hazards such as chemical spills, discharges or release of toxic or hazardous substances, storage tank leaks; and

· availability of needed equipment at acceptable prices.

Any of these risks can cause substantial losses resulting from:

•: injury or loss of life;
•: damage to and destruction of property, natural resources and equipment;
•: pollution and other environmental damage;
•: regulatory investigations and penalties;
•: revocation or denial of our permits;
•: suspension of our operations; and
•: repair and remediation costs.

· injury or loss of life;

· damage to and destruction of property, natural resources and equipment;

· pollution and other environmental damage;

· regulatory investigations and penalties;

· revocation or denial of our permits;

· suspension of our operations; and

· repair and remediation costs.

We do not currently maintain insurance against all of the risks described above. In the future we may not be able to obtain insurance at premium levels that justify its purchase, if at all. Insurance against certain environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from production, is not generally available to us or other companies within the mining industry. We may also experience losses in amounts in excess of the insurance coverage carried. We may suffer a material adverse impact on our business if we incur losses in excess of our insurance coverage carried or losses related to any significant events that are not covered by our insurance policies.

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The mining industry is capital intensive and the ability of a mining company to raise the necessary capital can be impacted by factors beyond its control.

The upfront cost incurred for the acquisition, exploration and development of a mining project can be substantial, and the ability of a mining company to raise that capital can be influenced by a number of factors beyond the company’'s control including but not limited to general economic conditions, political turmoil, market demand, commodity prices and expectations for commodity prices, debt and equity market conditions and government policies and regulations.

Once in production, mining companies require annual maintenance capital in order to sustain their operations. This sustaining capital can also be substantial and may have to be secured from external sources to the extent cash flows from operations are insufficient.

Future cash flow from operations is subject to a number of variables, including:

•: the quality of the resource base and the grade of those resources;
•: the quantity of materials mined:
•: the cost to mine the materials; and
•: the prices at which the mined materials can be sold.

~~· the~~ Any one ~~quality~~ of ~~the~~these ~~resource~~variables ~~base~~can ~~and~~materially ~~the~~affect ~~grade~~a ofmining ~~those~~company's ~~resources;~~ability to fund its sustaining capital needs.

· the quantity of materials mined:

· the cost to mine the materials; and

· the prices at which the mined materials can be sold.

Any one of these variables can materially affect a mining company’s ability to fund its sustaining capital needs.

If our future revenues are adversely affected as a result of lower potash prices, including those related to sales pursuant to our agreement with Sichuan Chemical, operating difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to undertake or complete future mining projects. We may, from time to time, seek additional financing, either in the form of bank borrowings, sales of debt or equity securities or other forms of financing or consider selling non-core assets to raise operating capital. However, we may not be able to obtain additional financing or make sales of non-core assets upon terms acceptable to us.

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New sources of supply can create structural market imbalances, which could negatively affect our operating results and financial performance.

Potash supply and demand has been volatile. If production increases to the point where the market is over supplied, the price at which we are able to sell and the volumes we are able to sell could be impacted, which may materially and adversely affect our projected business, operating results and financial condition.

Variations in crop nutrient application rates may exacerbate the nature of the prices and demand for our products.

Farmers are able to maximize their economic return by applying optimum amounts of crop nutrients. Farmers’' decisions about the application rate for each crop nutrient, or to forego application of a crop nutrient, particularly phosphate and potash, vary from year to year depending on a number of factors, including among others, crop prices, crop nutrient and other crop input costs or the level of the crop nutrient remaining in the soil following the previous harvest. Farmers are more likely to increase application rates when crop prices are relatively high, crop nutrient and other crop input costs are relatively low and the level of the crop nutrient remaining in the soil is relatively low. Conversely, farmers are likely to reduce or forego application when farm economics are weak or declining or the level of the crop nutrients remaining in the soil is relatively high. This variability in application rates can materially aggravate the cyclicality of prices for our future products and our sales volumes.

Global economic conditions can adversely affect our business.

Global economic conditions can adversely affect our business. Many industries, including the mining industry, are impacted by these market conditions. Global, national and regional economic events could produce major changes in demand patterns that could have a material adverse effect on our sales, margins and profitability.

Risks Relating to our Common Stock

We have been notified by ~~Nasdaq~~NASDAQ that we have failed to satisfy a continuing listing rule and are subject to delisting from The ~~Nasdaq~~NASDAQ & Stock ~~Exchange~~Market following an appeal hearing.

On April 25, 2013, we received written notification from The ~~Nasdaq~~NASDAQ Stock Market that we are no longer in compliance with ~~Nasdaq~~ NASDAQ Listing Rule 5550(b)(2) because the market value of our listed securities has fallen below the $35 million minimum requirement for continued listing on the ~~Nasdaq~~NASDAQ Capital Market for a period of at least 30 consecutive business days. Under ~~Nasdaq~~NASDAQ Listing Rule 5810(c)(3)(C), we had 180 calendar days to regain compliance. Compliance can be achieved by meeting the $35 million minimum requirement for market value of listed securities for a minimum of 10 consecutive business days during the 180-day compliance period. On October 23, 2013 we received written notification from The Nasdaq Stock Market that we have not regained compliance during that period and that our common stock would be delisted at the open of business on November 1, 2013. The Nasdaq rules permit us to appeal the delisting determination to a Nasdaq Hearing Panel, and we have requested an appeal hearing from Nasdaq. There is no assurance that our appeal will be successful. Delisting of our common stock from The Nasdaq Capital Market could substantially reduce the liquidity of your investment in our common stock.

On October 23, 2013 we received written notification from The NASDAQ Stock Market that we have not regained compliance during that period and that our common stock would be delisted at the open of business on November 1, 2013. The NASDAQ rules permitted us to appeal the delisting determination to a NASDAQ Hearing Panel, and on December 11, 2013 our appeal was heard by NASDAQ. The Panel extended the time for us to regain compliance with the market value of listed securities rule to February 28, 2014, which has at our request been extended by the Panel to March 31, 2014.

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The market price and trading volume of our common stock has been volatile, and you may lose all or part of your investment.

Our common stock began trading on The ~~Nasdaq~~NASDAQ Capital Market under the symbol “"PGRX”" on July 2, 2012. On September 4, 2013 we effected a 1-for-50 ~~for one~~ reverse stock split. The high and low sale prices of our common stock on The ~~Nasdaq~~NASDAQ Capital Market since trading commenced, adjusted for the stock split, has been $~~512~~230.5000 and $21.1545, respectively.

The price of our common stock has fluctuated and may fluctuate in the future in response to many factors, including:

•: the perceived prospects for natural resources in general;

~~· the perceived prospects for natural resources in general;~~18

~~· differences~~Table ~~between~~of ~~our actual financial and operating results and those expected by investors;~~Contents

•: differences between our actual financial and operating results and those expected by investors;
•: changes in the share price of public companies with which we compete;
•: news about our industry and our competitors;
•: changes in general economic or market conditions including broad market fluctuations;
•: the public's reaction to press releases and other public announcements and filings with the SEC;
•: arrival or departure of key personnel;
•: acquisitions, strategic alliances or joint ventures involving us or our competitors;
•: adverse regulatory actions; and
•: other events or factors, many of which are beyond our control.

~~· changes~~ Our shares may trade at prices significantly below current levels, in which case holders of the ~~share~~shares may experience difficulty in reselling, or an inability to sell, the shares. In addition, when the market price of ~~public~~a ~~companies~~company's ~~with~~common ~~which~~equity wedrops ~~compete;~~significantly, stockholders often institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources away from the day-to-day operations of our business.

· news about our industry and our competitors;

· changes in general economic or market conditions including broad market fluctuations;

· the public’s reaction to press releases and other public announcements and filings with the SEC;

· arrival or departure of key personnel;

· acquisitions, strategic alliances or joint ventures involving us or our competitors;

· adverse regulatory actions; and

· other events or factors, many of which are beyond our control.

Our shares may trade at prices significantly below current levels, in which case holders of the shares may experience difficulty in reselling, or an inability to sell, the shares. In addition, when the market price of a company’s common equity drops significantly, stockholders often institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources away from the day-to-day operations of our business.

Our articles of incorporation permit us to issue debt securities with voting rights which would dilute the voting power of the holders of our common stock.

Our articles of incorporation permit us to issue debt securities with voting rights as permitted by Nevada corporate law. We do not have any debt securities with voting rights outstanding as of ~~the~~February 25, ~~date of this prospectus~~2014. Holders of voting debt securities may have different interests than stockholders and may vote in accordance with those interests. Issuances of debt securities with voting rights could also have an anti-takeover effect, in that it could make a change in control or takeover of us more difficult. For example, we could grant voting rights to debt holders so as to dilute the voting rights of persons seeking to obtain control of us. Similarly, voting rights could be granted to debt holders allied with our management and could have the effect of making it more difficult to remove our current management by diluting the voting rights of persons seeking to cause such removal.

Future sales or issuances of shares of common stock or the exercise of our outstanding warrants may decrease the value of our existing common stock, dilute existing shareholders and depress the market price of our common stock. The substantial majority of our outstanding warrants contain full ratchet anti-dilution protection which can be highly dilutive to stockholders. We may also issue additional shares of our common stock or securities convertible into our common stock in the future.

We have issued warrants to purchase an aggregate of approximately 611.2 9 million shares of our common stock, of which approximately 59.2 4 million ~~of which~~ have full-ratchet anti-dilution protection. See “"Risk Factors—Risks Related to our Financial Condition and Business~~—The~~. ~~substantial~~All ~~majority~~ of ~~our~~these ~~outstanding~~ warrants ~~contain full ratchet~~ having anti-dilution protection ~~and~~ have an exercise price ~~higher~~near ~~than~~ the recent trading price of our common stock as of ~~the~~February 25, ~~date of this prospectus~~2014, which makes it highly likely that issuances of our securities, at least in the short term, will trigger these highly dilutive provisions.”

We As described ~~may~~under ~~also~~"Prospectus ~~sell~~Summary—Restructuring ~~additional common stock in subsequent offerings and may issue additional warrants and shares~~ of ~~our~~Senior ~~common~~Unsecured ~~stock~~Debt" inwe ~~the~~have ~~future,~~recently ~~which~~agreed ~~may~~with ~~lower~~ the ~~market~~holders ~~price~~ of our ~~common stock~~$7.3 million We(principal ~~could~~and ~~also~~accrued interest) ~~issue~~of ~~preferred~~senior ~~stock~~unsecured innotes ~~the~~to ~~future,~~issue ~~which~~them ~~could be convertible into~~ shares of ~~our~~ common stock ~~and/or~~with ~~have~~an ~~voting~~aggregate ~~rights~~value ~~equivalent~~equal to ~~those~~17% of athe ~~common~~amounts ~~stock~~owed ~~holder. Some~~under oftheir ~~our~~notes ~~advisors~~as ~~are~~full ~~compensated~~extinguishment ~~based on periodic issuances~~ of ~~shares~~such ofdebt, ~~common~~provided ~~stock~~we orare able ~~warrants~~ to ~~purchase~~retire ~~common~~our ~~stock.~~Karlsson WeGroup ~~cannot~~senior ~~predict~~secured ~~the~~debt ~~size~~on ~~of future sales and issuances of common stock~~ or ~~securities~~prior ~~convertible~~to ~~into common stock or the effect~~March 10, if2014. ~~any,~~We ~~that~~will ~~future~~not ~~sales~~be ~~and~~able ~~issuances~~to ofraise ~~common stock or securities convertible into common stock will have on~~ the ~~market~~money ~~price~~to ofpay ~~our~~off ~~shares of common stock. Sales or issuances of a substantial number of common stock or securities convertible into common stock, or~~ the ~~perception~~Karlsson ~~that~~Group ~~such~~debt ~~sales~~on ~~could occur, may adversely affect prevailing market prices for our common stock. With any additional sale~~ or ~~issuance~~before ~~of common stock or securities convertible into our common stock~~March 10, ~~investors will suffer dilution of their voting power~~ 2014 and weare ~~may experience dilution~~ in ~~our~~discussions ~~earnings~~with ~~per~~the ~~share.~~

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Karlsson Group to extend the due date of this payment. In connection with this, we plan to negotiate parallel extensions with Apollo. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

We may also sell additional common stock in subsequent offerings and may issue additional warrants and shares of our common stock in the future, which may lower the market price of our common stock. We could also issue preferred stock in the future, which could be convertible into shares of our common stock and/or have voting rights equivalent to those of a common stock holder. Some of our advisors are compensated based on periodic issuances of shares of common stock or warrants to purchase common stock. We cannot predict the size of future sales and issuances of common stock or securities convertible into common stock or the effect, if any, that future sales and issuances of common stock or securities convertible into common stock will have on the market price of our shares of common stock. Sales or issuances of a substantial number of common stock or securities convertible into common stock, or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock. With any additional sale or issuance of common stock or securities convertible into our common stock, investors will suffer dilution of their voting power and we may experience dilution in our earnings per share.

We incur increased costs as a result of being an operating public company, specifically as a result of Section 404 of the Sarbanes-Oxley Act of 2002.

As a public company, we incur increased legal, accounting and financial compliance costs that we would not incur as a private company. For example, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “"Sarbanes-Oxley Act”"), the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, and are subject to the rules and regulations of The Nasdaq Stock Market. Such requirements increase our costs, make some activities more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, the market price of our common stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports filed with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures or internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.

Our common stock could be considered a “"penny stock”" making it difficult to sell.

The SEC has adopted regulations which generally define a “"penny stock”" to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. Our common stock currently trades and since its initial listing on The Nasdaq Capital Market has traded below $5.00 per share. The SEC’s penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that before a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s agreement to the transaction. These rules may restrict the ability of brokers-dealers to sell our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a penny stock.

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Nasdaq Capital Market has traded below $5.00 per share on an adjusted pre-reverse stock split basis. The SEC's penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that before a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's agreement to the transaction. These rules may restrict the ability of brokers-dealers to sell our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a penny stock.

Securities analysts may not provide coverage of our shares or may issue negative reports, which may adversely affect the trading price and trading volume of the shares.

Our common stock is covered by a limited number of securities analysts and we cannot assure you those securities analysts will cover our company going forward. If securities analysts do not cover our company, this lack of coverage may adversely affect the trading price of the shares. The trading market for the shares of our common stock will rely in part on the research and reports that securities analysts publish about us and our business. If one or more of the analysts who cover our company downgrades our common stock or cease coverage, the trading price and volume of the shares of our common stock may decline. Further, because of our small market capitalization, it may be difficult for us to attract additional securities analysts to cover our company, which could significantly and adversely affect the trading price and volume of our stock.

We do not intend to pay any cash dividends in the foreseeable future.

We have never declared or paid dividends on our common stock nor do we anticipate paying any cash dividends on our common stock within the foreseeable future. Our board of directors has the ability and may so choose to declare cash dividends on our common stock, at their discretion, in the future. In their determination to declare dividends, the board will consider, among other factors, the company’'s financial position, results of operations, cash requirements, and any applicable outstanding covenants. Holders of our common stock will be entitled to receive dividends when and, if declared by our board, out of funds legally available for their payment, subject to the rights of holders of any preferred stock that we may issue.

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MARKET PRICE FOR OUR COMMON STOCK AND DIVIDEND POLICY

Market Information

Our common stock trades on the Nasdaq Capital Market under the symbol “"PGRX.”" Prior to July 2, 2012, our common stock traded on the OTC Bulletin Board trading system, also under the symbol “"PGRX”". On ~~October 18~~[ ], ~~2013~~2014 the last reported sale price of our common stock was $~~3.06~~[ ] per share.

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The following table sets forth the high and low bid prices for our common stock for the respective periods, as reported on the Nasdaq OMX and OTC Bulletin Board trading systems.

Fiscal Year	Quarter	High		Low
2012	First Quarter	$	200.00	$	142.50
	Second Quarter	$	387.50	$	187.50
	Third Quarter	$	425.00	$	200.00
	Fourth Quarter	$	500.00	$	102.50
2013	First Quarter	$	512.50	$	117.50
	Second Quarter	$	158.50	$	88.50
	Third Quarter	$	203.00	$	70.00
	Fourth Quarter	$	91.00	$	11.00
2014	First Quarter	$	22.50	$	3.40
	Second Quarter	$	5.65	$	2.15
	Third Quarter	$	1.74	$	1.50

As of ~~October 16~~[ ], ~~2013~~2014, there were ~~approximately~~[ ] 50 holders of record of our common stock based upon information provided by our transfer agent.

Dividend Policy

We have never paid any cash dividends on our common stock and do not anticipate paying any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the development of our Holbrook project. Our senior debt with The Karlsson Group prohibits the payment of dividends so long as any of that debt is outstanding. Any future determination to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our financial condition, results of operations, capital requirements and other factors as our board considers relevant.

DILUTION

Purchasers in this offering will experience an immediate decrease in the net tangible book value per share of our common stock. Our net tangible book value as of December 31, 2013 was approximately ($154.2) million, or ($36.78) per share of our common stock (based on 4,191,658 shares of our common stock outstanding as of December 31, 2013). Net tangible book value per share is equal to our total net tangible book value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common stock. Dilution per share equals the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the net tangible book value per share of our common stock immediately after completion of this offering. At the offering price of $[ ] per share and after deducting estimated offering expenses payable by us, and the application of the estimated net proceeds from this offering, our pro forma net tangible book value as of December 31, 2013 would have been approximately ($[ ]) million, or ($[ ]) per share. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $[ ] per share and an immediate decrease in net tangible book value to purchasers in this offering of $[ ] per share. The following table illustrates this per share dilution (based upon 21,191,658 shares of our common stock that would have been outstanding on December 31, 2013 after giving pro forma effect to the consummation of this offering).


Offering price				$	[ ]
Net tangible book value per share as of December 31, 2013	$	([36.78]	)
Change per share attributable to this offering	$	[ ]


Pro forma net tangible book value per share after this offering				$	([ ]	)


Dilution in net tangible book value per share to purchasers				$	[ ]

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The calculations above are based on 4,191,658 shares of our common stock actually outstanding as of December 31, 2013 and do not take into effect further dilution to new investors that could occur upon the exercise of our outstanding stock options or other securities convertible into common stock having a per share exercise price greater than the offering price (at December 31, 2013, this included 846,300 stock options and 7,008,870 warrants to acquire shares of our common as well as [ ] shares of our common stock available for future grant under our stock incentive plans).

USE OF PROCEEDS

If The ~~all~~net ofproceeds to us from the ~~outstanding~~sale ~~Class B~~of ~~Warrants~~the ~~are~~common ~~exercised~~stock weoffered ~~will~~hereby ~~receive~~are ~~gross~~expected ~~proceeds~~to ofbe approximately $~~6.2~~[ ] million ($[ ] million, ~~and~~ if ~~all~~the Underwriters exercise their over-allotment option to purchase additional shares of ~~the~~common ~~outstanding~~stock ~~Class A~~in ~~Warrants~~full) ~~plus~~based ~~those~~on ~~issuable~~an ~~under~~assumed ~~the~~public ~~outstanding~~offering ~~Class B~~price ~~Warrants~~of ~~are~~$[ ] ~~exercised~~per weshare, ~~will~~which ~~receive~~was ~~additional~~the ~~net~~last ~~proceeds~~reported sale price of ~~approximately~~our ~~$14.2~~common ~~million,~~stock inon ~~each~~the Nasdaq ~~case~~Capital Market on [ ], 2014, after ~~deduction~~deducting ofthe underwriting ~~commissions~~discount and our estimated offering expenses. We intend to use ~~any~~the $[ ] of the net proceeds from ~~the~~this ~~exercise~~offering ofto ~~the~~extinguish ~~warrants~~our tosenior ~~continue~~secured debt to ~~fund~~The ~~the~~Karlsson Group, $[ ] for funding the development of the Holbrook Project, ~~make~~and ~~mandatory~~$[ ] ~~repayments~~to offund ~~outstanding indebtedness and for~~ general corporate purposes.

We issued ~~will~~$125 million ~~not~~of ~~receive~~senior ~~any~~secured ~~proceeds~~debt ~~from~~to The Karlsson Group to finance the ~~resale~~acquisition of ~~shares~~their of50% ~~common~~interest ~~stock~~in AWP in August 2012. On December 10, 2013, we entered into the Extension Agreement with The Karlsson Group that allows for the repayment and ~~Series~~retirement of this debt for the discounted amount of $25 Amillion ~~Warrants~~if ~~offered~~paid ~~hereby~~on or before March 10, 2014. The Karlsson senior secured note bears annual interest of 9% payable quarterly in-kind by increasing the principal note balance.

~~Under~~ We will ~~the~~not ~~terms~~be ofable ~~our~~to ~~senior~~raise ~~debt~~the ~~owed~~money to ~~Karlsson~~pay weoff ~~are~~the ~~required~~Karlsson toGroup ~~deposit~~debt ~~50%~~on ofor ~~the~~before ~~net~~March 10, ~~proceeds~~2014 ofand ~~the~~are ~~next~~in ~~$18.8~~discussions ~~million~~with ofthe ~~capital~~Karlsson weGroup ~~raise~~to ~~(for~~extend athe ~~total~~due date of $9this payment.4 ~~million)~~In ~~into~~connection ~~escrow~~with tothis, bewe ~~used~~plan ~~only~~to ~~for~~negotiate ~~approved~~parallel ~~Holbrook~~extensions ~~project~~with ~~expenses~~Apollo. We ~~are~~may ~~also~~decide ~~required~~ to ~~pay~~file ~~10%~~bankruptcy ofif ~~all~~we ~~capital~~cannot ~~raised~~raise ~~going~~sufficient ~~forward~~funds to ~~each~~continue ofour ~~The Karlsson Group and Apollo as payments on their respective promissory notes~~operations.

As of October 18, 2013, we had approximately $1.0 million of cash. In addition to our normal operating cash needs, we have payments of $1.2 million on November 15, 2013 and $1.2 million on February 10, 2014 due to The Karlsson Group.

CAPITAL STRUCTURE

As of ~~October~~February 18[ ], ~~2013~~2014, our capital structure consisted of the following:

•: 4,970,578 shares of outstanding common stock
•: $15 million of liquidation value redeemable preferred stock. The preferred stock is non-convertible and non-voting and carries an 8% annual cumulative dividend
•: 9,404,456 Series A Warrants having an exercise price of $1.50 per share and expiration dates in 2018 and 2019. All Series A Warrants contain full ratchet anti-dilution protection provisions.
•: 2,472,962 other warrants comprised of the following:

· 4,210,022 shares of outstanding common stock;

	Exercise Price ($)	Expiration	Notes

1,000	2.25 - 4.04	2018
2,068,012	3.50	2018
307,424	6.00 - 17.00	2017, 2019	See Note 1 below
96,526	62.50 - 251.00	2014 - 2018


2,472,962

~~· $15~~Note 1: we have ~~million~~agreed to adjust the exercise price on the 172,117 of ~~liquidation~~these ~~value~~warrants ~~redeemable~~currently ~~preferred~~held ~~stock. The~~by ~~preferred~~the Karlsson Group to the lowest price per share of our common stock issold between ~~non-convertible~~November 14, 2013 and ~~non-voting~~March 10, ~~and~~2014, ~~carries~~but anin 8%no ~~annual~~event ~~cumulative~~higher ~~dividend.~~than the current exercise price

· 3,936,677 Series A Warrants having an exercise price of $4.05 per share and expiration dates in 2018. All Series A Warrants contain full ratchet anti-dilution protection provisions.23

· 2,254,863 other warrants comprised of the following:

Outstanding Warrants	Exercise Price ($)	Expiration	Notes
800	3.06 – 4.04	2018
1,787,171	4.05	2018	Contains full ratchet anti-dilution protection to $3.50 per share
307,424	6.00 – 17.00	2017, 2018
159,468	62.50 – 251.00	2018
2,254,863

· 916,668 Series B Warrants. Each Series B Warrant has an exercise price of $6.00 per share and is exercisable for one share of our common stock and one Series A Warrant. The Series B Warrants expire in January 2014. Each Series A Warrant issued in the exercise of a Series B Warrant will have a five year term, an initial exercise price of $6.00 and full ratchet anti-dilution protection.

· 164,100 stock options with exercise prices ranging from $130.00 to $212.50 and expiration dates between 2021 and 2023.

· Total indebtedness as of September 30, 2013 of $152.6 million, of which $1.2 million is due on November 15, 2013 and $151.4 million is due on the earlier of July 1, 2015 or 12-months following the completion of our definitive feasibility study. In addition, we will owe another $1.2 million on February 10, 2014 that is not reflected in the $152.6 million of total indebtedness as of September 30, 2013. The notes underlying this indebtedness bear interest at 8% and 11% per year.

DILUTION

Persons who exercise Class B Warrants in this offering will experience an immediate increase in the net tangible book value per share of our common stock. Our net tangible book value as of June 30, 2013 was approximately ($97.1) million, or ($42.16) per share of our common stock based upon 2,302,388 shares of our common stock outstanding as of June 30, 2013.

Net tangible book value per share is equal to our total net tangible book value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common stock. Dilution per share equals the difference between the amount per share paid by purchasers of shares of our common stock in this offering (on an as-converted basis) and the net tangible book value per share of our common stock immediately after completion of this offering.

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~~At the offering price~~ of $612.0050 per ~~unit~~share ~~and~~on ~~after deducting estimated offering expenses payable by us, and~~ the ~~application of the estimated net proceeds from this offering~~112,117 ~~our~~warrants ~~pro~~issued ~~forma~~on ~~net tangible book value as of June~~May 30, ~~2013would~~2012 ~~have~~and ~~been approximately (~~$866.9)00 ~~million, or ($17.41)~~ per share ~~based~~on ~~upon~~the ~~a pro forma 4~~60,~~992,520~~000 ~~shares~~warrant ofissued ~~our~~on ~~common~~June 26, ~~stock outstanding~~2013. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $24.75 per share and an immediate decrease in net tangible book value to purchasers in this offering of $23.41 per share.

•: Upon payment of the discounted payoff amount of $25 million on or before March 10, 2014, we have agreed to grant the Karlsson Group a new, five year warrant for 750,000 shares having an exercise price equal to the lowest price per share of our common stock sold between November 14, 2013 and March 10, 2014.
•: 161,300 stock options with exercise prices ranging from $130.00 to 212.50 and expiration dates between 2021 and 2023
•: 685,000 stock options with exercise prices ranging from $2.25 to $2.36 and expiration dates in 2023.
•: Total indebtedness as of December 31, 2013 of $156.8 million, all of which will become due and payable on March 10, 2014 if we are unable to retire all amounts owing under the Karlsson Group debt for the Discounted Payment Amount of $25 million on or before March 10, 2014.

~~The following table pro formas the per share dilution assuming the issuance of:~~24

~~· 856,798~~Table ~~shares from the exercise~~ of ~~the Series B Warrants issued as part of the June 26th offering;~~Contents

· 916,667 shares in the units issued to the Very Hungry parties:

· 916,667 shares from the exercise of the Series B Warrants issued to the Very Hungry parties.

Offering price				$	6.00
Net tangible book value per share as of June 30, 2013	$	(42.16	)
Change per share attributable to this offering	24.75
Pro forma net tangible book value per share after this offering				$	(17.41	)
Dilution in net tangible book value per share to purchasers				$	23.41

The calculations above exclude the conversion of any Series A Warrants and do not take into effect further dilution to new investors that could occur upon the exercise of our outstanding stock options or other securities convertible into common stock having a per share exercise price greater than the offering price.

SELECTED FINANCIAL DATA

The following table includes our selected consolidated historical financial data. You should read carefully the consolidated financial statements, and “"Management’'s Discussion and Analysis of Financial Condition and Results of Operations,”" included ~~in our interim report on Form 10-Q for the three months ended June 30, 2013 and annual report on Form 10-K for the year ended March 31, 2013 included~~ elsewhere in this prospectus. The selected consolidated financial data in this table is not intended to replace the consolidated financial statements included elsewhere in ~~our~~this ~~interim report on Form 10-Q for the three months ended June 30, 2013 and annual report on Form 10-K for the year ended March 31, 2013~~prospectus.

	Nine Months Ended December 31, 2013			Year Ended March 31, 2013			Cumulative from August 5, 2010 (Inception) through December 31, 2013
	Three Months Ended June 30, 2013		Year Ended March 31, 2013		Cumulative from August 5, 2010 (Inception) through June 30, 2013
	(In thousands)		~~(In thousands)~~	(In thousands)	~~(In thousands)~~		(In thousands)
Operating data
Net loss from operations	$~~(6,112~~	)(12,849	~~$(42,737~~)	)	$(7274,~~813~~784	)		(112,974	)
Other income (expenses) (1)	7,646		(9,141	)	(60,320	)
Other expenses(1)		(25,081	)		(9,141	)		(93,047	)
Net gain (loss)	1,534		(51,866	)	(130,043	)
Net loss attributable to Prospect Global Resources Inc.		(37,930	)		(79,854	)		(198,184	)
Basic and diluted per share loss	$1.02		$(44.90	)	$(165.87	)
Basic and diluted per share loss(2)	$	(13.62	)	$	(69.14	)	$	(142.61	)
Weighted average number of shares	1,505		1,155		784
Weighted average number of shares(2)		2,820			1,155			1,393

	December 31, 2013			March 31, 2013
	June 30, 2013		March 31, 2013
	(In thousands)		~~(In thousands)~~	(In thousands)
Balance sheet data
Cash and cash equivalents	$~~1,372~~	51	~~$1,024~~	$	1,024
Restricted cash	2,432		—
Mineral properties		13,047			13,690
Mineral properties	41,922		39,994
Other assets		1,190			2,293
Other assets	10,033		10,044

Total assets	$~~55,759~~	14,288	~~$51,062~~	$	17,007
Current liabilities	~~27,218~~	167,797	~~146,925~~		146,925
Noncurrent liabilities	~~117,870~~	650	—		—
Shareholders’ deficit	(89,329	)	(95,863	)
Redeemable preferred stock		4,996			—
Total liabilities and shareholders’ equity	$55,759		$51,062
Shareholders' deficit		(159,155	)		(129,918	)

Total liabilities and shareholders' equity	$	14,288		$	17,007

(1) Other ~~income (~~ expenses) ~~includes~~include the following significant non-cash items: a.For the nine months ended December 31, 2013: derivative gains of $2,162, assets impairments of $1,224 and interest expense of $25,970; b.For the year ended March 31, 2013: derivative losses of $1,900 and interest expense of $7,241; c.For the cumulative period through December 31, 2013: derivative losses of $54,504, asset impairments of $1,224, a loss on debt extinguishments of $2,049 and interest expense of $35,270. (2)All per share amounts have been adjusted for the 1-for-50 reverse stock split that became effective on September 4, 2013.

~~a. For the three months ended June 30, 2013: derivative gains of $2,900, a gain on debt extinguishment of $13,114 and interest expense of $8,366;~~25

b. For the year ended March 31, 2013: derivative losses of $1,900 and interest expense of $7,241;

c. For the cumulative period through June 30, 2013: derivative losses of $53,766, a gain on debt extinguishment of $11,114 and interest expense of $17,666.

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MANAGEMENT’'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. We caution you not to put undue reliance on any forward-looking ~~statements, which speak only as of August 14, 2013~~statement. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in “"Risk Factors”" and elsewhere in this prospectus. See “"Cautionary Statement Regarding Forward-Looking Statements”" above. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited and unaudited consolidated financial statements and related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“"U.S. GAAP”"), included in this prospectus and with the understanding that our actual future results may be materially different from what we currently expect. We recently restated our financial statements for the fiscal years ended March 31, 2013 and 2012 and the quarterly periods ending June 30, September 30 and December 31, 2012 and June 30 and September 30, 2013. See"—Restatement of Financial Statements" below for additional information.

Overview

We are engaged in the exploration and development of a potash ~~deposit~~mine ~~located~~ in the Holbrook Basin of eastern Arizona, which we refer to as the Holbrook Project. WePotash ~~hold~~is ~~our~~primarily ~~interest~~used ~~and~~as ~~control~~an ~~the~~agricultural ~~Holbrook~~fertilizer ~~Project~~due ~~through~~to ~~our~~its ~~wholly~~high ~~owned~~potassium ~~subsidiary, AWP~~content. ~~Through AWP~~Potassium, wenitrogen ~~hold~~and ~~potash~~phosphate ~~exploration~~are ~~permits~~the onthree ~~38 Arizona~~primary ~~state~~nutrients ~~sections,~~essential ~~own~~for ~~the~~plant growth. ~~mineral~~The ~~rights~~Holbrook onProject ~~eight~~consists ~~private~~of ~~sections~~permits and ~~hold~~ leases ~~for~~on ~~the~~143 mineral ~~rights~~estate onsections ~~101~~spanning ~~private~~approximately ~~sections which~~88,175 acres in ~~total,~~the ~~cover~~Holbrook ~~approximately~~Basin 90of eastern Arizona,~~000~~ ~~acres~~along the southern edge of the Colorado Plateau.

We completed a pre-feasibility study, or PFS, for the Holbrook Project in July 2013. We are currently working toward a definitive feasibility study, or DFS, for the Holbrook Project. We commenced our phase 4 drilling program in August 2013 and completed the program in October 2013. We believe that this drilling program completes the drilling necessary to complete a DFS.

Restatement of Financial Statements

We recently restated our financial statements for the fiscal years ended March 31, 2013 and 2012 and the quarterly periods ending June 30, September 30 and December 31, 2012 and June 30 and September 30, 2013 to (i) reverse stock compensation related to unvested stock option awards for former employees and board members, (ii) expense certain costs that had been previously capitalized and (iii) remove references to us being a development stage company. As a result of this restatement, our management has re-evaluated and amended its conclusions regarding the effectiveness of disclosure controls and procedures and internal control over financial reporting and concluded that our disclosure controls and procedures and internal control over financial reporting were not effective as of March 31, 2013. Management believes the cause of this restatement was based on its interpretation of SEC Guide 7 and specific accounting literature and is therefore isolated, and because of this no additional corrective action is necessary to remedy the material weakness.

History

Between January and November 2011, we invested $11.0 million dollars in AWP while The Karlsson Group contributed to AWP its ownership of mineral rights on eight private sections and potash exploration permits on 42 Arizona state sections, comprising a total of approximately 31,000 gross acres in the Holbrook Basin, each for a 50% ownership interest in AWP.

In July 2011, AWP entered into a Potash Sharing Agreement covering 101 private mineral estate sections and related mineral leases on approximately 6362,000 acres adjacent to or in close proximity to AWP’'s existing mineral rights in the Holbrook Basin.

On May 30, 2012, we entered into an agreement with The Karlsson Group to acquire the 50% of AWP that we did not already own for an aggregate purchase price of $150.0 million before consideration of the warrants and other potential contingent payments.26

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On May 30, 2012, we entered into an agreement with The Karlsson Group to acquire the 50% of AWP that we did not already own for an aggregate purchase price of $150.0 million plus warrants to purchase 112,117 shares of our common stock for $212.50 per share. The agreement provided for the grant of a 1% royalty and other potential contingent payments.

On August 1, 2012, we closed The Karlsson Group Acquisition, at which time we became the sole owner of AWP.

Strategy

Our strategy is to increase stockholder value through our focus on the exploration, development and production of potash from our Holbrook Project. Since 2011, we have conducted drilling, geological work and various other technical and preliminary economic assessments to advance and expand our mineralized material base in the Holbrook Project. We completed a ~~pre-feasibility study, or~~ PFS, for the Holbrook Project in July 2013 and are now working ontowards completing a ~~definitive feasibility study, or~~ DFS.

Major Influences on Results of Operations and Factors Affecting Comparability

We are aan ~~development~~exploration stage company and generate no revenues. Therefore, our operating and project ~~development~~related expenses are funded entirely by cash raised through our financing activities. Due to the sporadic nature of financing transactions, our spending and results can vary significantly between periods.

We capitalize the portion of our cash expenditures each period that are directly related to the development of our Holbrook Project and a portion of our non-cash stock option expenses. We expense our cash and non-cash expenditures that are related to our general corporate activities such as financing and fund raising, accounting and public company requirements, and corporate legal.

Our historical financing activities have included the issuances of significant amount of warrants and options. In accordance with GAAP, we estimate the value of these derivatives and recognize the associated non-cash expenses and gains. Non-cash warrant and stock option expenses comprise a significant amount of our general and administrative expenses.

16 Financing

During the June 30, 2013 quarter, our financings activities provided cash of $8.3 million consisting of the $5.0 million in proceeds received in May in exchange for the Very Hungry Notes and the $3.3 million in net proceeds received from our June public offering. The June public offering generated gross proceeds of $5.0 million from the sale of 833,334 shares of our common stock and 856,798 Series A Warrants and 856,798 Series B Warrants. After offering related expenses, we netted $3.3 million from the offering.

In September 2013 we raised $3.0 million through the issuance of 742,000 shares and 2,945,098 Series A Warrants with each warrant having full ratchet anti-dilution protection and an exercise price of $4.05. The issued warrants were comprised of 1,294,750 warrants issued in conjunction with the shares and 1,650,348 warrants issued in connection with the full ratchet anti-dilution protection provisions in already outstanding warrants. This raise was achieved by reducing the exercise price on the outstanding Series B Warrants from $6.00 to $4.05 and increasing the number of Series A Warrants received for each Series B Warrant exchanged from 1.0 to 1.75. These funds were used for our drilling program, continued development of a DFS, mandatory debt payments and ongoing operating expenses.

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~~Operating~~Warrants with ~~Results~~an ~~for~~exercise price of $1.50. As a result of the ~~Three~~reduction ~~Months~~of ~~Ended~~the ~~June~~exercise price of the Series 30A Warrants, ~~2013~~the ~~compared~~exercise price on the 1,787,171 warrants held by Buffalo Management was reduced from $4.05 to ~~Three~~$3.50 ~~Months~~and ~~Ended~~we ~~June~~issued Buffalo Management 30280,841 ~~2012~~additional warrants with an exercise price of $3.50.

Reverse Stock Split

At our annual meeting on August 30, 2013 our shareholders approved up to an one-for-50 reverse stock split. Following Board approval, an one-for-50 reverse stock went into effect on September 4, 2013. This reverse stock split brought us into compliance with Nasdaq's minimum share price requirement.

As indicated in our preliminary proxy statement filed February 20, 2014, the board is seeking stockholder approval to grant the board discretionary authority to effect a reverse split with respect to the issued and outstanding shares of our common stock. If this proposal is approved by our stockholders, the board may subsequently effect, in its sole discretion, a reverse stock split of up to an one-for-20 exchange ratio. If approved, the board's discretion to effect the reverse stock split would last until December 31, 2014, when such discretion would terminate if not exercised by the board.

Operating Results for the Nine Months Ended December 31, 2013 compared to Nine Months Ended December 31, 2013.

Revenue

For the ~~three~~nine months ended ~~June~~December 3031, 2013 and 2012, the Company had no ~~revenue~~revenues.

Exploration Expense

Exploration expense for the ~~three~~nine months ended ~~June~~December 3031, 2013 and 2012 was ~~nil~~comprised ~~for~~of ~~each period, respectively. For~~ the ~~three~~following: months ended June 30, 2013 and 2012, $1.9 and $5.6 million, respectively, were capitalized as development costs in mineral properties that would have been considered exploration expense had we not been able to capitalize these costs.

General and Administrative Expense (“G&A”)

	Nine Months Ended December 31, 2013 (in thousands)		Nine Months Ended December 31, 2012 (in thousands)

	(unaudited)		(unaudited)
Drilling & Fieldwork	$	2,652	$	4,337
Engineering		1,168		6,512
Permitting		649		5,004
Mineral Leases & Exploration Permits		379		1,163


Total Exploration Expense	$	4,848	$	17,016

~~General~~ For the ~~and~~nine ~~administrative~~months ~~expenditures~~ended December 31, 2013, our exploration activities encompassed the drilling of 17 holes at a significant cost reduction over prior todrilling ~~capitalization~~programs ~~considerations,~~as ~~for~~well as additional permitting and pre-feasibility study activities. For the ~~three~~nine months ended ~~June~~December 3031, ~~2013~~2012, ~~and~~our ~~2012~~activities ~~were~~included ~~comprised~~the drilling of 14 holes and the ~~following:~~work associated with our permitting and engineering activities.

	Three Months Ended			Three Months Ended
	June 30, 2013 (in millions)			June 30, 2012 (in millions)
	(unaudited)			(unaudited)
Salaries and benefits	$	0.8		1.3
Equity compensation	1.3			0.4
Management fees, consulting fees and board compensation	0.1			0.2
Legal, accounting and insurance	0.9			2.5
Warrant expense	3.3			—
Office, travel and other	0.4			0.1
Total G&A before capitalization	$	6.8		4.5
Amounts capitalized as development costs to mineral properties	(0.7		)	(1.2	)
G&A per Statement of Operations	$	6.1		3.3

The decrease in our salaries and benefits expense for the three months ended June 30, 2013 compared to the three months ended June 30, 2012 was primarily due to a reduction in incentive compensation accruals for 2013 versus 2012.

Equity compensation is the stock option value derived from the Black-Scholes option pricing model and is based on the estimated fair value of the awards on their grant date. Equity compensation is recognized ratably over the vesting period, in most cases one year. Our equity compensation increased during the three months ended June 30, 2013 mainly due to the additional expense associated with last July’s employee stock option grants and modifications to previously issued grants to former employees expensed during the current quarter. No current employees received any additional stock option grants during the quarter ended June 30, 2013.

Legal, accounting and insurance expenditures for the current quarter were lower than the comparable period as we incurred fewer legal costs. Last year’s quarter included legal fees for our Nasdaq listing and initial public offering and work on the Karlsson Group acquisition.

The increase in our warrant expense during the current quarter stemmed from the change in how we account for our warrants. Prior to issuing the warrants in connection with our June 26, 2013 public offering, which contained full ratchet anti-dilution protection provisions, we accounted for our warrants under the equity method of accounting with the associated charges being accounted for through equity. With the change to the liability method of accounting, these same charges must now be accounted for as expenses. During the quarter ended June 30, 2013, we issue 917,398 new warrants, the majority of which have an exercise price of $6.00 and a 5-year term. During the comparable 2012 period, we issued 112,117 new warrants, having an original exercise price of $212.50 and a 7-year term.

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~~Included~~ ~~within~~General ~~G&A expenses above are rental expenses of $60,000~~ and ~~$24,000~~Administrative ~~for~~Expense the three months ended June 30, 2013 and 2012, respectively. The increase in rent expense in the June 2013 quarter as compared to the June 2012 quarter was due to the Company’s leasing of new office space beginning in October 2012 and the addition of leased office space in Los Angeles beginning in June 2012.("G&A")

General and administrative expenses for the nine months ended December 31, 2013 and 2012 were comprised of the following:

	Nine Months Ended December 31, 2013 (in millions)		Nine Months Ended December 31, 2012 (in millions)

	(unaudited)		(unaudited)
Salaries and benefits	$	2,244		3,491
Office, travel and other		1,070		4,306
Tax compensation		1,537		6,226
Legal, accounting and insurance		2,240		4,835
Management fees, consulting fees and board compensation		375		1,468
Equity compensation		1,840		9,285


Total G&A	$	9,306		29,611

Salaries and benefits expense decreased by approximately $1.2 million over the prior period due primarily to reductions in employee head count.

Office, travel and other expenses decreased by approximately $3.2 million over the prior period due mainly to the higher expenses incurred during the 2012 period related to third party investment activities. The balance of the decrease was primarily due to our lower spending on travel, marketing, market research and public relations expenditures during the 2013 period as we attempted to conserve cash.

Tax compensation related to the Karlsson Group debt decreased by approximately $4.7 million over the prior period due to a $6.2 million tax compensation charge taken during the December 2012 period as compared to a $1.5 million tax compensation charge during the December 2013 period.

Legal, accounting and insurance expenses decreased by approximately $2.6 million over the prior period as the prior period included the expenses associated with our acquisition of the Karlsson Group's interest in AWP.

Management fees, consulting fees and board compensation expenses decreased by approximately $1.1 million over the prior period primarily due to fees paid for the termination of a consulting contract in August of 2012.

Equity compensation expenses decreased by approximately $7.4 million over the prior period as most of the stock options from our July 1, 2012 grants had fully vested by the end of July 2013 and therefore the expense in the current period was primarily related to the new stock options granted in November 2013.

Included within G&A expense above are rental expenses of approximately $0.2 million each for each of the nine months ended December 31, 2013 and 2012.

Off-take Fees

On October 18, 2012, we entered into an agreement with Sichuan Chemical Industry Holding (Group) Co, Ltd, a Chinese limited liability company ("Sichuan"), under which Sichuan agreed to purchase a minimum of 500,000 tonnes (on a take-or-pay basis, backed by a letter of credit) of potash from us per year for a period of ten years starting with the commencement of production from our Holbrook Project.

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Upon execution of the Sichuan agreement, we owed a one-time arrangement fee to a third party of $7.8 million. In July 2013, we entered into a letter agreement reducing the fees to be paid to the third party by $0.4 million and recognized a gain by the same amount. We expensed this arrangement fee when incurred.

Warrant Expense

Warrant expense for the nine months ended December 31, 2013 was a negative $0.9 million primarily to a change in the fair value measurement of our outstanding warrants at December 31, 2013. Prior to our June 26, 2013 capital raise, which included the issuance of warrants having full ratchet anti-dilution protection, we accounted for our warrants under the equity method and as such at December 31, 2012 we had no similar "mark-to-market" adjustment. With the anti-dilution protection afforded these newer warrants, we no longer met the criteria for equity accounting for our warrants and therefore began accounting for all warrants as liabilities. We now re-measure this liability at the end of each quarter using a binomial lattice valuation model with a corresponding adjustment to warrant expense. The reduction in the fair value of our warrants at December 31, 2013 was primarily related to the decrease in our stock price from $4.61 at June 26, 2013 to $1.74 at December 31, 2013.

For the nine months ended December 31, 2012, warrant expense totaled approximately $5.9 million and related primarily to the warrants that were issued to Buffalo Management in connection with the termination of the management services agreement between the Company and Buffalo Management in August 2012.

Derivative Gains/Losses

~~During~~ For the ~~quarter~~nine months ended ~~June~~December 3031, 2013, we realized a net derivative gain of $2.9 2 million. ~~derivative~~This net gain ~~related~~was comprised toof a $2.9 million gain associated with the embedded conversion options ~~included~~ in the Very Hungry ~~Notes. These~~and ~~conversion~~Reiman ~~options~~Trust ~~were~~convertible ~~tied~~notes tooffset ~~our~~by ~~previously~~derivative ~~announced~~losses ~~investor~~of ~~rights offering on May~~$0.7 ~~22,~~million associated ~~2013~~with ~~and~~the ~~when~~warrants ~~this~~exchanged ~~investor~~in ~~rights~~connection ~~offering~~with ~~was~~our ~~subsequently terminated on~~ June 1726, 2013 ~~we recognized a gain equal to the fair value of these conversion options~~offering. ~~No derivative gains or losses were incurred for the three months ended June 30, 2012.~~

~~Gain~~ During the onDecember 31, ~~Debt~~2012 ~~Restructurings~~period, we had a derivative loss of $1.9 million. During the acquisition of the Karlsson Group interest in August of 2012, a derivative asset was created representing our option to prepay the Karlsson Group note for a reduced amount if the prepayment was made in December of 2012. This option was forfeited as of December 31, 2012 and consequently the derivative asset was written off to expense.

~~During~~ ~~the~~Loss ~~June 2013 quarter, we recognized a gain of $13.1 million associated with the two restructurings of the Karlsson Note, completed~~ on ~~April 15,~~Extinguishments 2013 and June 26, 2013, respectively. In accordance with applicable guidance, the Company accounted for these restructurings as a debt extinguishment in that the restructured debt met the requirements for having a substantially different debt instrument following the completion of the restructurings. The components of this gain consisted of the following:(net)

	Gain on extinguishment (in millions)
	(unaudited)
Additional Consideration 1% gross revenue interest	$	9.2
Additional Consideration tax gross-ups	11.4
Additional consideration - warrants	0.4
Fees paid to the Karlsson Group	0.4
Reduction in the fair value of the amended Karlsson Note*	(34.5		)
Net gain on debt extinguishment	$	(13.1	)

For the nine months ended December 31, 2013, our extinguishment gains and losses netted to approximately $0.0. These gains and losses included the following:

•: a gain of $13.0 million associated with the restructurings of the Karlsson Group debt on April 15, 2013, June 26, 2013 and September 16, 2013;.
•: a loss of $11.4 million associated with the December 10, 2013 Extension Agreement to restructure the Karlsson Group debt;
•: a $2.1 million loss associated with the write off of the remaining debt discount recorded in connection with the issuance of the $5.5 million convertible notes to Very Hungry and the Scott Reiman Trust;
•: a gain of $0.5 million associated with the change in the fair value of the warrants issued to Buffalo Management in the exchange of Buffalo's 1% royalty interest for shares of our redeemable preferred stock and warrants.

* For the ~~See~~nine ~~explanation~~months ofended ~~change~~December 31, in2012, ~~fair~~we ~~value~~had ~~under~~no ~~the~~such ~~Karlsson~~extinguishment ~~Note~~gains ~~heading~~or ~~above~~losses.

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Asset Impairments

For the nine months ended December 31, 2013, we recorded impairments of $1.2 million comprised primarily of (i) $0.5 million related to our write-down of the land option on 5,080 acres acquired in connection with the Karlsson Group Acquisition and (ii) $0.6 million stemming from our decision not to renew the leases on four of our exploration permits. No such impairments were incurred during the nine months ended December 31, 2012.

Interest Expense

Net interest expense for the ~~three~~nine months ended ~~June~~December 3031, 2013 totaled $826.4 0 million, ~~all~~the majority of which related to interest on ~~the~~our Karlsson ~~Note~~and Apollo debt, the ~~Apollo~~Very ~~Notes~~Hungry and Reiman Trust convertible notes and amortization the ~~Very~~Karlsson ~~Hungry~~note ~~Notes~~discount. Net interest expense for the ~~three~~nine months ended December 31, 2012 totaled approximately $4.6 million and related to the Karlsson Note. For the nine months ended ~~June~~December 3031, 2013 and 2012, ~~was~~we paid cash interest of approximately $12,000 and nil.

Off-Balance Sheet Arrangements

None.

Cash Flow Summary

The following summarizes our cash flows for the nine months ended December 31, 2013 and since inception:

	Nine Months Ended December 31, 2013 (in thousands)			Cumulative from August 5, 2010 (Inception) through December 31, 2013 (in thousands)

	(unaudited)			(unaudited)
Net cash used in operating activities	$	(12,833	)		(60,278	)
Net cash used in investing activities		(43	)		(3,838	)
Net cash provided by financing activities		11,903			64,167	*


Increase (decrease) in cash and cash equivalents	$	(973	)		51

*: Reflects gross proceeds of $107.4 million net of (i) $34.8 million of payments to The Karlsson Group towards the acquisition of their 50% interest in AWP, (ii) $2.1 million in other debt related payments and (iii) $6.3 million of financing related fees.

Cash flows used in operating activities

For the nine months ended December 31, 2013, the cash used in operating activities totaled approximately $12.8 million including:

•: $3.5 million for G&A spending on such items as salaries and benefits and public company compliance activities;
•: $3.1 million for legal fees;
•: $2.6 million for drilling and related activities;
•: $1.9 million for payments to land owners and lease/permit renewals;
•: $1.4 million for permitting, engineering and other site related spending; and
•: $0.3 million for consultant services.

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Cash flows used in investing activities

During the nine months ended December 31, 2013, the cash used in investing activities of approximately $43,000 was consumed primarily in the acquisition of land rights and equipment.

Cash flows provided by financing activities

Our financings activities provided cash of $11.9 million during the nine months ended December 31, 2013 consisting of the $5.0 million in proceeds received in May in exchange for the notes held by Very Hungry LLC and the Scott Reiman 1991 Trust, the $4.1 million in proceeds received from our June 2013 public offering and the $3.0 million from the exercise of Series B warrants in September 2013 partially offset by the $0.2 million in debt service payments made on our Karlsson Group and Apollo debt during October 2013.

Operating Results for the Years Ended March 31, 2013 and 2012

Revenue

For the years ended March 31, 2013 and 2012 and from August 5, 2010 (Inception) to March 31, 2013, we had no revenues.

Exploration Expense

Years Ended March 31, 2013 and 2012

~~Our~~ Exploration ~~exploration~~ expenses for the ~~years~~12 months ended March 31, 2013 and 2012 ~~totaled~~were ~~nil~~comprised and $5.0 million, respectively. The 2012 expense included $0.5 million, $4.3 million and $0.2 million for seismic, drilling and permitting/environmental activities, respectively. For 2013, $18.8 million was capitalized as development costs in mineral properties that would have been recorded as exploration expense had we not been able to capitalize those costs. The increase in costs between years was primarily due to differences in our operational focus during the respective periods. During 2012, we drilled a total of ~~12 holes and incurred costs associated with~~ the ~~completion~~following: of the Resource Report and PEA while our 2013 activities encompassed the drilling of 14 holes and work associated with our permitting, environmental and feasibility study activities. The activities in both years related exclusively to the Holbrook Project.

	12 Months Ended March 31, 2013		12 Months Ended March 31, 2012

	(in thousands)		(in thousands)
Drilling & Fieldwork	$	4,504	$	5,618
Engineering		7,049		216
Permitting		5,696		—
Mineral Leases & Exploration Permits		1,326		168


Total Exploration Expense	$	18,575	$	6,002

~~Table~~ During the twelve months ending March 31, 2013, we drilled 14 holes and completed work associated with our permitting and pre-feasibility study activities. During the twelve months ending March 31, 2012, we drilled a total of ~~Contents~~12 holes and incurred costs associated with completion of the Resource Report and PEA.

Capitalized development costs are expenses incurred during the year that if not capitalized in mineral properties would have been expensed had we not been able to capitalize these costs. The Company made a determination following the completion of the Resource Report and PEA in late 2011 that it had met the requirements to transition from an exploration stage to a development stage company and accordingly began capitalizing all development related costs related to the Holbrook Project as of January 1, 2012. Prior to this date and while we were in the exploration stage, all costs related to the Holbrook Project were expensed as incurred.

Cumulative Period

~~Our~~ Exploration ~~exploration~~ expense for the ~~Cumulative~~cumulative ~~Period~~period ~~totaled~~ended ~~$5.6 million and included $1.0 million~~March 31, ~~$4.4~~2013 ~~million~~was ~~and~~comprised ~~$0.2 million for seismic, drilling and permitting/environmental activities, respectively, all~~ of ~~which related to~~ the ~~Holbrook~~following: Project. For the Cumulative Period, $19.6 million was capitalized as development costs in mineral properties that would have been considered exploration expense had we not been able to capitalize these costs.

General and Administrative Expense (“G&A”)

	Cumulative Period Ended March 31, 2013

	(in thousands)
Drilling & Fieldwork	$	10,662
Engineering		6,982
Permitting		5,985
Mineral Leases & Exploration Permits		1,594


Total Exploration Expense	$	25,223

~~Our general and administrative expenditures, prior to capitalization considerations, for the years ended March 31, 2013 and 2012 consisted of the following:~~32

	Year Ended			Year Ended
	March 31, 2013			March 31, 2012
	(in millions)			(in millions)
Salaries and benefits	$	5.3		$	1.3
Equity compensation	10.9			9.7
Management fees, consulting fees and board compensation	6.8			0.4
Legal, accounting and insurance	6.5			4.2
Karlsson Note Tax Gross Up	6.2			—
Apollo termination fee	9.7			—
Office, travel and other	3.7			1.6
Total G&A before capitalization	$	49.1		$	17.2
Amounts capitalized as development costs to mineral properties	$	(6.4	)	$	(0.3	)
G&A per Statement of Operations	$	42.7		$	16.9

Our 2013 expenses for salaries and benefits, stock compensation, management fees and board compensation increased over the comparable 2012 period mainly due to: (i) an increase of approximately $5.8 million in management fees, (ii) an increase of approximately $1.2 million in stock compensation owing to the timing of awards and their respective service periods and (iii) an increase of approximately $4.0 million in employee salaries/bonuses. Of the $5.8 million increase in management fees, approximately $5.2 million related to a one-time termination fee we paid Buffalo Management as described more fully in Note 12—Related Party Transactions of the accompanying consolidated financial statements. The remaining changes are largely attributable to the increase in our business activity between 2013 and 2012, including an increase in the number of full-time employees from five as of March 31, 2012 to twelve as of March 31, 2013.

Our legal, accounting and insurance expenses increased in 2013 from what they were in 2012 primarily due to the legal fees that we incurred in connection with (i) the negotiation and closing of The Karlsson Group Acquisition and the restructuring of our Karlsson Group debt and (ii) the additional SEC filings in connection with our two common stock public offerings.

The increase in our office, travel and other expenses in 2013 stemmed primarily from two separate non-recurring charges as follows: (i) a one-time expense of approximately $6.2 million related to the Karlsson Note Tax Gross Up as discussed in Note 3—The Karlsson Group Acquisition and (ii) a one-time expense of approximately $9.7 million incurred on termination of the Apollo agreement as discussed in Note 8—Debt of the accompanying audited annual financial statements.

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~~Included~~ From inception ~~within~~through ~~total G&A before capitalization are rental expenses of $0.2 million and nil for 2013 and 2012~~March 31, ~~respectively. The increase in~~ 2013 ~~rent~~our ~~expense~~activities ~~was~~have ~~due~~encompassed to the ~~Company’s~~drilling ~~move~~of to28 aholes ~~larger~~and ~~office~~work ~~space~~associated ~~beginning~~with inour ~~October 2012~~permitting and ~~the~~pre-feasibility ~~addition~~study ~~of leased office space in Los Angeles beginning in June 2012~~activities.

General and Administrative Expense ("G&A")

Years Ended March 31, 2013 and 2012

Our general and administrative expenditures for the years ended March 31, 2013 and 2012 consisted of the following:

	Year Ended March 31, 2013		Year Ended March 31, 2012

	(in millions)		(in millions)
Salaries and benefits	$	5.3	$	1.3
Equity compensation		10.3		9.7
Management fees, consulting fees and board compensation		6.8		0.4
Legal, accounting and insurance		6.5		4.2
Karlsson Note Tax Gross Up		6.2		—
Apollo termination fee		9.7		—
Office, travel and other		3.7		1.6


Total G&A	$	48.5	$	17.2

Salaries and benefits expenses increased by approximately $4.0 million over the prior period due to increased headcount and bonuses for employees. Headcount increased from 5 employees to 12 as of March 31, 2012 compared to March 31, 2013.

Equity compensation expenses increased by approximately $0.6 million over the prior period due to the timing of awards and their respective service periods. Equity compensation is recognized ratably over the vesting period, in most cases one year.

Management fees, consulting fees and board compensation expenses increased by approximately $6.4 million over the prior period primarily due to approximately $5.2 million related to a one-time termination fee to Buffalo Management. The remaining change was due to additional consultation fees with the public offering.

Legal, accounting and insurance expenses increased by approximately $2.3 million over the prior period primarily due to the legal fees that we incurred in connection with (i) the negotiation and closing of The Karlsson Group Acquisition and the restructuring of our Karlsson debt and (ii) the additional SEC filings in connection with our two common stock public offerings.

Karlsson Note Tax Gross Up expenses were for tax compensation payments due to The Karlsson Group for increases in federal and state taxes and other tax related matters as part of The Karlsson Group Acquisition.

Apollo termination fee expenses were for the termination agreement entered into with Apollo for the break-up and release of the convertible note financing for $100.0 million.

Office, travel and other expenses increased by approximately $2.1 million over the prior period due to lower increased spending on travel, marketing, market research and public relations expenditures for the public offering in July 2012.

Included within total G&A are rental expenses of $0.2 million and nil for 2013 and 2012, respectively. The increase in 2013 rent expense was due to our move to a larger office space beginning in October 2012 and the addition of leased office space in Los Angeles beginning in June 2012.

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Cumulative Period

Our general and administrative expenditures, ~~prior~~since toinception ~~capitalization considerations, for the Cumulative Period~~ were comprised of the following:

	August 5, 2010 (Inception) through March 31, 2013
	August 5, 2010
	(Inception) through
	March 31, 2013
	(in millions)
Salaries and benefits	$	7.0
Salaries and benefits, stock compensation, management fees and board compensation	$	7.0
Equity compensation	~~20.6~~	20.0
Management fees, consulting fees and board compensation	~~7.4~~	7.4
Legal, accounting and insurance	~~11.3~~	11.3
Karlsson Note Tax Gross Up	~~6.2~~	6.2
Apollo termination fee	~~9.7~~	9.7
Office, travel and other	~~5.6~~	5.6
Total G&A before capitalization	$	67.8

Amounts capitalized as development costs to mineral properties	$	(6.7	)
Total G&A	$	67.2
G&A per Statement of Operations	$	61.1

Included within total G&A ~~before capitalization~~ are rental expenses of $0.3 million ~~for~~since ~~the Cumulative Period~~inception.

Derivative Losses

Years Ended March 31, 2013 and 2012

Our derivatives losses for the years ended March 31, 2013 and 2012 totaled $1.9 million and $39.8 million, respectively. For 2013, all $1.9 million was associated with the Karlsson Note Prepayment Option as described more fully in Note 8—Debt of the accompanying ~~audited annual~~ consolidated financial statements. Our derivative losses in 2012 stemmed from a combination of (i) the change in the fair value of the compound embedded derivatives of our convertible notes and warrants and (ii) the derivative losses we incurred upon issuance of the convertible notes as described more fully in Note 10—Derivative Financial Instruments of the accompanying consolidated ~~audited annual~~ financial statements.

Cumulative Period

Our derivative losses ~~for~~since ~~the~~inception ~~Cumulative Period~~ totaled $56.7 million, of which $1.9 million was associated with the Karlsson Note Prepayment Option as described above while the remainder stemmed from (i) the change in the fair value of the compound embedded derivatives of our convertible notes and warrants and (ii) the derivative losses we incurred on issuance of the convertible notes.

Loss on Debt Extinguishment

Years Ended March 31, 2013 and 2012 and Cumulative Period

We incurred a $2.0 million loss on the extinguishment of the ~~Merkin Note during 2012 as is more fully described in Note~~$2.0 ~~9—Convertible~~million ~~Notes~~Merkin ofconvertible ~~the~~note ~~accompanying~~during ~~audited annual financial statements~~2012. No such loss was incurred during 2013.

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Interest Expense

Years Ended March 31, 2013 and 2012

Our net interest expense for the years ended March 31, 2013 and 2012 totaled $7.2 million and $1.9 million, respectively. For 2013, this amount represents the interest expense accrued on The Karlsson Note and the Apollo Notes, all of which were entered into during 2013. An amount equal to this is included in accrued liabilities at March 31, 2013. Our net interest expense for 2012 was related to the convertible notes then outstanding and was comprised of $0.4 million for interest and $1.5 million for the amortization of related discounts and financing costs.

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Cumulative Period

Net interest expense for the Cumulative Period totaled $9.3 million and consisted of the (i) $7.2 million related to interest on the Karlsson and Apollo Notes and (ii) $2.1 million associated with the convertible secured notes.

Off-Balance Sheet Arrangements

None.

Cash Flow Summary

The following table summarizes our cash flows for the periods indicated:

	Year Ended March 31, 2013			Year Ended March 31, 2012			Cumulative from August 5, 2010 (Inception) through March 31, 2013

	(in millions)			(in millions)			(in millions)
Net cash used in operating activities	$	(34.8	)	$	(11.3	)	$	(47.5	)
Net cash used in investing activities		(2.6	)		(1.1	)		(3.8	)
Net cash provided by financing activities		27.1			21.4			52.3


Increase (decrease) in cash and cash equivalents	$	(10.3	)	$	9.0		$	1.0

Cash used in operating activities for each of the comparative periods presented above was primarily related to our exploration activities in the Holbrook Basin and other corporate general and administrative expenses. Likewise, the cash consumed by our investing activities was primarily related to the acquisition of adjacent and complementary acreage within the Holbrook Basin.

During 2013, we completed two public offerings that resulted in net financing cash proceeds to us of $61.9 million. From these proceeds, we made payments to The Karlsson Group totaling $34.7 million comprised of the $25.0 million upfront payment due in connection with our purchase of the 50% interest in AWP that we did not already own and another $9.7 million following the completion of the second public offering in November 2012. The $9.7 million, which represented 40% of the net proceeds raised in the November offering, reduced the outstanding balance due under The Karlsson Note from $125.0 million to $115.3 million.

Prior to 2013, the cash provided by our financing activities came almost exclusively through the issuance of convertible notes and sales of our common stock in private placements.

Liquidity and Capital Resources

~~Short-Term~~ As ~~Liquidity~~of February 25, 2014, we had cash of approximately $0.3 million available for general corporate purposes. On or before March 10, 2014 we have a $25 million payment due under our Karlsson debt which if we fail to make payment we will be in default. We will not be able to make this payment by March 10, 2014 and ~~Capital~~are ~~Needs~~in discussions with The Karlsson Group to extend the due date of this payment. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

~~Our~~ The increase ~~current~~in ~~operations~~our ~~do not generate any~~ cash ~~flow.~~position Asfrom ~~of September 30~~December 31, 2013, weto ~~had~~February 25, ~~approximately~~2014 ~~$2.8~~was ~~million~~due into ~~cash,~~a ~~including~~capital ~~escrowed~~raise ~~cash~~in ofearly ~~$0.3~~February ~~million~~ which ~~can~~resulted ~~only~~in benet ~~used~~proceeds ~~for~~of ~~drilling and other development activities related to the Holbrook Project. Excluding this escrowed cash, we had~~ approximately $21.5 0 million ~~available~~to ~~for general corporate purposes~~us.

As of the date of this prospectus, we have approximately $1.0 million available for general corporate purposes. We have a $1.2 million payment due to The Karlsson Group on November 15, 2013. We are trying to raise additional money to make this payment and avoid defaulting on our debt with The Karlsson Group. In addition to the November payment, we have a $1.2 million payment due to The Karlsson Group on February 10, 2014.35

Our debt to The Karlsson Group, including principal, accrued interest and compensation for tax matters, totaled approximately $145.4 million at September 30, 2013 and is secured by substantially all our assets. A default on The Karlsson Group debt would make the entire amount immediately due and payable and also cause a cross-default on our $7.2 million of debt with Apollo. If we are unable to raise sufficient funds or receive a waiver for such payment from The Karlsson Group before November 15, 2013, we anticipate that we would voluntarily file for bankruptcy protection rather than permit The Karlsson Group to initiate foreclosure proceedings.

If we are able to avoid defaulting on our debt, we will continue our capital raising and debt restructuring efforts. Our continuation as a going concern is dependent upon our efforts to raise additional capital to meet operational, mine development and corporate requirements. As disclosed within these financial statements, the capital necessary to meet these requirements is substantial and will require the issuance of additional debt and/or equity securities. These requirements and the potential lack of available funding raise substantial doubt as to our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Summary of Indebtedness

As of ~~September~~December 3031, 2013 our total indebtedness was $~~152~~156.6 8 million and was comprised of the following:

	December 31, 2013 (thousands)
	September 30, 2013 (thousands)		March 31, 2013 (thousands)
	(unaudited)
Karlsson senior secured note*	$	~~117~~120,~~472~~079	$	~~115,282~~
Apollo unsecured notes	~~6,750~~	6,654	~~6,750~~
Tax compensation on Karlsson senior secured note	~~17,629~~	19,152	~~6,226~~
Accrued Interest on Karlsson and Apollo Notes	~~10,742~~	10,875	~~7,329~~
Total debt and tax compensation	152,593		135,587

Total debt and tax compensation		156,760

* *Excludes debt ~~gross~~ discount as required by GAAP and reflected on ~~the~~our ~~Karlsson~~face ~~note~~financials.

Karlsson Group ~~Senior Secured Note~~Debt

We issued ~~The~~the Karlsson Group a $125.0 million senior first priority secured promissory note on August 1, 2012 as partial consideration for the acquisition of their 50% interest in AWP. InWe ~~addition,~~also we agreed to compensate ~~The~~the Karlsson Group for increases in certain federal and state income taxes and other tax related matters. All amounts ~~owed~~owing to ~~The~~the Karlsson Group are secured by a lien on all the assets of AWP, ~~and~~a ~~all~~pledge ~~the shares~~ of the capital stock of ~~all~~ our ~~subsidiaries.~~subsidiary Incompanies ~~addition,~~and a payment guarantee from Prospect ~~Nevada~~Global. ~~has~~The Karlsson ~~guaranteed~~note ~~this~~bears ~~debt~~interest at 9% and is payable quarterly in-kind by an increase to the note's outstanding principal balance.

~~This~~ On December 10, 2013, we entered into an extension agreement with the Karlsson Group which restructured the senior first priority secured promissory note. ~~bears~~Under ~~annual~~the ~~interest~~terms of 9%the extension ~~payable~~agreement, ~~quarterly~~we ~~in-kind~~have byuntil ~~increasing~~March 10, 2014 to prepay all amounts owing under the ~~principal~~Karlsson senior secured note ~~balance~~for the aggregate discounted payoff amount of $25 million. ~~The~~ Upon payment of the $25 million discounted payoff amount, the Karlsson Note will be deemed paid in full (including all principal, interest and ~~interest~~tax iscompensation ~~due~~amounts) and the Karlsson Group will release its first priority lien over our assets. In the event we do not pay the discounted payoff amount on or before March 10, 2014, we will be in default under the ~~earlier~~Karlsson Note as in effect prior to the extension agreement, which in the aggregate will total approximately $151.7 million on March 10, 2014, without the ability to cure such default and the Karlsson Group would have the right to foreclose on all of ~~July~~our assets. If we are unable to raise sufficient funds to pay off the Karlsson Group debt on or before March 110, ~~2015~~2014, or 12extend ~~months~~the ~~following~~due ~~completion~~date of ~~our~~this payoff ~~DFS~~we anticipate that we would voluntarily file for bankruptcy protection rather than permit the Karlsson Group to initiate foreclosure proceedings.

The Karlsson ~~principal~~Note ~~balance,~~is ~~accrued~~also ~~interest~~mandatorily ~~and~~pre-payable ~~compensation~~within ~~for~~five ~~tax~~business ~~matters~~days ~~totaled approximately $152.6 million as~~ of ~~September 30,~~a ~~2013,~~sale of ~~which~~at ~~$1.2~~least ~~million~~50% isof ~~due~~AWP on or ~~before~~a ~~November 15,~~merger ~~2013~~of ~~and~~AWP iswith ~~included~~or ininto ~~current~~an ~~liabilities~~unaffiliated entity.

We are required to prepay the Karlsson Note with 10% of the gross proceeds from any future capital raises until the Karlsson Note has been paid in full. The Karlsson Note is also mandatorily pre-payable within five business days of a sale of at least 50% of AWP or a merger of AWP with or into an unaffiliated entity.

Karlsson debt covenants

We are required to deposit 50% of the net proceeds of the next of $18.8 million of capital we raise (for a total of $9.4 million) into escrow, which funds may be used solely to fund drilling and the Holbrook Project development.

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We are required to meet the following development milestones:

(i) Deliver a completed and updated final NI 43-101 resource report on or before February 1, 2014,

(ii) Deliver completed metallurgical and rock mechanic test work results that will be used to complete the mine and processing plant designs for the definitive feasibility study on or before June 1, 2014, and

(iii) Deliver a completed and published definitive feasibility study on or before December 31, 2014.

If we do not meet any one of the required development milestones, The Karlsson Group will be entitled to foreclose on the collateral securing the Karlsson Note.

Karlsson Note Tax Compensation

We currently estimate the compensation for tax matters to be approximately $17.6 million. This estimate could change based on future changes in tax rates (including increases in effective income tax rates caused by “minimum tax” provisions such as the “Buffett rule” or “flat tax” proposals) and/or future changes in certain interest rates published by the Internal Revenue Service.

If no principal payments are made between now and December 31, 2013, we would owe Karlsson Group an additional $1.2 million in February 2014. If no principal payments are during the calendar year 2014, we would owe Karlsson Group another $1.2 million in February 2015. These amounts are not currently reflected in the $17.6 million on the balance sheet.

Apollo Notes

On March 7, 2013, we entered into a Termination and Release Agreement with certain affiliates of certain investment funds managed by Apollo Global Management, LLC (which we refer to collectively as the Apollo Parties) that terminated the agreements we entered into with the Apollo Parties in November 2012 (as amended in December 2012). In connection with the Termination and Release Agreement, we issued the Apollo Parties two promissory notes (“"the Apollo Notes”") totaling approximately $6.8 million as partial consideration for the break-up and release. The Apollo Notes, which were subsequently amended on April 15, 2013 and January 10, 2014, are unsecured and bear interest at the rate of 11% per annum, ~~payable~~and mature on the earlier of i) July 1, 2015; or ii) 12 months following completion of our Definitive Feasibility Study.; or iii) the date the Karlsson Note is paid in

~~We are required to prepay the Apollo Notes with 10% of the gross proceeds from any future capital raises until the notes have been paid in full.~~36

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full. The final maturity date of the Apollo notes is now effectively March 10, 2014 under the terms of the December 10, 2013 Extension Agreement.

On January 10, 2014 we entered into an agreement with Apollo. This agreement provides that upon repayment or extinguishment of our senior secured debt owing to The Karlsson Group on or before March 10, 2014 in accordance with the terms of the December 10, 2013 Extension Agreement, and in any event for consideration having an aggregate value less than or equal to 17.0% of the aggregate amount owed under the Karlsson Group debt (including in respect of accrued interest and tax gross-up obligations), we may repay the Apollo notes by issuance of a number of shares of our common stock with an aggregate value of 17% of all amounts owing under the Apollo notes (including accrued interest). To the extent we have not repaid or extinguished the Karlsson debt on or before March 10, 2014, the entire aggregate amount of approximately $7.4 million due under the Apollo Notes as of March 10, 2014 would be immediately due and payable.

We will not be able to raise the money to pay off the Karlsson Group debt on or before March 10, 2014 and are in discussions with the Karlsson Group to extend the due date of this payment. In connection with this, we plan to negotiate parallel extensions with Apollo. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

As of December 31, 2013 we owed a total of $7.3 million, of which $0.6 million was for accrued interest. This entire balance, principal and interest, is included in current liabilities at December 31, 2013 as a result of the March 10, 2014 due date for the Karlsson Note.

Commitments and Contingencies

The Karlsson Group Acquisition

In conjunction with The Karlsson Group Acquisition, we have the following commitments and contingencies:

•: we are required to pay The Karlsson Group 2% of gross potash sales from any of our current or future acquired leases, licenses and permits (perpetual in nature),
•: in the event of a sale, directly or indirectly, of at least 50% of AWP or a merger of AWP with or into an unaffiliated entity on or prior to February 1, 2018, The Karlsson Group is entitled to10% of the net proceeds received from the transaction in excess of $200 million.
•: in the event of any equity or debt offering completed by us while the Karlsson Note remain outstanding, we must place 50% of the net proceeds of the next $18.8 million of capital raised into escrow (for a total of $9.4 million), which funds may be released solely to fund specified expenses for the Holbrook Project.
•: in the event of any equity or debt offering completed by us while the Karlsson Note remain outstanding, we must pay the Karlsson Group 10% of the gross proceeds raised as a prepayment of the outstanding balance.
•: we have agreed to compensate the Karlsson Group for any incremental income tax liabilities attributable to an increase in federal or state income tax rates over the tax rates that were in effect for 2012, such that they are made whole with respect to any such increase in tax liabilities. We also agreed to compensate the Karlsson Group for certain interest charges imposed on the deferred tax liabilities as a result of the application the "installment sale" rules of the Internal Revenue Code.

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Royalties

In addition to the 2% royalty to The Karlsson Group, we have the following royalty or revenue interest commitments once we have production from our Holbrook Project (all perpetual in nature):

•: 1% revenue interest to Buffalo Management;
•: 1% royalty interest to Grandhaven;
•: Royalties of a sliding scale nature on gross sales from our private mineral estate sections;
•: Royalties of a sliding scale nature on gross sales from our Arizona state sections, although no formal agreement has been made at his time.

Grandhaven Royalty Interest

Grandhaven holds a 1% overriding royalty interest in the gross proceeds received by our subsidiary AWP from the extraction of potash from lands and state exploration permits held by AWP on November 22, 2011. Grandhaven also holds an option (the "Grandhaven Option"), that just became effective on December 31, 2013 and is now exercisable at any time, to receive shares of our common stock valued at $212.50 per share in exchange for the fair market value of any royalty interest surrendered.

In addition, if;

(i): the Arizona State Land Department declines to issue any lease to us with respect to any state exploration permit, or
(ii): the Arizona State Land Department terminates any state exploration permit, or
(iii): the Arizona State Land Department refuses to consent to the assignment of any royalty interests in any Arizona state lease, or requires any reduction of or imposes any condition on such royalty interests as a condition of approving an assignment of such royalty interests or approving any royalty reduction or other action with respect to a state lease,

then Grandhaven has the option to receive substitute royalty interests from us in the same number of acres in portions of our private mineral leases, in a percentage sufficient to compensate Grandhaven for the reduced royalty interests in the affected state leases.

If we have not been issued any Arizona state leases as of the date that we convey the assignment of the royalty interest in our private mineral leases, Grandhaven may elect to exchange their royalty in our Arizona state leases for a 1.388% royalty interest in all of our private mineral leases.

On February 7, 2014 we received notice from Grandhaven regarding the closing of the conveyance of their royalty interests in the fee and state mineral rights owned by AWP. As of February 25 the assignment of their royalty interest had not been completed.

Major Contractual Obligations

(amounts in thousands)	Less than 1-year		~~1-2 years~~	1 - 2 years	~~Total~~
Debt obligations	2,328	*	166,805	*	169,133	*
Debt obligations*		25,000	*		—		—	25,000	*
Land and lease payment	291		291		582
Land and lease payment**		363			609		729	1,701

*~~Amounts~~Assumes the ~~include~~Company's ~~estimates~~prepayment of ~~future~~the ~~interest~~Karlsson ~~and~~Note ~~tax~~on ~~compensation~~March 10, to2014 befor ~~incurred~~the ~~between~~discounted ~~now~~payment amount of $25.0 million and the ~~debt’s~~simultaneous extinguishment ~~maturity~~of the Apollo Notes for shares of our common stock. If we are unable to pay the $25.0 million discounted amount on the Karlsson Note by March 10, 2014, or extend the due date of this payment, the entire undiscounted amount then owing under the Karlsson Note as

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well as the amounts then owing under the Apollo Notes would become immediately due and payable, totaling $158.8 million as of that date.

**: Amounts may change in the future as mineral leases are converted to mining leases.

The Apollo Notes

In the event of any equity or debt offering completed by the Company while the Apollo Notes remain outstanding, we have agreed to pay Apollo 10% of the gross proceeds raised as a prepayment of the outstanding principal.

Common Stock and Warrant Commitments

As of February 25, 2014, the Company had remaining commitments to issue an additional 7,500 shares of our common in exchange for services under an investor relations consulting agreement with COR Advisors LLC. The 7,500 shares of common stock are due in quarterly increments of 1,500 shares each with the next quarterly increment being due on April 5, 2014. We do not pay a cash fee under this agreement.

As of February 25, 2014, we had 9,404,456 outstanding Series A Warrants having full ratchet anti-dilution protection rights. The exercise price for all of these warrants is $1.50 and all have expiration dates in 2018 and 2019.

For warrants with full ratchet anti-dilution protection, any issuances of common stock (or securities exercisable into common stock) at a price below the exercise price of the warrants results in a reduction in the exercise price of the warrants to the new issuance or strike price and a corresponding increase in the number of warrants issued. For example, if an investor held 300 warrants with an exercise price of $4.00 and we issued new shares of common stock at $3.00 per share, the strike price on the warrants would be reduced to $3.00 and the investor would receive an additional 100 warrants with a $3.00 exercise price.

We have agreed to adjust the exercise price on 172,117 warrants currently held by the Karlsson Group to the lowest price per share of our common stock sold between November 14, 2013 and March 10, 2014, but in no event higher than the current exercise price of $12.50 per share on the 112,117 warrants issued on May 30, 2012 and $6.00 per share on the 60,000 warrant issued on June 26, 2013.

We have agreed to grant the Karlsson Group a new five year warrant for 750,000 shares having an exercise price equal to the lowest price per share of our common stock sold between November 14, 2013 and March 10, 2014 contingent upon payment of the discounted payoff amount of $25 million on or before March 10, 2014.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A summary of significant accounting policies is included in Note 2—Summary of Significant Accounting Principles in the accompanying consolidated financial statements. Management believes that the application of these policies on a consistent basis ~~enables us to provide useful and reliable financial information about our operating results and financial condition.~~

~~Mineral Properties~~39

Investments in mineral properties are capitalized as incurred. The carrying costs of mineral properties are assessed for impairment whenever changes in circumstances indicate that the carrying costs may not be recoverable. When we reach the production stage, the related capitalized costs will be depleted. Refer to Note 5—Mineral Properties of the accompanying audited annual financial statements for additional information.

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enables us to provide useful and reliable financial information about our operating results and financial condition.

Mineral Properties

The Company is primarily engaged in the acquisition, exploration and exploitation of mineral properties with the objective of extracting minerals from these properties. Mineral property exploration costs are expensed as incurred. Costs for acquired mineral properties are capitalized and then impaired if the criteria for capitalization are not met. Capitalization of mine development costs that meet the definition of an asset will commence once we have proven and probable reserves in accordance with SEC Industry Guide 7.

In the event that a mineral property is acquired through the issuance of the Company's shares, the mineral property is recorded at the fair value of the respective property or the fair value of common shares and other instruments issued, whichever is more readily determinable. When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash, shares, or other instruments are recorded only when the Company has made or is obliged to make the payment or issue the shares or instruments.

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, notes payable, accounts payable, accrued liabilities, warrants, stock options and derivative financial instruments. We carry cash and cash equivalents, accounts and notes receivable, notes payable, accounts payable and accrued liabilities at historical costs; their respective estimated fair values approximate carrying values due to their current nature.

We do not use derivative financial instruments to hedge exposures to cash flow, market or foreign-currency risks. However, we have entered into certain other financial instruments and contracts, such as our convertible note financing arrangements and the Karlsson and Very Hungry Notes that contain embedded derivative features. The convertible note financing arrangements were carried as derivative liabilities, at fair value, in our financial statements until their conversion or the conversion option was no longer available.

Equity-Based Compensation

We recognize compensation costs for share-based awards based on the estimated fair value of the employee awards on their grant date with estimated fair values determined through a Black-Scholes option pricing model. Compensation costs are recognized on a straight-line basis over each issuance’'s respective vesting period.

From time to time, we will issue share-based awards, including options and warrants, to non-employees. The fair value of these awards issued to non-employees (typically consultants) is measured on the earlier of the date the performance is complete or the date the consultant is committed to perform. In the event that the measurement date occurs after an interim reporting date, the awards are measured at their then-current fair value at each interim reporting date, estimated using the Black-Scholes pricing model. The fair value of awards is expensed on a straight-line basis over the associated performance period.

Warrants

We classify our issued and outstanding warrants as liabilities or equity in its financial statements, depending upon the criteria met and specific circumstances at a given point in time. Refer to Note 11—Equity Based Compensation and Note 12—Shareholders’' Equity of the accompanying audited annual financial statements for additional information.

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BUSINESS

Overview

We are engaged in the exploration and development of a potash deposit located in the Holbrook Basin of eastern Arizona, which we refer to as the Holbrook Project. Potash is primarily used as an agricultural fertilizer due to its high potassium content. Potassium, nitrogen and phosphate are the three primary nutrients essential for plant growth. The Holbrook Project consists of permits and leases on ~~147~~143 mineral estate sections spanning approximately 9088,~~000~~175 acres in the Holbrook Basin of eastern Arizona, along the southern edge of the Colorado Plateau.

We completed a ~~preliminary economic assessment in December 2011 and a~~ pre-feasibility study, or PFS, ~~in July 2013~~ for ~~our~~the Holbrook Project in July 2013. We are currently working toward a definitive feasibility study, or DFS, for the Holbrook Project. AsWe commenced ~~is common for natural resources development projects, through~~ our ~~ongoing~~phase 4 ~~engineering~~drilling ~~work~~program ~~and~~in ~~analysis,~~August we2013 ~~are continually evaluating multiple methods to increase stockholder value while decreasing development~~ and ~~operating~~completed ~~risks~~the ~~through~~program ~~alternative development scenarios. These ongoing efforts could lead to (i) changes~~ in ~~capital~~October ~~expenditures required to build the mine, (ii) projected production levels, (iii) operating costs and (iv) mine life~~2013. We ~~will~~believe ~~announce~~that ~~any~~this ~~significant~~drilling ~~changes~~program tocompletes ~~our~~the ~~business~~drilling ~~plan~~necessary ~~resulting~~for ~~from~~a ~~our ongoing optimization analyses and will continue to make such evaluations~~DFS.

Business and Operating Strategy

Our strategy is to increase stockholder value through our focus on the exploration, development and eventual production of potash from our Holbrook Project. Key elements of our strategy include the following:

•: Complete a definitive feasibility study to establish proven and probable reserves;
•: Through our ongoing engineering work and analysis, evaluate various methods to increase shareholder returns while decreasing development and operating risks;
•: Work with state and local agencies to permit a potash mine;
•: Strengthen our leasehold position through acquiring bolt-on acreage and additional property interests within and around the Holbrook Project area;
•: Leverage our geographic advantages such as close proximity to sales markets and access to transportation and other infrastructure to achieve lower cost of sales;
•: Build early partnerships and sales arrangements with key customers such as the potash supply agreement we entered into with Sichuan Chemical during the latter part of 2012. Although Sichuan may terminate the agreement if we have not produced and sold an aggregate of 100,000 tonnes of potash from the Holbrook Basin in a 45 consecutive day period by December 31, 2015 and we will not meet this condition by December 31, 2015, we expect future agreements will be based on an achievable time schedule.

~~· Continue~~ ~~exploration~~ ~~and~~ Our ~~development of the resource and produce a definitive feasibility study to establish proven and probable reserves;~~Properties

~~· Through~~ Location ~~our~~and ~~ongoing~~Access The ~~engineering~~Holbrook ~~work~~Project area is located within the Holbrook Basin and ~~analysis,~~is ~~evaluate~~situated ~~various~~entirely ~~methods~~within Apache County in northeastern Arizona. The Holbrook Project has good access to ~~increase~~highways ~~shareholder~~and ~~returns~~other ~~while~~transportation. ~~decreasing~~It ~~development~~is bounded on the north by Interstate Route 40 (I-40) and ~~operating~~can ~~risks;~~be accessed by via county roads from I-40. Secondary and ranch roads allow all-weather access to most locations in the area. All locations not accessible via existing roads can be accessed by either four-wheel drive or all-terrain vehicles. The BNSF Railway transects the northern part of the Holbrook Project area. The Holbrook Project is surrounded by the Navajo Reservation to the north and north-east, some Apache and Hopi Reservation grounds to the south, and the Petrified Forest National Park to the west.

~~· Work~~ Climate and Topography The Holbrook Project is located in a high desert, semi-arid region. Weather patterns are characterized by relatively dry conditions with ~~state~~hot spring, summer, and ~~local~~fall ~~agencies~~temperatures ranging from 52°F to ~~permit~~93°F, aand ~~potash~~cool ~~mine;~~winter temperatures ranging from 18°F to 63°F. The area experiences two rainy seasons, both occurring in the winter. The regional lands and limited

~~· Strengthen our leasehold position through acquiring bolt-on acreage and additional property interests within and around the Holbrook Project area;~~41

· Leverage our geographic advantages such as close proximity to sales markets and access to transportation and other infrastructure to achieve lower cost of sales;

· Build early partnerships and sales arrangements with key customers such as the potash supply agreement we entered into with Sichuan Chemical during the latter part of 2012.

The realization of our investment in the Holbrook Project is dependent upon various factors, including but not limited to, our ability to obtain the necessary financing to continue the development of the Holbrook Project in order to meet the development milestones in the timeframes required under our senior debt with The Karlsson Group. To the extent we are unable to raise sufficient funds to allow for completion of these development milestones within the timeframes required under the Karlsson debt, The Karlsson Group could declare us to be in default, causing all of our then outstanding debt to be immediately due and payable and allowing The Karlsson Group to foreclose on substantially all of our assets. The terms of the Karlsson debt also limit the amount and terms of new debt we can incur, all of which must be subordinated to the Karlsson debt. These debt restrictions will make raising capital to meet the development milestones and to fund our operations more difficult. Refer to Note 18 — Subsequent Events of the accompanying audited annual consolidated financial statements.

Our current cash situation has slowed the development of our Holbrook Project. Our forecasted cash requirements for the next 12 months include meeting the Karlsson senior debt financing milestones and significant expenditures for the further development of the Holbrook Project. This indicates the existence of a material uncertainty that has raised substantial doubt about the Company’s ability to continue as a going concern as our ability to continue and meet our debt obligations is dependent on us raising additional equity or debt financing. If we cannot raise the capital required for further exploration and development of the Holbrook Project, this may result in the delay or indefinite postponement of further exploration and development and the possible, partial or total loss of our interest in certain properties.

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vegetation consist of minor salt cedar and scrub grasses and are generally flat with minor low-lying rolling hills. The ~~Holbrook~~land ~~Project~~supports ranching, light industry and areas of historical mining.

~~Our~~ Geological Setting The Holbrook ~~Project~~Basin ~~currently~~is ~~consists~~a 5,000 square mile kidney-shaped sedimentary basin in east-central Arizona located along the southern edge of ~~permits~~the ~~and~~Colorado ~~leases~~Plateau. onGround ~~147~~water ~~mineral~~occurs ~~estate~~throughout ~~sections~~the ~~spanning~~area ~~approximately~~and ~~90,000~~forms a ~~acres~~regional aquifer. The potash beds in the Holbrook Basin ofare ~~eastern~~hosted ~~Arizona~~within the Permian Supai Salt Formation. The mineralized zones are located at relatively shallow depths, generally less than 1,600 feet.

~~Location The~~ Our Holbrook Project ~~area~~currently isconsists ~~located~~of ~~within~~permits ~~the Holbrook Basin~~ and isleases ~~situated entirely within Apache County in northeastern Arizona. Automobile access to the area is provided via Interstate Route 40 (I-40) to Navajo, Arizona, and then heading south~~ on ~~County~~143 ~~Road~~mineral ~~7230.~~estate ~~The~~sections ~~Holbrook~~spanning ~~Project~~approximately ~~is surrounded by the Navajo Reservation to the north and north-east~~88,175 ~~some~~acres ~~Apache~~in ~~and Hopi Reservation grounds to~~ the ~~south,~~Holbrook ~~and~~Basin ~~the~~of ~~Petrified~~eastern ~~Forest National Park to the west~~Arizona.

Infrastructure The nearby towns of Holbrook, St. Johns, and Show Low provide locations for personnel, supplies, equipment and accommodation. Electricity is provided to the area by three coal-fired power stations, the Cholla, Coronado and Springerville Plants. In addition, water for drilling can be obtained from range tanks, wells, and the Little Colorado River. Drilling mud, diesel and other resources can be obtained locally or from Silver City, New Mexico, which is approximately 231 miles from the Holbrook Project, or from the Farmington, New Mexico area, which is a similar distance away.42

The Holbrook Project has good access to highways and other transportation. It is bounded on the north by Interstate Route 40 (I-40). Secondary and ranch roads allow all-weather access to most locations in the area. All locations not accessible via existing roads can be accessed by either four-wheel drive or all-terrain vehicles. The BNSF Railway transects the northern part of the Holbrook Project area.

Climate The Holbrook Project is located in a high desert, semi-arid region. Weather patterns are characterized by relatively dry conditions with hot spring, summer, and fall temperatures ranging from 52°F to 93°F, and cool winter temperatures ranging from 18°F to 63°F. The area experiences two rainy seasons, both occurring in the winter.

Geological Setting The Holbrook Basin is a 5,000 square mile kidney-shaped sedimentary basin in east-central Arizona located along the southern edge of the Colorado Plateau.

The regional lands and limited vegetation consist of minor salt cedar and scrub grasses and are generally flat with minor low-lying rolling hills. The land supports ranching, light industry and areas of historical mining. There is some hay production in the valley bottoms and there are numerous ranches scattered throughout the Holbrook Project area. Two streams, the Little Colorado, a permanent stream, and the Puerco River, an intermittent stream, intersect the area. Their intersection lies about three miles east of Holbrook, and they tend to generally produce fresh water. The divide area between the rivers is characterized by generally low grassland ridges, broad drainage areas and ledge form buttes and mesas. Ground water occurs throughout the area and forms a regional aquifer.

The potash beds in the Holbrook Basin are hosted within the Permian Supai Salt Formation. The mineralized zones are located at relatively shallow depths, generally less than 1,600 feet.

History of the Project Prior to our exploration program there have been many companies exploring potash in this area tracing back approximately 50 years.

In the 1960’s and 1970’s, a total of 135 holes were drilled to delineate the potash in the area. Arkla Exploration Company and Duval Corporation drilled 105 holes. The others were drilled by Kern County Land, National Potash, New Mexico and Arizona Land, St. Joe American, and U.S. Borax. Only five holes penetrated the entire salt package, but 127 holes were drilled into the upper 100 to 300 feet of salt where the potash is typically present. Most of the historical holes were cored through the upper 100 feet of salt to get direct information about the nature of the potash deposits. Both Arkla and Duval reported the presence of potassium minerals.

To date, there has been no commercial production of potash in Arizona, either by conventional or solution mining.

Proposed Mining and Processing Due to the relatively shallow depth of the potash, year-round warm weather, relatively dry climate and consistent quality of the mineralization in our acreage, we intend to construct a conventional underground mine and process our ore on-site through surface floatation. The majority of current potash produced in North America use conventional mining techniques.

Exploration Program During calendar year 2011, we completed approximately 70 miles of 2D seismic testing and the drilling and coring of 12 holes. This was combined with the historic information from approximately 58 holes in our project area, the results of which were used to delineate the potash potential on our acreage. During calendar year 2012, we completed the drilling of an additional 16 holes. During calendar year 2013 we completed the drilling of 17 holes. As part of our project development work, in 2011 we engaged third party technical consultants i) to complete a NI 43-101 mineral resource estimate, which was updated in August 2012, and ii) to prepare a Preliminary Economic Analysis, or PEA. In 2013, we engaged a third party technical consultant to prepare a pre-feasibility study on the Holbrook Project.

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~~Our~~ We hold ~~resource~~the ~~estimate, PEA and pre-feasibility study are preliminary in nature and~~ mineral ~~resources~~rights ~~are~~to ~~not~~101 ~~mineral~~sections ~~reserves~~covering ~~and~~approximately ~~have~~61,661 ~~not~~acres ~~demonstrated~~that ~~economic~~were ~~viability.~~privately ~~The~~owned ~~resource~~by ~~estimate,~~third ~~as updated~~parties, ~~has~~own ~~not estimated any~~ mineral ~~reserves~~rights ~~for the Holbrook Project and there is no certainty that the estimates~~ in ~~the~~fee ~~resource~~on ~~estimate,~~8 assections ~~updated,~~covering ~~will be realized. As defined by SEC Industry Guide 7~~approximately 5,107 ~~our~~acres ~~resource currently does not meet the definition of proven or probable reserves~~ and ~~further~~hold ~~studies~~exploration ~~that~~permits ~~demonstrate~~from the ~~economic~~Arizona ~~viability~~State ofLand ~~the~~Department, ~~project~~or ~~must be completed~~ASLD, ~~and~~on ~~necessary~~34 ~~permits~~sections ~~and~~covering ~~additional~~approximately ~~property~~21,406 ~~rights must be obtained~~acres. ~~See “Cautionary Note to Investors Regarding Mineral Disclosures” and “Risk Factors” contained in elsewhere herein this prospectus.~~

In October 2012, we signed a 10-year potash supply agreement with Sichuan Chemical, a large state owned Chinese chemical company, pursuant to which Sichuan will purchase at least 500,000 tonnes of potash from us per year on a take or pay basis.43

InTable ~~February 2013, we submitted our application for the Air Quality Control permit to the Arizona Department~~ of Environmental Quality (“ADEQ”) and our Mineral Development Report to the Arizona State Land Department (“ASLD”) to convert certain ASLD exploration permits to mineral leases. In September 2013, we received our Air Quality Control Permit to construct and operate a 2.2 million ton per year potash mine.Contents

~~Governmental~~ ~~Regulation~~Privately ~~and~~Leased ~~Environmental, Health and Safety~~Sections

We ~~must~~obtained ~~obtain~~our ~~numerous~~mineral ~~governmental,~~rights ~~environmental,~~to ~~mining~~the ~~and~~101 ~~other~~privately ~~licenses,~~owned ~~permits~~sections ~~and~~in ~~approvals~~July ~~authorizing~~2011 ~~our~~by ~~operations.~~entering ~~Our~~into ~~existing~~a ~~exploration~~Potash ~~permits~~Sharing ~~require~~Agreement, usor toPSA, with ~~make~~the ~~leasehold~~private ~~payments~~parties tothat ~~either~~own the ~~state~~mineral interests and/or ~~private~~royalties ~~entities based~~ on ~~the~~these ~~number of leased land~~ sections. ~~and~~We ~~acres.~~were Ifrequired weto ~~commence~~make ~~production~~a onlump ~~these~~sum ~~leases,~~payment wefollowing ~~will~~completion ~~then~~of beour ~~required~~initial toresource ~~make~~report ~~royalty~~and ~~payments~~a ~~based~~lump sum onpayment following the ~~revenue~~submission ~~generated~~of byour ~~the~~application ~~potash~~for wea ~~produce~~mineral lease from the ~~leased~~State ~~land.~~of WeArizona, ~~anticipate~~and ~~making~~have ~~significant~~made ~~leasehold~~both payments. toWe ~~both~~are ~~governmental~~required ~~and~~to ~~private~~make ~~entities.~~annual ~~Modifications~~rent ofpayments ~~financial terms~~ of ~~these~~$30,000 ~~leases may adversely affect the viability~~ on January 1st of ~~our~~each ~~projects~~year.

In Once in ~~addition~~production, ~~portions~~we ofwill ~~the~~be ~~area~~required ~~for~~to ~~the~~make ~~Holbrook~~royalty ~~Project~~payments ~~border,~~based oron ~~are~~gross ~~within,~~sales ~~the expanded boundaries~~ of ~~the~~potash ~~Petrified~~extracted ~~Forest~~from ~~National~~these ~~Park~~sections. WeThe ~~hold~~royalty ~~the~~payments ~~mineral rights for some of this land and we~~ will ~~need~~be toon ~~work~~a ~~closely~~sliding ~~with~~scale ~~both~~based on the ~~State~~average ofpotash ~~Arizona~~prices received and ~~park~~in ~~officials~~no ~~regarding~~event ~~those~~shall ~~portions of~~ the ~~Holbrook~~royalties, ~~Project.~~as ~~This~~a ~~coordination~~percentage ~~could potentially delay the issuance~~ of ~~necessary~~gross ~~permits~~sales, orbe ~~lead~~less tothan the ~~imposition~~rates ofwe ~~restrictions~~pay to ~~some of our operations that could adversely affect~~ the ~~viability~~State of ~~portions~~Arizona offor ~~the~~potash ~~Holbrook~~mined ~~Project.~~on Itstate ~~could also lead to the denials of, approvals and permits necessary to develop portions of the Holbrook Project~~lands. ~~Furthermore,~~The ~~any future expansion~~ term of ~~the~~this ~~Petrified~~agreement ~~Forest~~is ~~National~~indefinite ~~Park~~so ~~could~~long ~~limit~~as ~~our ability to acquire additional~~ mineral ~~rights,~~operations ~~and~~are ~~additional~~conducted ~~acquisitions~~on ofa ~~lands~~continuous orbasis ~~interests~~from inthese ~~land by the National Park Service could lead to further overlap with our current holdings~~sections.

~~Our~~ Mineral operations ~~exploration~~shall ~~and~~be ~~development~~deemed ~~activities~~"conducted ~~subject~~on usa tocontinuous anbasis" ~~evolving~~unless ~~set of federal, state~~ and ~~local~~until ~~health,~~the ~~safety~~earlier ~~and~~of: ~~environmental,~~(i) a orperiod ~~HSE,~~of ~~laws~~180 ~~that~~consecutive ~~regulate~~days orelapses ~~propose~~in towhich ~~regulate~~no ~~surface disturbance~~development, ~~air~~mining or ~~and~~processing ~~water~~operations ~~quality~~are ~~impacts~~conducted ~~and~~or ~~safety~~(ii) when ~~procedures~~we, ~~followed~~in by our ~~employees.~~sole ~~Upon commencement of potash production~~discretion, wedecide ~~will also need~~ to ~~comply~~abandon ~~with~~the ~~laws~~development ~~that~~of ~~regulate~~any orfacilities ~~propose~~necessary tofor ~~regulate our mining activities, including~~ the ~~management and handling of raw materials~~extraction, ~~disposal~~processing, ~~storage~~ and ~~management~~sales of ~~hazardous and solid waste, the safety of our employees and post-mining land reclamation~~ potash.

Our counter parties have the right to terminate the PSA if (i) we fail to make any payments under the PSA but only after written notice and providing a 10-day cure period, (ii) production of potash has not commenced by July 27, 2018 or (iii) there has been a bankruptcy filing by or against us.

Fee Sections

We own the mineral rights in fee on 8 sections covering approximately 5,107 acres.

Arizona State Land Sections

We hold exploration permits from the ASLD on 34 sections covering approximately 21,406 acres. These exploration permits are renewable for one year terms for up to five years in total. We are required to make minimum exploration expenditures or annual leasehold payments of $20 per acre to the Arizona State Land Department. We have 14 exploration permits that were originally acquired in 2009 and whose five year term ends in 2014 and 20 exploration permits that were originally acquired in 2010 and whose five year term ends in 2015.

In February 2013 we submitted our application to the ASLD to convert our exploration permits into mineral leases and are progressing the conversion process. We expect this process to be completed before the expiration of any of our exploration permits. If not completed, we will reapply for any exploration permits that expire. As part of the granting of a mineral lease the State of Arizona will impose a royalty regime on any potash mined from state lands. We expect our royalty rates to be consistent with other mining royalty rates in Arizona.

Surface Agreements

We have surface use agreements with various parties requiring annual payments of approximately $85,535.

Other Royalties or Burdens

In addition to the royalties described above (i) under the PSA for privately held sections and (ii) to be determined by the State of Arizona in conjunction with the issuance of our mineral lease, we have (iii) royalties for 3% of the gross potash sales received by AWP and (iv) 1% of all gross revenues received by Prospect Global Resources, Inc.

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Grandhaven Royalty Interest

In addition, if;

(i) the Arizona State Land Department declines to issue any lease to us with respect to any state exploration permit, or

(ii) the Arizona State Land Department terminates any state exploration permit, or

(iii) the Arizona State Land Department refuses to consent to the assignment of any royalty interests in any Arizona state lease, or requires any reduction of or imposes any condition on such royalty interests as a condition of approving an assignment of such royalty interests or approving any royalty reduction or other action with respect to a state lease,

On February 7, 2014 we received notice from Grandhaven regarding the closing of the conveyance of their royalty interests in the fee and state mineral rights owned by AWP. As of February 25, 2014 the assignment of their royalty interest had not been completed.

Infrastructure

The nearby towns of Holbrook, St. Johns, and Show Low provide locations for personnel, supplies, equipment and accommodation. Electricity is provided to the area by three coal-fired power stations, the Cholla, Coronado and Springerville Plants.

Proposed Mining and Processing

Due to the relatively shallow depth of the potash, year-round warm weather, relatively dry climate and consistent quality of the mineralization in our acreage, we intend to construct a conventional underground mine and process our ore on-site through surface floatation. The majority of current potash produced in North America use conventional mining techniques.

Exploration

During calendar year 2011, we completed approximately 70 miles of 2D seismic testing and the drilling and coring of 12 holes. This was combined with the historic information from approximately 58 holes in our project area, the results of which were used to delineate the potash potential on our acreage. During calendar year 2012, we completed the drilling of an additional 16 holes. During calendar year 2013 we completed the drilling of 17 holes. As part of our project exploration work, in 2011 we engaged third party technical consultants (i) to complete a NI 43-101 mineral resource estimate, which was updated in August 2012, and (ii) to prepare a PEA. In 2013, we engaged a third

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party technical consultant to prepare a pre-feasibility study on the Holbrook Project. We believe we have completed the drilling necessary to complete a DFS and no further drilling is currently planned.

Our resource estimate, PEA and pre-feasibility study are preliminary in nature and mineral resources are not mineral reserves and have not demonstrated economic viability. The resource estimate, as updated, has not estimated any mineral reserves for the Holbrook Project and there is no certainty that the estimates in the resource estimate, as updated, will be realized. As defined by SEC Industry Guide 7, our resource currently does not meet the definition of proven or probable reserves and further studies that demonstrate the economic viability of the project must be completed, and necessary permits and additional property rights must be obtained. See "Cautionary Note to Investors Regarding Mineral Disclosures" and "Risk Factors" contained in elsewhere herein this prospectus.

Off-take Agreement

•: Sichuan holds an option to purchase up to an additional 500,000 tonnes of potash per annum during each year of the agreement;
•: Sichuan has the exclusive rights to sell and distribute potash in the People's Republic of China on our behalf; and
•: Sichuan may terminate the agreement if we have not produced and sold an aggregate of 100,000 tonnes of potash from the Holbrook Basin in a 45 consecutive day period by December 31, 2015. We will not meet this condition by December 31, 2015.

Permitting, Governmental Regulation and Environmental, Health and Safety

Our activities subject us to an evolving set of federal, state and local health, safety and environmental, or HSE, laws that regulate or propose to regulate surface disturbance, air and water quality impacts and safety procedures followed by our employees. Upon commencement of potash production, we will also need to comply with laws that regulate or propose to regulate our mining activities, including the management and handling of raw materials, disposal, storage and management of hazardous and solid waste, the safety of our employees and post-mining land reclamation. The Holbrook Project is located entirely on state or private land, therefore, we must obtain numerous governmental, environmental, mining, access and other licenses, permits and approvals authorizing our operations from instrumentalities within the State of Arizona. Because our activities are contemplated to occur within state jurisdiction, we do not anticipate needing federal authorizations, from agencies such as the National Forest Service or the Bureau of Land Management.

The three most critical permits for the Project are:

(i): Air Quality Control Permit (received)
(ii): Conversion of our exploration permits into mineral leases (application submitted)
(iii): Aquifer Protection Permit (expected to complete in 2014).

In February 2013, we submitted our application for the Air Quality Control permit to the Arizona Department of Environmental Quality ("ADEQ"). In September 2013, we received an Air Quality Control Permit to construct and operate a 2.2 million ton per year potash mine, however, because we currently contemplate moving forward with a mine that is substantially smaller than 2.2 million tons, this permit will likely need to be amended to reflect the reduced operational capacity and annual activity. If an amendment is required we anticipate that it would take several months to process.

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We have submitted our application to convert our exploration permits into a mineral development lease to the Arizona State Land Department ("ASLD"). The ASLD is currently reviewing the application, including certain revisions that we submitted in the first quarter of 2014 and we expect to receive our mineral lease in 2014. We do not expect the processing of the amended application will cause any delays in the development of the Holbrook Project.

Our existing state exploration permits require us to post reclamation bonding of $65,000 in order to drill on state lands and make minimum exploration expenditures or annual leasehold payments of $20 per acre to the ASLD. If we commence production on these leases, we will then be required to make royalty payments based on the revenue generated by the potash we produce from the leased land. The State of Arizona will determine the royalty prior to issuing the mineral lease based upon its appraisal conducted during the processing of the Draft Mineral Development Report. The royalty contained within the lease may be a fixed royalty rate subject to adjustment or a sliding scale. We expect our royalty rates to be consistent with other mining royalty rates in Arizona.

In addition, we hold mineral rights for land that is within the expanded boundaries of the Petrified Forest National Park. We have no plans to drill or develop these holdings at the present time. Future development of these mineral rights will require working closely with both the State of Arizona and park officials and would likely require additional specific Federal authorizations at that time.

We cannot predict the impact of new or changed laws, regulations or permitting requirements, or changes in the ways that such laws, regulations or permitting requirements are enforced, interpreted or administered. HSE laws and regulations are complex, are subject to change and have become more stringent over time. It is possible that greater than anticipated HSE capital expenditures or reclamation and closure expenditures will be required in the future. We expect continued government and public emphasis on environmental issues will result in increased future investments for environmental controls at our operations.

Market Conditions and Trends

~~Potash~~ Fertilizers ~~Demand Potash~~serve ~~demand~~a ~~depends~~fundamental ~~primarily~~role onin ~~the~~global ~~demand~~agriculture ~~for~~by ~~fertilizer,~~providing ~~which~~essential ~~is based on the total planted acreage,~~ crop ~~mix,~~nutrients ~~soil~~that ~~characteristics,~~help ~~fertilizer~~sustain ~~application~~both ~~rates,~~the ~~crop~~yield ~~yields~~ and the ~~farm~~quality ~~income. Each~~ of ~~these~~crops. ~~factors~~The isthree ~~affected~~primary bynutrients ~~current~~required ~~and~~for ~~projected~~plant ~~grain~~growth ~~stocks~~are ~~and~~nitrogen, ~~prices~~phosphate, ~~agricultural~~and ~~policies~~potassium, ~~improvements~~and inthere ~~agronomic~~are ~~efficiency,~~no ~~fertilizer~~known substitutes ~~application~~for ~~rates~~these ~~and weather~~nutrients. ~~From~~A ~~2000~~proper tobalance ~~2011, global consumption~~ of ~~potash~~each ~~as a fertilizer grew at a compound annual growth rate (CAGR)~~ of ~~2.54%~~the ~~per~~three ~~year,~~nutrients ~~from~~is ~~approximately~~necessary ~~35.9 million tonnes KCl~~ to ~~approximately~~maximize ~~47.3~~their ~~million tonnes KCl, according to Fertecon~~effectiveness.

27 Potash is primarily used as an agricultural fertilizer due to its high potassium content. Potassium helps regulate plants' physiological functions and improves plant durability, providing crops with protection from drought, disease, parasites, and cold weather. Unlike nitrogen and phosphate, the potassium contained in naturally-occurring potash does not require additional chemical conversion to be used as a plant nutrient.

Potash demand depends primarily on the demand for fertilizer, which is based on the total planted acreage, crop mix, soil characteristics, fertilizer application rates, crop yields and farm income. Each of these factors is affected by current and projected grain stocks and prices, agricultural policies, improvements in agronomic efficiency, fertilizer application rates and weather.

The estimated worldwide annual capacity of potash production is now in excess of recent annual demand and it is expected that this supply surplus will continue for the next few years; although this excess capacity is generally held by larger, more well-established producers that have a history of managing production levels to more closely meet worldwide demand.

We believe the long-term demand for potash remains positive and will be driven by the continued growth in emerging economies, a growing global population and the upgrading of diets worldwide amongst the growing middle class. Specifically, we believe that as the emerging markets grow and the members of their middle classes increase, the diet of this increasingly affluent population will change

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~~Potash Supply The supply of potash is influenced by a broad range of factors including available capacity~~ and drive ~~achievable~~demand ~~operating~~for ~~rates;~~more ~~mining,~~agricultural ~~production and freight costs; government policies and global trade~~products. ~~Barriers~~This toincremental ~~adding~~demand ~~new~~on ~~potash production are significant because economically recoverable potash deposits with~~ the ~~appropriate~~agricultural ~~geologic~~industry ~~conditions~~will ~~occur rarely. According to Fertecon~~translate, in ~~2011~~our opinion, ~~seven~~into ~~countries~~a ~~accounted~~sustained ~~for~~increase ~~approximately 91% of the world’s aggregate potash production. This scarcity has resulted~~ in ademand ~~high degree of concentration among the leading producers. Canada currently accounts~~ for ~~approximately 30% of global~~ potash ~~production. The next six largest producers, Russia, Belarus, China, Germany, Israel~~ and ~~Jordan, account for approximately 60% of global production~~fertilizer generally. The U.S. produces approximately 15% of the potash it consumes. U.S. potash reserves are concentrated in the southwestern U.S and account for approximately 3% of world production. Only 12 countries produce nearly all of the world’s supply, making much of the world dependent upon imports to satisfy their potash requirements.

Competitive Business Conditions

Once we have production, we will sell into commodity markets and compete based on the delivered price of potash, timely service, reliability of supply, and product quality. Products must maintain particle size and potassium oxide ("K₂O") content benchmarks in order to compete effectively.

We will compete primarily with much larger potash producers, principally Canadian producers and, to a lesser extent, producers located in Russia, Chile, Germany, and Israel. As a smaller producer, we will seek to maintain an advantage through customized and timely service for our customers, and a focus on the markets in which we have a transportation cost advantage.

Within the Holbrook Basin, we know of at least two other companies currently engaged in the exploration of potash. To the best of our knowledge, neither of these companies has yet made a decision to move forward with a plan to construct a potash mine.

Employees

As of ~~October~~February 1825, ~~2013,~~2014 we had a total of ~~eight~~seven employees.

Legal Proceedings

The Company is not a party to any pending material legal proceedings nor, except as described below, is the Company aware of any threatened or contemplated proceeding against the Company.

On April 26, 2013, we received correspondence from a stockholder, the Kevin F. Flynn June 1992 Non-Exempt Trust, which purchased $10.0 million of shares in our November 2012 public offering asserting a right to rescind the purchase based on failure to disclose material information and misrepresenting other material information in connection with that offering. We believe the claim is without merit and intend to vigorously defend against it. In a related letter dated June 14, 2013, the four underwriters in our November 2012 public offering notified us that they received a letter from this same stockholder in which this stockholder elected to void its purchase of shares in our November 2012 public offering. Pursuant to the terms of the underwriting agreement we entered into with the underwriters in our November 2012 public offering, the underwriters requested that we appoint counsel for the underwriters to advise on this matter, subject to their determination that counsel is satisfactory, or, alternatively, we may authorize the underwriters to employ counsel at our expense. No further correspondence has been received from this stockholder.

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DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of the persons who are our directors and named executive officers as of February [ ], ~~the date of this prospectus~~2014:

Name	Age		~~Position~~
Dr. Barry Munitz	72	72	~~Chairman of board of directors~~	Chairman of board of directors
Chad Brownstein	40	40	~~Executive Vice Chairman of board of directors~~	Executive Vice Chairman of board of directors
J. Ari Swiller	44	45	~~Director, Chairman of Audit, Finance and Operations and Governance, Nominating and Compensation Committees~~	Director, Chairman of Audit, Finance and Operations and Governance, Nominating and Compensation Committees
Reed Dickens	35	35	~~Director~~	Director
Daniel J. Neumann	38	38	~~Director~~	Director
Damon G. Barber	46	46	~~President, Chief Executive Officer and Secretary~~	President, Chief Executive Officer and Secretary
Greg Dangler	32	32	~~Interim Chief Financial Officer~~	Interim Chief Financial Officer
Wayne Rich	48	48	~~Principal Accounting Officer and Treasurer~~	Principal Accounting Officer and Treasurer

Directors hold office for a period of one year from their election at the annual meeting of stockholders and until a particular director’'s successor is duly elected and qualified. Officers are elected by, and serve at the discretion of, our board of directors. None of the above individuals has any family relationship with any other. It is expected that our board of directors will elect officers annually following each annual meeting of Stockholders.

~~Dr. Barry~~ We do ~~Munitz:~~not ~~Chairman~~expect ofor ~~the~~intend ~~board~~that ofeach ~~directors. Dr. Munitz~~director ~~joined~~will ~~our~~have ~~board of directors as chairman in February 2011. From August 2010 to February 2011, Dr. Munitz served as chairman of~~ the ~~board~~same ~~of directors of Old Prospect Global Resources~~background, ~~Inc.,~~ ~~our~~skills ~~wholly owned subsidiary. Dr. Munitz has been Trustee Professor at the California State University, Los Angeles campus since 2006. Between 2005~~ and ~~2010,~~experience; ~~Dr. Munitz~~we ~~chaired~~expect ~~California’s P-16 Council, an organization~~ that ~~develops~~board ~~strategies~~members towill ~~improve~~have ~~education~~a indiverse ~~the~~portfolio ~~State~~ of ~~California. Dr. Munitz served as President and CEO of the J. Paul Getty Trust from 1997 to 2006 where he was responsible for the two museums (Brentwood and Malibu)~~backgrounds, ~~the~~skills ~~Conservation~~ and ~~Research Institutes, the philanthropic foundation, the investment portfolio, and all education outreach programs~~ experiences. ~~From~~One ~~1991~~goal ~~to 1997, he served as Chancellor~~ of ~~the~~this ~~California~~diversity ~~State University (CSU)—a twenty-three campus system which~~ is ~~the largest senior university in the United States. Prior~~ to ~~that~~assist ~~role, Dr. Munitz was vice chairman of~~ the ~~publicly~~board ~~held company MAXXAM and president~~ of ~~the~~directors ~~private~~as ~~company which was its major stockholder (Federated Development) where he was involved for~~ a ~~decade~~whole in ~~their~~its ~~natural~~oversight ~~resources~~and ~~activity,~~advice asconcerning ~~well~~our asbusiness ~~timber, banking, energy~~ and ~~real estate~~operations. ~~During~~The ~~the~~directors' ~~past~~biographies ~~decades,~~note heeach director's ~~served~~relevant ~~as a Trustee of Princeton University~~experience, ~~the Seattle Art Museum~~qualifications, and ~~the~~skills ~~Courtauld~~that ~~Institute~~led into ~~London, as well as a corporate director at SunAmerica and Kaufman & Broad. Dr. Munitz is~~ the ~~immediate~~conclusion ~~past~~that ~~chair~~such ~~and~~individual ~~current~~should ~~vice~~serve ~~chair~~as ~~of the board of Sierra Nevada College, is president of the Cotsen Foundation for the Art of Teaching and for Academic Research, is~~ a ~~governor of the three Eli and Edythe Broad Family Foundations and a corporate~~ director at SallieMae. Dr. Munitz received a Bachelor’s degree in Classics and Comparative Literature from Brooklyn College, and received a Masters and a Ph.D. from Princeton University. Dr. Munitz is a fellow of ~~the~~our American Academy of Arts and Sciences and holds honorary degrees from Whittier College, Claremont University, the California State University, the University of Southern California, Notre Dame and the University of Edinburghcompany.

•: Senior Leadership Experience. Directors who have served in senior leadership positions are important to us, as they bring experience and perspective in analyzing, shaping, and overseeing the execution of important operational and policy issues at a senior level. These directors' insights and guidance, and their ability to assess and respond to situations encountered in serving on our board, may be enhanced if their leadership experience has been developed at start-up businesses or organizations that experienced rapid growth, faced significant competition, and/or involved rapidly evolving business models.
•: Industry Experience. Directors who have worked at a senior level or have invested substantially in mining or other natural resources businesses bring valuable knowledge, experience and perspective that can help our board and management make strategic development and operations decisions.
•: Business Development Experience. Directors who have a background in business development and in acquisitions can provide insight into developing and implementing strategies for growing our business through combination with other organizations. Useful experience in this area includes consideration of "make versus buy" and "analysis of the fit" of a proposed acquisition with a company's strategy, the valuation of transactions, and management's plans for integration with existing operations.
•: Financial Expertise. Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes is important because it assists our directors in understanding, advising, and overseeing our capital structure, financing and investing activities, financial reporting, and internal control over such activities.

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Dr. Barry Munitz: Chairman of the board of directors. Dr. Munitz joined our board of directors as chairman in February 2011. From August 2010 to February 2011, Dr. Munitz served as chairman of the board of directors of Old Prospect Global Resources, Inc., our wholly owned subsidiary. Dr. Munitz has been Trustee Professor at the California State University, Los Angeles campus since 2006. Between 2005 and 2010, Dr. Munitz chaired California's P-16 Council, an organization that develops strategies to improve education in the State of California. Dr. Munitz served as President and CEO of the J. Paul Getty Trust from 1997 to 2006 where he was responsible for the two museums (Brentwood and Malibu), the Conservation and Research Institutes, the philanthropic foundation, the investment portfolio, and all education outreach programs. From 1991 to 1997, he served as Chancellor of the California State University (CSU)—a twenty-three campus system which is the largest senior university in the United States. Prior to that role, Dr. Munitz was vice chairman of the publicly held company MAXXAM and president of the private company which was its major stockholder (Federated Development) where he was involved for a decade in their natural resources activity, as well as timber, banking, energy and real estate. During the past decades, he served as a Trustee of Princeton University, the Seattle Art Museum, and the Courtauld Institute in London, as well as a corporate director at SunAmerica and Kaufman & Broad. Dr. Munitz is the immediate past chair and current vice chair of the board of Sierra Nevada College, is president of the Cotsen Foundation for the Art of Teaching and for Academic Research, is a governor of the three Eli and Edythe Broad Family Foundations and a corporate director at SallieMae. Dr. Munitz received a Bachelor's degree in Classics and Comparative Literature from Brooklyn College, and received a Masters and a Ph.D. from Princeton University. Dr. Munitz is a fellow of the American Academy of Arts and Sciences and holds honorary degrees from Whittier College, Claremont University, the California State University, the University of Southern California, Notre Dame and the University of Edinburgh.

The board believes that Mr. Munitz brings to the board significant senior leadership and industry experience from his past business experience in senior management roles and his expertise in analyzing investments in the natural resources industry.

Chad Brownstein: Executive Vice Chairman of the board of directors. Mr. Brownstein, one of our co-founders joined our board of directors as non-executive vice-chairman in August 2011 and became executive vice chairman in August 2012. Mr. Brownstein was an advisor to Crescent Capital Group (formerly Trust Company of the West Leveraged Finance Group) where he focuses on investing in Special Situations. Mr. Brownstein was a Member of Crescent Capital Group from January 2011 to July 2012 and was Senior Vice President at Trust Company of the West from February 2009 to December 2010. Previously, he was a Senior Advisor at Knowledge Universe Ltd., where he focused on turnaround operations and private equity investing. Prior to that, he was a Partner at ITU Ventures making venture and growth investments with a specialization in corporate strategy. Earlier in his career, Mr. Brownstein worked at Donaldson Lufkin & Jenrette in the Merchant and Investment Banking divisions. Mr. Brownstein is a member of the Cedars Sinai Board of Governors, California Competes Council, and serves on the board of directors for Los Angeles Conservation Corps and First PacTrust Bancorp (a Nasdaq listed company). Mr. Brownstein attended Columbia Business School and received a BA from Tulane University.

28 The board believes that Mr. Brownstein brings to the board significant senior leadership, industry, and business development experience and financial expertise from his past business experience in senior management roles, working with venture stage companies at ITU Ventures, his experience with Donaldson Lufkin & Jenrette and his expertise in analyzing investments in the natural resources industry.

J. Ari Swiller: Director. Mr. Swiller joined our board of directors in February, 2011. From October 2010 to February 2011, Mr. Swiller served as a director of Old Prospect Global Resources, Inc., our wholly owned subsidiary. Mr. Swiller co-founded the Renewable Resources Group (RRG) in 2003. RRG has developed two million acre-feet (AF) of water projects, over a gigawatt of

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J. Ari Swiller: Director. Mr. Swiller joined our board of directors in February, 2011. From October 2010 to February 2011, Mr. Swiller served as a director of Old Prospect Global Resources, Inc., our wholly owned subsidiary. Mr. Swiller co-founded the Renewable Resources Group (RRG) in 2003. RRG has developed two million acre-feet (AF) of water projects, over a gigawatt of renewable energy and marketed hundreds of water rights in nine states. Currently the firm owns and/or manages more than 100,000 acres of farmland for the purpose of water, renewable energy, and/or carbon development. Mr. Swiller’'s responsibilities include managing all aspects of the business. Prior to founding RRG, Mr. Swiller was a Principal in The Yucaipa Companies; he served as Vice President of External Affairs at Ralphs Grocery Company and Executive Director of The Ralphs/Food4Less Foundation. He serves on the board of rfXcel Corporation, which develops supply chain performance improvement software. Mr. Swiller also serves on the Board of the Los Angeles Conservation Corps, the Miguel Contreras Educational Foundation and Falcon Waterfree Technologies. Mr. Swiller earned a B.A. from Cornell University.

~~Reed Dickens: Director. Mr. Dickens joined our~~ The board ofbelieves ~~directors~~that ~~in October 2013.He has been the founder and principal of Dickens Capital Group, a corporate advisory business platform, since August 2009. From August 2009 to December 2011,~~ Mr. ~~Dickens~~Swiller ~~served~~brings ~~as the Chairman and CEO of Marucci Sports, which Forbes Magazine recognized as one of the most promising growth brands in America. Mr. Dickens continues~~ to ~~serve on~~ the board ofsignificant ~~directors~~senior ~~of Marucci Sports. From 2005 to 2009~~leadership, ~~Mr. Dickens~~industry ~~served as the CEO of Outside Eyes, a firm that he founded. Outside Eyes creates crisis management~~ and ~~branding~~business ~~strategies~~development ~~for~~experience ~~a diverse~~ and ~~high-profile~~financial ~~client~~expertise ~~list.~~from ~~Mr. Dickens~~his ~~continues~~past tobusiness experience ~~serve~~in ~~as Outside Eyes’~~ senior ~~strategist.~~management ~~In addition~~roles, ~~Mr. Dickens~~particularly ~~currently~~his ~~serves~~experience as afounder ~~senior advisor to TPG Capital, L.P.’s portfolio of growth companies. Between 2001~~ and ~~2003~~principal Mr. Dickens served as assistant press secretary for President George W. Bush, where he assisted in managing the relationship between the White House Press Corps and the West Wing Press Office. Since 2005, Mr. Dickens has traveled the country as a corporate speaker and frequently contributed on CNN, Fox News, and MSNBC. Mr. Dickens received a Bachelor’s degree in Communications from Louisiana State University of ~~Shreveport~~RRG.

~~Daniel~~ Reed ~~J. Neumann~~Dickens: Director. Mr. ~~Neumann~~Dickens joined our board of directors in October 2013. He ishas ~~currently~~been athe ~~Managing~~founder ~~Director~~ and ~~Portfolio~~principal ~~Manager~~of ~~with GRT~~ Dickens Capital ~~Partners~~ Group, ~~LLC,~~ a ~~Boston-based~~corporate ~~asset~~advisory ~~management~~business ~~firm~~platform, ~~where~~since heAugust ~~and~~2009. ~~several~~From ~~former~~August ~~BlackRock~~2009 to December 2011, ~~Inc~~ Mr. Dickens ~~colleagues~~served ~~are~~as ~~helping~~the toChairman ~~launch~~and aCEO ~~new~~of ~~energy~~Marucci ~~sector~~Sports, ~~investment~~which ~~platform.~~Forbes ~~From~~Magazine recognized ~~2005~~as ~~until~~one ~~joining~~of ~~GRT~~the ~~Capital~~most ~~Partners~~promising ingrowth ~~May 2013,~~brands in America. Mr. ~~Neumann~~Dickens ~~was~~continues ato ~~Managing~~serve ~~Director~~on ~~and~~the ~~Portfolio~~board ~~Manager~~of atdirectors ~~BlackRock, Inc~~of Marucci Sports. ~~While~~From at2005 ~~Blackrock~~to 2009, Mr. ~~Neumann~~Dickens ~~managed~~served ~~The~~as ~~BlackRock~~the ~~Energy~~CEO ~~and~~of ~~Resources~~Outside ~~Trust (NYSE Ticker: BGR)~~Eyes, ana ~~$800~~firm ~~million~~that ~~publically~~he ~~traded~~founded. ~~closed-end~~Outside ~~equity~~Eyes ~~energy~~creates crisis ~~fund~~management ~~with~~and ~~the~~branding ~~capability~~strategies tofor ~~invest~~a ~~globally~~diverse and ~~across~~high-profile ~~all~~client ~~company sizes, including private equity~~list. ~~During this time,~~ Mr. ~~Neumann~~Dickens ~~also~~continues ~~assisted~~to ~~with~~serve ~~the~~as ~~following~~Outside ~~portfolios:~~Eyes' ~~The~~senior ~~BlackRock~~strategist. ~~Resources~~In ~~and~~addition, ~~Commodities~~Mr. Dickens currently ~~Strategy~~serves ~~Trust~~as ~~(NYSE:~~a ~~BCX),~~senior ~~The~~advisor ~~BlackRock~~to ~~All~~TPG ~~Cap Energy Fund (BACAX)~~Capital, L.P.'s ~~and~~portfolio ~~The~~of ~~BlackRock~~growth ~~Small Cap Energy Fund (SSGRX)~~companies. ~~Prior~~Between to2001 ~~his~~and ~~career~~2003 ~~at BlackRock,~~ Mr. ~~Neumann~~Dickens served as ~~Vice~~assistant ~~President~~press atsecretary ~~State~~for ~~Street~~President ~~Research &~~George ~~Management~~W. Bush, where he ~~was~~assisted ain ~~research~~managing ~~analyst,~~the ~~generating~~relationship ~~investment~~between ~~ideas in~~ the ~~energy~~White ~~and~~House ~~related~~Press ~~sectors.~~Corps ~~Prior~~and tothe ~~his~~West ~~work~~Wing atPress ~~State~~Office. ~~Street~~Since ~~Research~~2005, Mr. ~~Neumann~~Dickens ~~worked~~has antraveled ~~associate analyst with~~ the ~~Equity~~country ~~Research~~as ~~Department~~a ofcorporate ~~Bank of America Securities, LLC~~ speaker and asfrequently ancontributed ~~analyst~~on inCNN, ~~the~~Fox ~~Investment~~News, ~~Banking~~ and ~~Financial Institutions Group for PaineWebber, Inc~~MSNBC. Mr. ~~Neumann,~~Dickens ~~a CFA Charterholder,~~ received ~~his~~a Bachelor’'s degree in ~~Economics~~Communications ~~and~~from ~~English~~Louisiana ~~from~~State ~~Boston~~University ~~College~~of Shreveport.

~~Damon~~ The board ~~Barber:~~believes ~~President,~~that ~~CEO and Secretary.~~ Mr. ~~Barber~~Dickens ~~became~~brings ~~our president and chief executive officer on March 7, 2013. Mr. Barber served as our chief financial officer from December 2012~~ to ~~March 2013. Prior to joining Prospect Global, Mr. Barber was~~ the ~~chief~~board ~~executive~~significant ~~officer~~senior ~~and an executive director of CST Mining Group Limited from April 2010 to September 2011. While at CST~~leadership, ~~Mr. Barber~~industry ~~led a $600 million public equity raise to acquire two copper mine development projects~~ and ~~subsequently~~business ~~directed the~~ development ofexperience ~~one project into production~~ and ~~directed~~financial ~~the~~expertise ~~development~~from of the second project to where it was sold for $505 million and returned CST approximately two times its total investment in the project. From June 2010 to September 2011, Mr. Barber also served as chairman of Marcobre S.A.C., a joint venture between CST and Korea Resources Corporation and LS Nikko. From October 2011 to December 2012, Mr. Barber worked as a consultant in the natural resources industry and managed his ~~personal~~past investments. Prior to joining CST, Mr. Barber was a managing director at Deutsche Bank from October 2007 to January 2010 and also served as head of Deutsche Bank’s metals and mining investment banking practice in Asia-Pacific from January 2009 until January 2010. From February to March 2010, Mr. Barber provided consulting services. Mr. Barber has over 20 years of business experience in ~~the~~senior ~~natural resources industry in both~~ management ~~and advisory~~ roles, ~~including over 12 years advising and assisting natural resource companies on mergers & acquisitions, debt and equity capital raisings, leveraged buy-outs and project financings during~~ his ~~time~~experience ~~with~~managing ~~Deutsche~~portfolio ~~Bank~~investments ~~and from 1998 to 2007 as a member of Credit Suisse’s energy group. Prior to this, Mr. Barber was a bond trader~~ at ~~Credit~~BlackRock ~~Suisse First Boston from 1996 to 1998~~ and ~~was~~his ~~also~~expertise ~~a section foreman at CONSOL Energy Inc.’s Loveridge Mine from 1990 to 1994. Mr. Barber holds a Bachelor of Science degree~~ in ~~Mining~~analyzing ~~Engineering,~~natural ~~cum~~resources ~~laude, from the University of Kentucky and a Master of Business Administration degree, with distinction, from the Wharton School of Business~~investments.

~~Gregory~~ Daniel MJ. ~~Dangler~~Neumann: ~~Interim CFO~~Director. Mr. ~~Dangler~~Neumann ~~has~~joined aour ~~broad~~board ~~background~~of directors in ~~private~~October ~~equity~~2013. ~~investing,~~He ~~development~~is ofcurrently ~~large-scale~~a ~~technical~~Managing ~~infrastructure~~Director ~~projects,~~ and Portfolio Manager ~~the~~with ~~financing~~GRT ~~and~~Capital ~~management~~Partners, LLC, ofa ~~international~~Boston-based ~~growth~~asset ~~companies.~~management ~~Mr. Dangler~~firm, ~~served~~where ashe ~~our~~and ~~vice~~several ~~president~~former ~~of finance from March~~BlackRock, ~~2012~~Inc. ~~until~~colleagues ~~March 2013~~are ~~when~~helping heto ~~became~~launch ~~our~~a ~~interim~~new ~~chief~~energy ~~financial~~sector ~~officer~~investment platform. From ~~October 2011~~2005 tountil ~~March 2012,~~joining ~~Mr. Dangler~~GRT ~~managed~~Capital ~~his~~Partners ~~investments.~~in ~~Prior~~May ~~to that~~2013, Mr. ~~Dangler~~Neumann ~~served~~was ~~as chief executive officer of~~ a ~~technology~~Managing Director and ~~telecommunications~~Portfolio ~~company~~Manager ~~from~~at ~~October~~BlackRock, ~~2008 to October 2011~~Inc. AsWhile ~~the~~at ~~founding executive~~Blackrock, heMr. Neumann managed ~~helped~~The ~~the~~BlackRock ~~company~~Energy ~~raise~~and ~~capital~~Resources ~~and~~Trust ~~establish~~(NYSE ~~its~~Ticker: ~~global~~BGR), ~~presence~~an ~~with~~$800 million ~~operating~~publically ~~interests~~traded inclosed-end ~~Africa~~equity ~~and~~energy ~~South~~fund ~~America. Prior~~with tothe ~~that,~~capability ~~Mr. Dangler~~to ~~was~~invest anglobally ~~associate~~and ~~with~~across ~~ITU~~all company ~~Ventures~~sizes, aincluding ~~leading~~ private equity. ~~and~~During ~~venture~~this ~~capital~~time, ~~firm~~Mr. Neumann ~~focused~~also onassisted ~~growth~~with ~~stage~~the ~~technology~~following ~~investments.~~portfolios: ~~While~~The ~~with~~BlackRock ~~ITU,~~Resources ~~Mr. Dangler~~and ~~executed~~Commodities ~~private~~Strategy ~~and~~Trust ~~public~~(NYSE: ~~equity transactions~~BCX), ~~directed~~The BlackRock ~~activity~~All ~~for~~Cap ~~mergers~~Energy ~~and~~Fund ~~acquisitions~~(BACAX), and ~~provided~~The ~~strategic~~BlackRock ~~support~~Small toCap ~~portfolio~~Energy ~~companies.~~Fund Mr(SSGRX). ~~Dangler~~ ~~began~~Prior to his ~~professional~~ career asat anBlackRock, ~~Air~~Mr. Neumann ~~Force~~served ~~officer~~as ~~managing~~Vice ~~complex~~President ~~and~~at ~~large-scale~~State ~~infrastructure~~Street ~~projects. Mr.~~Research ~~Dangler~~& Management, ~~received~~where ahe ~~Meritorious~~was ~~Service~~a ~~Medal~~research ~~for~~analyst, ~~outstanding~~generating ~~achievement~~investment ideas in ~~delivering~~the aenergy ~~large-scale~~and ~~technology~~related ~~program,~~sectors. ~~which~~Prior ~~directly~~to ~~supported~~his ~~over~~work 20at ~~national~~State ~~security~~Street ~~space~~Research, ~~launch missions.~~ Mr. ~~Dangler~~Neumann ~~received~~worked aan BSassociate inanalyst with ~~Mechanical~~the ~~Engineering~~Equity ~~from~~Research ~~the~~Department ~~United~~of ~~States~~Bank ~~Air~~of ~~Force~~America ~~Academy~~Securities, LLC and as an ~~MBA~~analyst in ~~Finance~~the ~~from~~Investment ~~the~~Banking ~~University~~and ofFinancial ~~Southern~~Institutions ~~California’~~Group for PaineWebber, Inc. Mr. Neumann, a CFA Charterholder, received his Bachelor's ~~Marshall~~degree ~~School~~in ofEconomics ~~Business~~and English from Boston College.

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~~Wayne~~ The board ~~Rich:~~believes ~~Senior~~that ~~Vice President, Accounting and Treasury and Treasurer.~~ Mr. ~~Rich~~Neumann ~~served~~brings as chief financial officer and vice president of finance from September 6, 2011 until December 13, 2012. Since December 13, 2012, Mr. Rich has served as our Senior Vice President Accounting and Treasury. Mr. Rich served as treasurer and director of corporate finance at Thompson Creek Metals Inc., a publicly traded metals and mining company, from October 2008 until September 2011. Prior to ~~that~~the heboard ~~served~~significant insenior ~~several capacities at The Doe Run Resources Corporation~~leadership, anindustry ~~integrated mining~~ and ~~metals~~business ~~manufacturing~~development ~~company,~~experience ~~from August 1998 to October 2008, including as treasurer from April 2007 to October 2008~~ and ~~assistant~~financial ~~treasurer~~expertise from ~~July 2004~~his topast ~~April 2007.~~business experience ~~Mr. Rich holds a master’s~~ in ~~business~~senior ~~administration~~management ~~from~~roles ~~Illinois State University~~ and ahis ~~bachelor’s~~expertise ~~of science~~ in ~~accountancy~~analyzing ~~from~~natural ~~Eastern~~resources ~~Illinois University~~investments.

Damon Barber: President, CEO and Secretary. Mr. Barber became our president and chief executive officer on March 7, 2013. Mr. Barber served as our chief financial officer from December 2012 to March 2013. Prior to joining Prospect Global, Mr. Barber was the chief executive officer and an executive director of CST Mining Group Limited from April 2010 to September 2011. While at CST, Mr. Barber led a $600 million public equity raise to acquire two copper mine development projects and subsequently directed the development of one project into production and directed the development of the second project to where it was sold for $505 million and returned CST approximately two times its total investment in the project. From June 2010 to September 2011, Mr. Barber also served as chairman of Marcobre S.A.C., a joint venture between CST and Korea Resources Corporation and LS Nikko. From October 2011 to December 2012, Mr. Barber worked as a consultant in the natural resources industry and managed his personal investments. Prior to joining CST, Mr. Barber was a managing director at Deutsche Bank from October 2007 to January 2010 and also served as head of Deutsche Bank's metals and mining investment banking practice in Asia-Pacific from January 2009 until January 2010. From February to March 2010, Mr. Barber provided consulting services. Mr. Barber has over 20 years of experience in the natural resources industry in both management and advisory roles, including over 12 years advising and assisting natural resource companies on mergers & acquisitions, debt and equity capital raisings, leveraged buy-outs and project financings during his time with Deutsche Bank and from 1998 to 2007 as a member of Credit Suisse's energy group. Prior to this, Mr. Barber was a bond trader at Credit Suisse First Boston from 1996 to 1998 and was also a section foreman at CONSOL Energy Inc.'s Loveridge Mine from 1990 to 1994. Mr. Barber holds a Bachelor of Science degree in Mining Engineering, cum laude, from the University of Kentucky and a Master of Business Administration degree, with distinction, from the Wharton School of Business.

Gregory M. Dangler: Interim CFO. Mr. Dangler has a broad background in private equity investing, development of large-scale technical infrastructure projects, and the financing and management of international growth companies. Mr. Dangler served as our vice president of finance from March 2012 until March 2013 when he became our interim chief financial officer. From October 2011 to March 2012, Mr. Dangler managed his investments. Prior to that, Mr. Dangler served as chief executive officer of a technology and telecommunications company from October 2008 to October 2011. As the founding executive, he helped the company raise capital and establish its global presence with operating interests in Africa and South America. Prior to that, Mr. Dangler was an associate with ITU Ventures, a leading private equity and venture capital firm focused on growth stage technology investments. While with ITU, Mr. Dangler executed private and public equity transactions, directed activity for mergers and acquisitions, and provided strategic support to portfolio companies. Mr. Dangler began his professional career as an Air Force officer managing complex and large-scale infrastructure projects. Mr. Dangler received a Meritorious Service Medal for outstanding achievement in delivering a large-scale technology program, which directly supported over 20 national security space launch missions. Mr. Dangler received a BS in Mechanical Engineering from the United States Air Force Academy and an MBA in Finance from the University of Southern California's Marshall School of Business.

Wayne Rich: Senior Vice President, Accounting and Treasury and Treasurer. Mr. Rich served as chief financial officer and vice president of finance from September 6, 2011 until December 13, 2012. Since December 13, 2012, Mr. Rich has served as our Senior Vice President Accounting and Treasury. Mr. Rich served as treasurer and director of corporate finance at Thompson Creek Metals Inc., a publicly traded metals and mining company, from October 2008 until September 2011. Prior to that he served in several capacities at The Doe Run Resources Corporation, an integrated mining and metals manufacturing company, from August 1998 to October 2008, including as treasurer from April 2007 to

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October 2008 and assistant treasurer from July 2004 to April 2007. Mr. Rich holds a master's in business administration from Illinois State University and a bachelor's of science in accountancy from Eastern Illinois University.

Compensation of Directors

The table below sets forth the compensation earned by our non-employee directors during the 2013 and 2012 fiscal years. There were no non-equity incentive plan compensation, change in pension value or any non-qualifying deferred compensation earnings during these fiscal years. All amounts are in dollars. On February 11, 2011, Prospect Global (formerly known as Triangle Castings, Inc.) completed a reverse merger and acquired Prospect Global Resources Inc., a Delaware corporation incorporated on August 5, 2010, referred to herein as Old Prospect Global.

Name	Year		~~Fees Earned or Paid in Cash Compensation~~	Fees Earned or Paid in Cash		~~Stock Awards~~	~~Option Awards~~		Option Awards(13)	~~All Other Compensation~~		All Other Compensation	~~Total~~		Total
Dr. Barry Munitz(1),(12)	2013		$	150,000		—	$	732,780		$	100,000		$	982,780
Dr. Barry Munitz(1)(12)		2013		$	150,000		—		$	732,780		$	100,000		$	982,780
	~~2012~~	2012	$	~~37,500~~$	37,500	—	$—	~~1,363,952~~	$	—1,363,952			$—	~~1,401,452~~	$	1,401,452
Chad Brownstein(2),(12)	2013		$	25,000		—	$	369,226		—			$	394,226
Chad Brownstein(2)(12)		2013		$	25,000		—		$	369,226			—		$	394,226
	~~2012~~	2012	$	~~12,500~~$	12,500	—	$—	~~340,988~~	$	—340,988			$—	~~353,488~~	$	353,488
Devon Archer(3),(12)	2013		$	50,000		—	$	2,891,679		$	100,000		$	3,041,679
Devon Archer(3)(12)		2013		$	50,000		—		$	2,891,679		$	100,000		$	3,041,679
	~~2012~~	2012	$	~~12,500~~$	12,500	—	—			—			$—	~~12,500~~	$	12,500
Marc Holtzman(4),(12)	2013		$	50,000		—	$	258,458		—			$	308,458
Marc Holtzman(4)(12)		2013		$	50,000		—		$	258,458			—		$	308,458
	~~2012~~	2012	$	~~12,500~~$	12,500		$	~~1,022,964~~	$	—1,022,964			$—	~~1,035,464~~	$	1,035,464
Zhi Zhong Qiu(5),(12)	2013		$	50,000		—	$	258,458		—			$	308,458
Zhi Zhong Qiu(5)(12)		2013		$	50,000		—		$	258,458			—		$	308,458
	~~2012~~	2012	$	~~12,500~~$	12,500	—	$—	~~681,976~~	$	—681,976			$—	~~694,476~~	$	694,476
Scott Reiman(6),(12)	2013		—			—	—			—			—
Scott Reiman(6)(12)		2013			—		—			—			—			—
	~~2012~~	2012	$	~~12,500~~$	12,500	—	$—	~~681,976~~	$	—681,976			$—	~~694,476~~	$	694,476
J. Ari Swiller(7),(12)	2013		$	131,250		—	$	258,458		—			$	389,708
J. Ari Swiller(7)(12)		2013		$	131,250		—		$	258,458			—		$	389,708
	~~2012~~	2012	$	~~17,500~~$	17,500	—	$—	~~340,988~~	$	—340,988			$—	~~358,488~~	$	358,488
Conway J. Schatz(8),(12)	2013		$	75,000		—	$	258,458		—			$	333,458
Conway J. Schatz(8)(12)		2013		$	75,000		—		$	258,458			—		$	333,458
	~~2012~~	2012	—		—	—	—			—			—			—
James Dietz(9)	2013		$	12,500		—	—			—			$	12,500
James Dietz(9)(12)		2013		$	12,500		—			—			—		$	12,500
	~~2012~~	2012	—		—	—	—			—			—			—
Reed Dickens (10)(12)	2013		—			—	—			—			—
Reed Dickens(10)(12)		2013		$	—		—			—			—			—
	~~2012~~	2012	—		—	—	—			—			—			—
Daniel J. Neumann(11)(12)	~~2013~~	2013	—		—	—	—			—			—			—
	~~2012~~	2012	—		—	—	—			—			—			—

(1) Dr. Munitz joined our board of directors as chairman in February 2011. From August 2010 to February 2011, Dr. Munitz served as chairman of the board of directors of Old Prospect Global. Dr. Munitz received expense reimbursements from us of $3,301 in fiscal year 2013 and $0 in year 2012. Dr. Munitz also received a $100,000 bonus in fiscal year 2013 in addition to his regular Board pay. As of March 31, 2013, Dr. Munitz held options to purchase 8,000 shares of stock at $212.50 per share and 6,000 shares at $130.00 per share. (2)Mr. Brownstein joined our board of directors in August, 2011 and was our non-executive vice chairman until becoming our executive vice chairman on August 1, 2012. Mr. Brownstein received

(2) Mr. Brownstein joined our board of directors as non-executive vice chairman in August, 2011 and became executive vice chairman on August 1, 2012. Mr. Brownstein received expense reimbursements from us of $96,870 in fiscal year 2013 (prior to Mr. Brownstein becoming executive vice chairman on August 1, 2013) and $22,266 in year 2012.53

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expense reimbursements from us of $22,266 in year 2012 and $96,870 in fiscal year 2013 (prior to Mr. Brownstein becoming executive vice chairman on August 1, 2012). As of March 31, 2013, Mr. Brownstein held options to purchase 2,000 and 4,000 shares of our common stock at per share exercise prices of $212.50 and $130.00, respectively. Mr. Brownstein also received non-employee director's fees from us of $25,000 in 2013 (for the partial year that he was a non-employee director prior to becoming executive vice chairman) and $12,500 in 2012. The compensation paid Mr. Brownstein subsequent to becoming our executive vice chairman on August 1, 2012 is included the Executive Compensation table below. (3) Mr. Archer joined our board of directors in March 2012 and resigned from our board of directors in November 2012. Mr. Archer received expense reimbursements from us of $59,942 in fiscal year 2013 and $0 in year 2012. Mr. Archer also received a $100,000 bonus in fiscal year 2013 in addition to his regular Board pay. Mr. Archer received director's fees from us of $50,000 and $12,500 in fiscal years 2012 and 2013 as chairman of the audit committee. As of March 31, 2013, Mr. Archer held options to purchase 34,000 shares of stock at $130.00 per share. (4)Mr. Holtzman joined our board of directors in April 2011 and resigned from our board of directors in October 2013. Mr. Holtzman did not receive any expense reimbursements from us in fiscal years 2013 and 2012. As of March 31, 2013, Mr. Holtzman held options to purchase 6,000 shares of stock at $212.50 per share and 2,800 shares at $130.00 per share. (5)Mr. Qiu joined our board of directors in November 2011 and resigned from our board of directors in October 2013. Mr. Qiu received expense reimbursements from us of $21,779 in fiscal year 2013 and $0 in year 2012. As of March 31, 2013, Mr. Qiu held options to purchase 4,000 shares of stock at $212.50 per share and 2,800 shares at $130.00 per share. (6)Mr. Reiman joined our board of directors in August 2011 and resigned in March 2012. Mr. Reiman did not receive any expense reimbursements from us in fiscal years 2013 or 2012. As of March 31, 2013, Mr. Reiman did not hold any options to purchase shares of our stock. (7)Mr. Swiller joined our board of directors in February 2011. From October 2010 to February 2011, Mr. Swiller served as a director of Old Prospect Global. Mr. Swiller received expense reimbursements from us of $15,047 in fiscal year 2013 and $0 in year 2012. As of March 31, 2013, Mr. Swiller held options to purchase 2,000 shares of stock at $212.50 per share and 2,800 shares at $130.00 per share. Mr. Swiller received director's fees from us of $131,250 in fiscal year 2013 as chairman for both the governance, nominating and compensation committee and the finance and operations committee for three quarters of the year and chairman of the finance and operations committee for one quarter of the year. During fiscal year 2012, Mr. Swiller received director's fees from us of $17,500 as chairman of the finance and operations committee. (8)Mr. Schatz joined our board of directors as of April 1, 2012 and resigned from our board of directors in September 2013. Mr. Schatz received expense reimbursements from us of $5,261 in fiscal year 2013 and $0 in year 2012. As of March 31, 2013, Mr. Schatz held options to purchase 2,800 shares of stock at $130.00 per share. Mr. Schatz received director's fees from us of $75,000 in fiscal year 2013 of which $50,000 was earned during the portion of the year Mr. Schatz served as the as chairman of the audit committee and $25,000 for the portion of the year Mr. Schatz served as a non-employee director. (9)Mr. Dietz joined our board of directors in November 2012 and resigned from the board in March 2013. Mr. Dietz received expense reimbursements from us of $1,617 in fiscal year 2013 and $0 in year 2012. As of March 31, 2013, Mr. Dietz held no options to purchase shares of our stock. (10)Mr. Dickens joined our board of directors in October 2013. Mr. Dickens did not receive any expense reimbursements from us in fiscal years 2013 or 2012. As of March 31, 2013, Mr. Dickens held no options to purchase shares of our stock.

(4) Mr. Holtzman joined our board of directors in April 2011 and resigned from our board of directors in October 2013. Mr. Holtzman did not received any expense reimbursements from us in fiscal years 2013 and 2012.54

~~(5) Mr. Qiu~~Table ~~joined our board~~ of ~~directors in November 2011 and resigned from our board of directors in October 2013. Mr. Qiu received expense reimbursements from us of $21,779 in fiscal year 2013 and $0 in year 2012.~~Contents

(611) Mr. ~~Reiman~~ Neumann joined our board of directors in ~~August~~October ~~2011 and resigned in March 2012~~2013. Mr. ~~Reiman~~Neumann did not receive any expense reimbursements from us in fiscal years 2013 or 2012. As of March 31, 2013, Mr. Neumann held no options to purchase shares of our stock. (12)For the fiscal years ended March 31, 2013 and March 31, 2012, our board remuneration was as follows:

(7) Mr. Swiller joined our board of directors in February 2011. From October 2010 to February 2011, Mr. Swiller served as a director of Old Prospect Global. Mr. Swiller received expense reimbursements from us of $15,047 in fiscal year 2013 and $0 in year 2012.

	2013		2012

Chairman of the board	$	150,000	$	75,000
Vice chairman of the board		100,000		n/a
Chairman of the audit committee		100,000		50,000
Chairman of the finance and operations committee		75,000		35,000
Chairman of the governance, nominating and compensation committee		75,000		n/a
Board Member		50,000		25,000

~~(8) Mr. Schatz~~ ~~joined~~ The board ~~our~~was ~~board~~only ofcompensated ~~directors~~during astwo ofquarters ~~April~~for the fiscal year ended March 131, 2012. ~~and~~Such ~~resigned~~amounts ~~from~~are ~~our~~reflected in the table above. (13)Our board has not established a standard compensation arrangement with respect to grants of ~~directors~~stock inoptions ~~September 2013.~~to Mrdirectors. ~~Schatz~~ ~~received~~Because ~~expense~~of ~~reimbursements~~the ~~from~~serious usdecline in the trading price of ~~$5,261~~our incommon ~~fiscal~~stock, ~~year~~the ~~2013~~governance, nominating and $0compensation committee has made grants from time to time in ~~year~~amounts ~~2012~~believed to be reasonable for compensation and retention purposes.

(9) Mr. Dietz joined our board of directors in November 2012 and resigned from the board in March 2013. Mr. Dietz received expense reimbursements from us of $1,617 in fiscal year 2013 and $0 in year 2012.55

~~(10) Mr. Dickens~~ Table ~~joined our board~~ of ~~directors~~Contents ~~in October 2013. Mr. Dickens did not receive any expense reimbursements from us in fiscal years 2013 or 2012.~~

(11) Mr. Neumann joined our board of directors in October 2013. Mr. Neumann did not receive any expense reimbursements from us in fiscal years 2013 or 2012.

(12) For the years ended March 31, 2013 and March 31, 2012, we paid annual cash compensation (payable quarterly) of $150,000 and $75,000, respectively, to our chairman of the board, $100,000 and $0, respectively to our vice chairman of the board, $100,000 and $50,000, respectively, to the chairman of the audit committee, $75,000 and $35,000, respectively to the chairmen of the governance, nominating and compensation committee, $75,000 and $35,000, respectively, to the chairman of the finance and operations committee and $50,000 and $25,000, respectively, to each other non-employee director. Such amounts are reflected in the table above.

Executive Compensation

Summary compensation table

On March 20, 2012, Prospect’'s board of directors resolved to change our fiscal year end from December 31 to March 31, commencing with the 12 month period ending March 31, 2012. The table below sets forth the compensation earned by our named executive officers during the 2013 and 2012 fiscal years taking into account our change in fiscal year. There were no non-equity incentive plan compensation, change in pension value or any non-qualifying deferred compensation earnings during fiscal 2013 or 2012. The amounts in the table are in dollars.

Name and Principal Position		Salary ($)		Bonus ($)			Option Awards ($)(7)				All Other Compensation ($)(4)		Total ($)

Damon Barber(2)(4)(5)	2013	$	134,712		—	—	$	682,081	—	—	$	6,075	$	822,868
Chief Executive Officer, President and Secretary starting March 7, 2013 and Chief Financial Officer from December 13, 2012 through March 7, 2013	2012		—		—	—		—	—	—		—
Patrick L. Avery(1)(4)(5)	2013	$	563,946	$	575,000		$	545,881	—	—	$	26,483	$	1,711,310
Chief Executive Officer, President and Director, until March 7, 2013	2012	$	269,167	$	270,000		$	2,045,928	—	—	$	27,005	$	2,612,100
Wayne Rich(4)(5)(6)	2013	$	275,000	$	220,000	—		—			$	22,165	$	517,165
Principal Accounting Officer and Treasurer starting December 14, 2012; Chief Financial Officer starting September 6, 2011 until December 13, 2012	2012	$	156,597	$	100,000	—	$	3,443,751	—	—	$	11,799	$	3,712,147
Gregory M. Dangler(2)(4)(5)	2013	$	146,500	$	105,000	—	$	911,069	—	—	$	11,255	$	1,173,824
Interim Chief Financial Officer starting March 7, 2013	2012		—		—	—		—	—	—		—
Chad Brownstein(2)(3)(5)	2013	$	250,000	$	365,000	—		—	—	—	$	6,191	$	621,191
Executive Vice Chairman, starting August 1, 2012	2012		—		—	—		—	—	—		—		—
Brian W..Wallace(2)(4)(5)	2013	$	281,250	$	100,000	—	$	1,852,238	—	—	$	114,092	$	2,347,580
Chief Operating Officer, Executive Vice President starting August 15, 2012 until April 2, 2013	2012		—		—	—		—	—	—		—		—

(1): Mr. Avery was appointed director, chief executive officer and president of Old Prospect Global on August 17, 2010 and upon consummation of the reverse merger in February 2011 was appointed director, chief executive officer and president of Prospect Global on February 11, 2011 and served in this same capacity through March 7, 2013. Mr. Avery's salary for 2013 includes $35,000 paid under our Consulting, Termination and Release Agreement with Mr. Avery that became effective on March 7, 2013 and $31,446 of accrued vacation pay that was paid to Mr. Avery on his termination. Mr. Avery received base salaries of $480,000 and $290,000 in 2013 and 2012, respectively. Mr. Avery received performance based salary and bonus increases in fiscal year 2013.
(2): Mr. Barber, Mr. Dangler, Mr. Brownstein and Mr. Wallace did not earn compensation as named executive officers during our 2012 fiscal year. The compensation paid Mr. Brownstein as a non-executive board member prior to becoming our executive vice chairman on August 1, 2012 is included the Compensation of Directors table above.
(3): Does not include compensation or the value of stock options granted to Mr. Brownstein as non-executive vice chairman prior to him becoming our executive vice chairman on August 1, 2012.
(4): Other compensation consists of payments by Prospect Global of executive health benefits for coverage for the named executive officers and in the case of Mr. Dangler and Mr. Wallace also includes $5,000 and $100,000 of moving assistance, respectively.
(5): The following named executive officers also received expense reimbursements from Prospect Global in fiscal years 2013 and 2012, respectively, of: Mr. Barber $56,224 and $0; Mr. Avery $6,817 and $6,450; Mr. Rich $2,240 and $3,971; Mr. Dangler $3,674 and $0; Mr. Brownstein $96,870 and $22,266 and Mr. Wallace $8,564 and $0.
(6): Mr. Rich received base salaries of $275,000 each for 2013 and 2012 but was only employed by the Company for a portion of the 2012 fiscal year.
(7): The Company recognizes compensation expense related to share-based awards such as stock options based on the estimated fair value of the awards on their grant date. The fair value of stock options is estimated using the Black-Scholes option pricing model. Key inputs and assumptions used in estimating the fair value include our stock price, the grant price, expected term, volatility and the risk-free rate. Refer to Note 13—Equity Based Compensation in our annual financial statements for the year ended March 31, 2013 included elsewhere in this

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Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)	Option Awards ($)		Non-equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)(6)		Total ($)
Damon Barber(2)(4)(5)	2013	$	134,712	—		—	$	682,081	—	—	$	6,075	$	822,868
Chief Executive Officer, President and Secretary starting March 7, 2013 and Chief Financial Officer from December 13, 2012 through March 7, 2013	2012	—		—		—	—		—	—	—
Patrick L. Avery(1) (4)(5)	2013	$	563,946	$	575,000		$	619,059	—	—	$	26,483	$	1,784,488
Chief Executive Officer, President and Director, until March 7, 2013	2012	$	269,167	$	270,000		$	2,045,928	—	—	$	27,005	$	2,612,100
Wayne Rich(4)(5)	2013	$	275,000	$	50,000	—	—				$	22,165	$	347,165
Principal Accounting Officer and Treasurer starting December 14, 2012; Chief Financial Officer starting September 6, 2011 until December 13, 2012	2012	$	156,597	$	100,000	—	$	3,443,751	—	—	$	11,799	$	3,712,147
Gregory M. Dangler(2)(4)(5)	2013	$	146,500	$	105,000	—	$	911,069	—	—	$	11,255	$	1,173,824
Interim Chief Financial Officer starting March 7, 2013	2012	—		—		—	—		—	—	—
Chad Brownstein(2)(3)(5)	2013	$	250,000	$	365,000	—	—		—	—	$	6,191	$	621,191
Executive Vice Chairman, starting August 1, 2012	2012	—		—		—	—		—	—	—		—
Brian W. Wallace(2)(4)(5)	2013	$	281,250	$	100,000	—	$	1,852,238	—	—	$	114,092	$	2,349,453
Chief Operating Officer, Executive Vice President starting August 15, 2012 until April 2, 2013	2012	—		—		—	—		—	—	—		—

prospectus for additional information. See footnotes to the table contained in "Security Ownership of Certain Beneficial Owners and Management" for a description of the material terms of the granted options.

32 Employment Agreements

We have an at will employment agreement with Mr. Barber effective December 13, 2012. Pursuant to the terms of his employment agreement, he receives a base salary of $450,000 per year and received options to purchase 20,000 shares of our common stock exercisable at $130.00 per share. 6,667 options are fully vested, 6,667 options will vest on December 13, 2013 and 6,666 options will vest on December 13, 2014. The options will vest immediately upon a change of control or if Mr. Barber's services are terminated other than for cause or by Mr. Barber for good reason. Mr. Barber is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors in a maximum amount of 120% of base salary.

We have an at will employment agreement with Mr. Brownstein effective August 1, 2012. Mr. Brownstein is our executive vice chairman, reporting to our non-executive board chairman. Under the agreement Mr. Brownstein is required to devote all of his professional time with respect to natural resources to Prospect Global. He receives a base salary of $375,000 per year and is eligible for an annual cash bonus at the discretion of the compensation committee of the board of directors.

We have an at will employment agreement with Mr. Dangler effective November 7, 2013. Pursuant to the terms of his employment agreement, he received a $50,000 bonus upon signing the agreement and will receive a base salary of $250,000 per year. On July 1, 2012, Mr. Dangler was granted options to purchase 2,800 shares of our common stock at $130.00 per share, on October 18, 2012 options to purchase 6,000 shares of our common stock at $144.00 per share and on November 7, 2013 options to purchase 100,000 shares of our common stock at $2.36 per share. All of Mr. Dangler's options are fully vested. Mr. Dangler is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors. The employment agreement with Mr. Dangler does not specify a targeted bonus amount or a maximum bonus amount.

We have an at will employment agreement with Mr. Rich effective November 1, 2013. Mr. Rich receives an annual salary of $240,000 and holds options to purchase 20,000 shares of our common stock exercisable at $212.50 per share and options to purchase 75,000 shares of our common stock at $2.25. All of Mr. Rich's options are fully vested. Mr. Rich is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors (or the board in the compensation committee's absence). The employment agreement with Mr. Rich does not specify a targeted bonus amount or a maximum bonus amount.

We entered into a Consulting, Termination and Release Agreement with Mr. Avery, our previous president and chief executive officer, effective March 7, 2013, which provides for severance of $480,000, payable over one year's time in accordance with our regular payroll practice, payment for accrued vacation days and payment of an additional $5,000. Under the agreement, Mr. Avery provided consulting services to us as a Senior Advisor for 60 days. Prior to that, we had an at will employment agreement with Mr. Avery during which Mr. Avery received an annual base salary of $480,000 and a stock grant of 30,000 shares of our common stock, all 30,000 shares of which have now vested. Mr. Avery was also eligible for an annual cash bonus based on performance goals, with a targeted bonus of 120% of the then current base salary (with board approval). On December 27, 2011, Mr. Avery was granted 12,000 options which vested immediately, have an exercise price of $212.50 and expire on December 26, 2021. On July 1, 2012, Mr. Avery was granted an additional 6,000 options having an exercise price of $130.00 and an expiration date of July 1, 2022, of which 3,000 vested immediately and 3,000 were forfeited on his departure from the Company. As part of Mr. Avery's Consulting, Termination and Release Agreement, the expiration dates on Mr. Avery's 15,000 vested stock options were extended from 90 days from his departure date to their full original terms.

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~~(1)~~ We entered into a Separation and Release Agreement with Mr. ~~Avery~~Wallace, ~~was~~our ~~appointed~~previous ~~director,~~ chief ~~executive~~operating officer, on April 2, 2013 which provides for payment for accrued vacation days and ~~president~~mutual ofreleases. ~~Old~~Under ~~Prospect~~the ~~Global~~agreement, onMr. Wallace will provide consulting services to us as a Senior Advisor. Prior to that, Mr. Wallace had an at will employment agreement with us effective August 1715, ~~2010~~2012. Pursuant to the terms of his employment agreement, he received a base salary of $450,000 per year and ~~upon~~received ~~consummation~~options to purchase 20,000 shares of our common stock exercisable at fair market value at the ~~reverse~~time ~~merger~~of ingrant. ~~February 2011~~10,000 ~~was~~of ~~appointed~~these ~~director~~options vested on the grant date, while the remaining 10,000 options were forfeited by Mr. Wallace on his termination from the Company. The options would have vested immediately upon a change of control or if Mr. Wallace's services as chief ~~executive~~operating officer have ~~and~~terminated ~~president~~by ofus ~~Prospect~~other ~~Global~~than for cause or by Mr. Wallace for good reason. Mr. Wallace was eligible for an annual cash bonus based on ~~February~~performance goals established by the compensation committee of the board of directors in a maximum amount of 120% of base salary. As part of Mr. ~~11,~~Wallace's ~~2011~~Separation and ~~served~~Release inAgreement, ~~this~~the ~~same~~expiration ~~capacity~~dates ~~through~~on ~~March~~Mr. 7Wallace's 10,000 vested ~~2013~~stock options were extended from 90 days from his departure date to their full original terms.

(2) Mr. Barber, Mr. Dangler, Mr. Brownstein and Mr. Wallace did not earn compensation as named executive officers during our 2012 fiscal year.

(3) Does not include compensation or the value of stock options granted to Mr. Brownstein as non-executive vice chairman prior to him becoming our executive vice chairman on August 1, 2012.

(4) Other compensation consists of payments by Prospect Global of executive health benefits for coverage for the named executive officers and in the case of Mr. Dangler and Mr. Wallace also includes $5,000 and $100,000 of moving assistance, respectively.

(5) The following named executive officers also received expense reimbursements from Prospect Global in fiscal years 2013 and 2012, respectively, of: Mr. Barber $56,224 and $0; Mr. Avery $6,817 and $6,450; Mr. Rich $2,240 and $3,971; Mr. Dangler $3,674 and $0; Mr. Brownstein $96,870 and $22,266 and Mr. Wallace $8,564 and $0.

Equity Compensation Plan Information

The table below summarizes the securities outstanding under our equity compensation plans atas ~~October~~of February 1625, ~~2013~~2014:

Plan Category(1)	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		~~Weighted average exercise price of outstanding options, warrants and rights (b)~~	Weighted average exercise price of outstanding options, warrants and rights (b)		~~Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)~~	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
2011 Employee Equity Incentive Plan (1),(3)	74,600	(2)	$	166.51		n/a
2011 Employee Equity Incentive Plan(1)(3)		359,600	(2)	$	36.39			n/a
2011 Director and Consultant Equity Incentive Plan (1), (4)	89,500	(2)	$	156.09		n/a
2011 Director and Consultant Equity Incentive Plan(1)(4)		486,700	(2)	$	29.89			n/a
Total All Equity Incentive Plans	~~164,100~~	~~(2)~~846,300	$(2)	~~160.83~~$	32.66	~~1,769,900~~	~~(2)~~	1,087,700	(2)

(1) Reflects equity compensation plans approved by our Stockholders. We currently do not have any equity compensation plans that have not been approved by our Stockholders. (2)Represents shares of common stock. (3)Provides for the grant of such awards, as well as incentive stock option awards, to employees (including employees who are officers) of Prospect and its qualifying subsidiaries. (4)Provides for the grant of such awards to non-employee directors and consultants of Prospect and its qualifying subsidiaries.

~~(2) Represents shares of common stock.~~58

~~(3) Provides~~Table ~~for the grant~~ of ~~such awards, as well as incentive stock option awards, to employees (including employees who are officers) of Prospect and its qualifying subsidiaries.~~Contents

(4) Provides for the grant of such awards to non-employee directors and consultants of Prospect and its qualifying subsidiaries.

Outstanding Equity Awards at Fiscal Year-End

The below table contains information regarding unexercised options; stock that has not vested; and equity incentive plan awards for each named executive officer outstanding as of the end of March 31, 2013:

	OPTION AWARDS											STOCK AWARDS

Name and Principal Position (a)	Number of Securities underlying unexercised options (#) exercisable (b)		Number of securities underlying unexercised options (#) exercisable (c)		Equity Incentive plan awards: Number of securities underlying unexercised unearned options (#) (d)			Option exercise price ($) (e)		Option expiration date (f)		Number of shares or units of stock that have not vested (#) (g)		Market value of shares or units of stock that have not vested ($) (h)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (i)		Equity inventive plan awards: Market or payout value of unearned shares units or other rights that have not vested ($) (j)
Damon G. Barber				6,666		13,334	(2)	$	130.00		12/13/2022		—		—		—		—
Chief Executive Officer, President
Patrick L. Avery(1)(5)		—		12,000		—		$	212.50		12/26/2021		—		—		—		—
Chief Executive Officer, President and Director until March 7, 2013		—		3,000		—		$	130.00		07/01/2022		—		—		—		—
Wayne Rich		—		20,000		—		$	212.50		12/26/2021		—		—		—		—
Principal Accounting Officer and Treasurer starting December 14, 2012; Chief Financial Officer starting September 6, 2011 until December 13, 2012
Gregory M. Dangler		—		2,000		800	(3)	$	130.00		07/01/2022		—		—		—		—
Interim Chief Financial Officer starting March 7, 2013		—		3,000		3,000	(4)	$	144.00		10/18/2022		—		—		—		—
Chad Brownstein		—		2,000		—		$	212.50		12/27/2011		—		—		—		—
Executive Vice Chairman starting August 1, 2012		—		—		4,000	(3)	$	130.00		07/01/2022		—		—		—		—
Brian W. Wallace(5)		—		10,000		—		$	130.00		07/01/2022		—		—		—		—
Chief Operating Officer, Executive Vice President, starting August 15, 2012 until April 2, 2013

33 (1)Mr. Avery was appointed director, chief executive officer and president of Old Prospect Global on August 17, 2010 and upon consummation of the reverse merger in February 2011 was appointed director, chief executive officer and president of Prospect Global on February 11, 2011 and served in this same capacity through March 7, 2013. (2)6,667 options vest on December 13, 2013 and the remaining 6,666 options vest on December 13, 2014. (3)These options vest on July 1, 2013. (4)These options vest on October 18, 2013. (5)Mr. Avery and Mr. Wallace were not named executive officers as of the end of March 31, 2013.

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(1) Mr. Avery was appointed director, chief executive officer and president of Old Prospect Global on August 17, 2010 and upon consummation of the reverse merger in February 2011 was appointed director, chief executive officer and president of Prospect Global on February 11, 2011 and served in this same capacity through March 7, 2013.

(2) 6,667 options vest on December 13, 2013 and the remaining 6,666 options vest on December 13, 2014.

(3) These options vest on July 1, 2013.

(4) These options vest on October 18, 2013.

(5) Mr. Avery and Mr. Wallace were not named executive officers as of the end of March 31, 2013.

The Board of Directors and Committees Thereof

Prospect Global’'s board of directors held 16 meetings in fiscal year 2013. Each of our current directors who were directors at such time attended at least 75% of the aggregate total of meetings of the board of directors and committees on which they served, other than Marc Holtzman and Zhi Zhong Qiu. Our non-management directors meet at least one time throughout the year and as necessary or appropriate in executive session as which members of management are not present. All of our directors attended our annual meeting. Our policy regarding directors’' attendance at the annual meetings of Stockholders is that all directors are expected to attend, absent extenuating circumstances.

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Affirmative determinations regarding director independence and other matters

Our board of directors follows the standards of independence established under the Nasdaq rules in determining if directors are independent and has determined that Mr. Swiller, Mr. Dickens and Mr. Neumann are “"independent directors”" under those rules. No independent director receives, or has received, any fees or compensation from Prospect Global other than compensation received in his or her capacity as a director. There were no transactions, relationships or arrangements not otherwise disclosed that were considered by the board of directors in determining that any of the directors are independent. There are no family relationships among any of our executive officers, directors or nominees for directors.

Committees of the board of directors

Pursuant to our amended and restated bylaws, our board of directors is permitted to establish committees from time to time as it deems appropriate. To facilitate independent director review and to make the most effective use of our directors’' time and capabilities, our board of directors established in fiscal year 2013 the Apollo committee, the special committee with respect to our rights offering and the financing committee with respect to capital raising and in fiscal year 2012 a governance, nominating and compensation committee, a finance and operations committee and a pricing committee for our two public offerings. In fiscal year 2012, our board of directors also approved the formation of an audit committee, although due to a lack of qualified independent directors, the board did not appoint members to the audit committee until April 1, 2012. The function of the Audit committee, the Governance, Nominating and Compensation committee and the Finance and Operations committee are described below.

Audit Committee

Our audit committee became effective as of April 1, 2012. Mr. Swiller, Mr. Dickens and Mr. Neumann currently serve on the audit committee, with Mr. Swiller serving as chair. The board has determined that each of the members of the audit committee meet the Securities and Exchange Commission’'s definition of an audit committee financial expert. Each member of the audit committee is an “"independent director”" pursuant to the independence standards established under the Nasdaq rules. The audit committee is appointed by the board of directors to assist the board in fulfilling its oversight responsibilities with respect to (1) the integrity of Prospect’'s financials statements and financial reporting process and systems of internal controls regarding finance, accounting and compliance with legal and regulatory requirements, (2) the qualifications, independence and performance of Prospect’'s independent accountants, and (3) and other matters as set forth in the audit committee charter approved by the board. Management is responsible for Prospect’'s financial statements and the financial reporting process, including the systems of internal controls and disclosure controls and procedures. Our independent registered public accountants are responsible for performing an independent audit of Prospect’'s financial statements in accordance with generally accepted accounting standards and issuing a report thereon. The audit committee’'s responsibility is to monitor and oversee these processes. In fiscal year 2013, the audit committee held four meetings and has included an audit committee report in these proxy materials below. ~~Our~~ Our board approved a written charter for the audit committee in November 2011 which can be found at www.prospectgri.com under the tab “"Investors”".

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Audit Committee Report

The following is the report of the Audit Committee with respect to the Company’'s audited financial statements for the fiscal year ended March 31, 2013, and the notes thereto.

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Review with management

Management is responsible for preparing the Company’'s financial statements and the reporting process, including the system of internal control. The Audit Committee, in its oversight role, has reviewed and discussed with management the Company’'s audited financial statements for the fiscal year ended March 31, 2013 and the notes thereto.

Review and discussions with independent accountants

The Audit Committee has discussed with EKS&H LLLP, the Company’'s independent auditors, the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards , Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee has received the written disclosures and the letter from EKS&H required by applicable requirements of the Public Company Accounting Oversight Board regarding EKS&H’'s communications with the Audit Committee concerning independence, and has discussed with EKS&H its independence.

Conclusion

Based on the review and discussions referred to above, the Audit Committee recommended to the Company’'s Board of Directors that the Company’'s audited financial statements be included in the Company’'s Annual Report on Form 10-K for the fiscal year ended March 31, 2013, for filing with the Securities and Exchange Commission.


		SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
		Conway J. Schatz (Chair) J. Ari Swiller Marc Holtzman

Governance, Nominating and Compensation committee

We currently have a governance, nominating and compensation committee established at a board of directors meeting on November 14, 2011, which currently consists of Mr. Swiller and Mr. Dickens, both independent directors. Mr. Swiller serves as chair of the governance, nominating and compensation committee. The governance, nominating and compensation committee operates pursuant to a written charter which can be found at www.prospectgri.com under the tab “"Investors”". The committee meets annually to determine whether to recommend to the board to include the nomination of incumbent directors with expiring terms in the proxy statement. The committee meets at other times as needed to consider candidates to fill any vacancies that may occur. At least once a year, the committee considers whether the number of directors is appropriate for Prospect’'s needs and recommends to the board any changes in the number of directors, and reviews the performance of the board.

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Director nominations

In the event that vacancies on our board of directors arise, the governance, nominating and compensation committee considers potential candidates for director, which may come to the attention of the governance, nominating and compensation committee through current directors, professional executive search firms, stockholders or other persons. The governance, nominating and compensation committee will consider candidates recommended by stockholders if the names and qualifications of such candidates are submitted in writing. The governance, nominating and compensation committee considers properly submitted stockholder nominations for candidates for the board of directors in the same manner as it evaluates other nominees. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the governance, nominating and compensation committee and the materials provided by a stockholder to the corporate secretary for consideration of a nominee for director are forwarded to the governance, nominating and compensation committee. All candidates are evaluated at meetings of the governance, nominating and compensation committee. In evaluating such nominations, the governance, nominating and compensation committee seeks to achieve the appropriate balance of industry and business knowledge and experience in light of the function and needs of the board of directors. The governance, nominating and compensation committee considers candidates with excellent decision-making ability, business experience, personal integrity and reputation. Our management recommended our incumbent directors for election at our 2013 annual meeting. We did not receive any other director nominations.

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such candidates are submitted in writing. The governance, nominating and compensation committee considers properly submitted stockholder nominations for candidates for the board of directors in the same manner as it evaluates other nominees. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the governance, nominating and compensation committee and the materials provided by a stockholder to the corporate secretary for consideration of a nominee for director are forwarded to the governance, nominating and compensation committee. All candidates are evaluated at meetings of the governance, nominating and compensation committee. In evaluating such nominations, the governance, nominating and compensation committee seeks to achieve the appropriate balance of industry and business knowledge and experience in light of the function and needs of the board of directors. The governance, nominating and compensation committee considers candidates with excellent decision-making ability, business experience, personal integrity and reputation. Our management recommended our incumbent directors for election at our 2013 annual meeting. We did not receive any other director nominations.

Corporate governance

In addition to director nominations, the governance, nominating and compensation committee monitors the implementation and operation of our corporate governance guidelines and reviews from time to time the adequacy of the corporate governance guidelines in light of broadly accepted practices of corporate governance, emerging governance standards and market and regulatory expectations, and advises and makes recommendations to the board with respect to appropriate modifications. The committee also identifies and reviews measures to strengthen the operation of our governance guidelines, prepares and supervises the implementation of the board’'s annual reviews of director independence, and the board’'s performance, as contemplated by the corporate governance guidelines, and oversees the board’'s processes for evaluation of management.

~~Compensation~~ ~~subcommittee~~Compensation

~~Our~~ Prior to October 2013, there was a compensation subcommittee of the governance, nominating and compensation committee that consisted of Mr. Schatz and Mr. Swiller ~~during fiscal year 2013~~. The compensation subcommittee met six times during fiscal year 2013. The compensation ~~subcommittee~~committee reviews, approves and modifies our executive compensation programs, plans and awards provided to our directors, executive officers and key associates. The governance, nominating and compensation ~~subcommittee~~committee also reviews and approves short-term and long-term incentive plans and other stock or stock-based incentive plans. In addition, the ~~subcommittee~~governance, nominating and compensation reviews our compensation and benefit philosophy, plans and programs on an as-needed basis. In reviewing our compensation and benefits policies, the governance, nominating and compensation ~~subcommittee~~committee may consider the recruitment, development, promotion, retention, compensation of executive and senior officers of Prospect Global, trends in management compensation and any other factors that it deems appropriate. Our president and chief executive officer provides the governance, nominating and compensation ~~subcommittee~~committee with recommendations regarding our compensation program and the compensation of our named executive officers other than himself. The governance, nominating and compensation ~~subcommittee~~committee is not bound by the input it receives from our president and chief executive officer and exercises independent discretion when making executive compensation decisions. The governance, nominating and compensation ~~subcommittee~~committee may engage consultants (but has not already done so) in determining or recommending the amount of compensation paid to our directors and executive officer.

Governance, Nominating and Compensation ~~subcommittee~~committee interlocks and insider participation

None of the members of the governance, nominating and compensation ~~subcommittee~~committee are company officers. None of our executive officers currently serves or has served on the governance, nominating and compensation ~~subcommittee~~committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors (unless properly excusing themselves) or as a director of another entity, one of whose executive officer serves or served as one of our directors or on our compensation subcommittee.

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absence of any such committee, the entire board of directors (unless properly excusing themselves) or as a director of another entity, one of whose executive officer serves or served as one of our directors or on our governance, nominating and compensation committee.

Finance and Operations committee

We currently have a finance and operations committee established at a board of directors meeting on November 14, 2011, which currently consists of Mr. Swiller and Mr. Neumann, both independent directors, and met one time during fiscal year 2013. Mr. Swiller serves as chairman of the finance and operations committee. The finance and operations committee monitors matters relating to our financial and business operations, including financial performance, capital structure, financial operations, business operations, capital expenditures, dividends and strategic planning policy matters.

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Communications with the Board of Directors

Stockholders may communicate with our board of directors, any of the directors or any of the committees by sending written communications addressed to the board of directors, any of the directors or any of the committees to Prospect Global Resources Inc., 1401 17th Street, Suite 1550, Denver, CO 80202, Attention: Corporate Secretary. All communications are compiled by the corporate secretary and forwarded to the board or the individual director(s) accordingly.

Code of Ethics

We have a financial code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller and any of our officers and employees that are members of our finance team, including any persons performing similar functions. We also have a code of ethics for senior financial officers that applies to our principal executive officer, principal financial officer, principal accounting officer or controller. Our financial code of ethics and code of ethics for senior financial officers codify the business and ethical principles that govern the financial aspects of our business. Both the financial code of ethics and the code of ethics for senior financial officers were adopted by Triangle prior to the reverse merger and were replaced in October 2011 with our Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Corporate Communications Policy, Corporate Governance Guidelines, Corporate Governance Guidelines on Director Independence and an Insider Trading Policy. Copies of these policies are available on our website at www.prospectgri.com under the tab “"Investors.”" We will provide a copy of our financial code of ethics or code of ethics for senior financial officers to any person, at no charge, upon a written request. All written requests should be directed to: Prospect Global Resources Inc., 1401 17th Street, Suite 1550, Denver, CO 80202, Attention: Corporate Secretary.

Board Leadership Structure

The board’'s current leadership structure separates the positions of chairman and principal executive officer. The board has determined our leadership structure based on factors such as the experience of the applicable individuals, the current business and financial environment faced by Prospect Global, particularly in view of its financial condition and industry conditions generally and other relevant factors. After considering these factors, we determined that separating the positions of chairman of the board and principal executive officer is the appropriate leadership structure at this time. The board is currently responsible for the strategic direction of Prospect Global. The chief executive officer is currently responsible for the day to day operation and performance of Prospect Global. The board feels that this provides an appropriate balance of strategic direction, operational focus, flexibility and oversight.

~~The Board’s Role in Risk Oversight~~63

It is management’s responsibility to manage risk and bring to the board’s attention any material risks to Prospect Global. The board has oversight responsibility for Prospect Global’s risk policies and processes relating to the financial statements and financial reporting processes and the guidelines, policies and processes for mitigating those risks.

Employment Agreements

We have an at will employment agreement with Mr. Barber effective December 13, 2012. Pursuant to the terms of his employment agreement, he receives a base salary of $450,000 per year and received options to purchase 20,000 shares of our common stock exercisable at $130.00 per share. 6,667 options are fully vested, 6,667 options will vest on December 13, 2013 and 6,666 options will vest on December 13, 2014. The options will vest immediately upon a change of control or if Mr. Barber’s services are terminated other than for cause or by Mr. Barber for good reason. Mr. Barber is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors in a maximum amount of 120% of base salary.

We have an at will employment agreement with Mr. Dangler effective October 19, 2012. Pursuant to the terms of his employment agreement, he will receive a base salary of $180,000 per year and was granted options to purchase 6,000 shares of our common stock at $144.00 per share which are fully vested. On July 1, 2012, Mr. Dangler was granted additional options to purchase 2,800 shares of our common stock at $130.00 per share which are fully vested. Mr. Dangler is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors up to 80% of base salary.

We have an at will employment agreement with Mr. Rich. Mr. Rich receives an annual salary of $275,000 and received options to purchase 20,000 shares of our common stock exercisable at $212.50 per share, all of which have now vested. Mr. Rich is eligible for an annual cash bonus based on performance goals established by the compensation committee of the board of directors (or the board in the compensation committee’s absence) in a minimum amount of 80% of base salary and a maximum amount of 120% of base salary.

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We ~~entered~~The into a Consulting, Termination and Release Agreement with Mr. Avery, our previous president and chief executive officer, effective March 7, 2013, which provides for severance of $480,000, payable over one year’Board's ~~time~~Role in ~~accordance~~Risk with our regular payroll practice, payment for accrued vacation days and payment of an additional $5,000. Under the agreement, Mr. Avery provided consulting services to us as a Senior Advisor for 60 days. Prior to that, we had an at will employment agreement with Mr. Avery during which Mr. Avery received an annual base salary of $480,000 and a stock grant of 30,000 shares of our common stock, all 30,000 shares of which have now vested. Mr. Avery was also eligible for an annual cash bonus based on performance goals, with a targeted bonus of 120% of the then current base salary (with board approval). On December 27, 2011, Mr. Avery was granted 12,000 options which vested immediately, have an exercise price of $212.50 and expire on December 26, 2021. On July 1, 2012, Mr. Avery was granted an additional 6,000 options having an exercise price of $130.00 and an expiration date of July 1, 2022, of which 3,000 vested immediately and 3,000 were forfeited on his departure from the Company. As part of Mr. Avery’s Consulting, Termination and Release Agreement, the expiration dates on Mr. Avery’s 15,000 vested stock options were extended from 90 days from his departure date to their full original terms.Oversight

We It ~~entered~~is ~~into~~management's aresponsibility ~~Separation~~to ~~and~~manage ~~Release~~risk ~~Agreement with Mr. Wallace, our previous chief operating officer, on April 2, 2013 which provides for payment for accrued vacation days~~ and ~~mutual~~bring ~~releases. Under the agreement, Mr. Wallace will provide consulting services~~ to ~~us as a Senior Advisor. Prior to that, Mr. Wallace had an at will employment agreement with us effective August 15, 2012. Pursuant to~~ the ~~terms~~board's ofattention ~~his~~any ~~employment~~material ~~agreement,~~risks ~~he received a base salary of $450,000 per year and received options~~ to ~~purchase~~Prospect ~~20,000 shares of our common stock exercisable at fair market value at the time of grant~~Global. ~~10,000 of these options vested on the grant date, while the remaining 10,000 options were forfeited by Mr. Wallace on his termination from the Company.~~ The ~~options~~board has ~~would~~oversight ~~have~~responsibility ~~vested~~for ~~immediately~~Prospect ~~upon a change of control or if Mr. Wallace’~~Global's ~~services~~risk aspolicies ~~chief~~and ~~operating~~processes ~~officer~~relating ~~have~~to ~~terminated by us other than for cause or by Mr. Wallace for good reason. Mr. Wallace was eligible for an annual cash bonus based on performance goals established by~~ the ~~compensation~~financial ~~committee~~statements ofand ~~the~~financial ~~board~~reporting ofprocesses ~~directors in a maximum amount of 120% of base salary. As part of Mr. Wallace’s Separation~~ and ~~Release Agreement,~~ the ~~expiration dates on Mr. Wallace’s 10~~guidelines,~~000~~ ~~vested~~policies ~~stock~~and ~~options~~processes ~~were~~for mitigating ~~extended~~those ~~from 90 days from his departure date to their full original terms~~risks.

TRANSACTIONS WITH RELATED PERSONS

We All ~~will~~potential ~~present all possible~~ transactions between us and our officers, directors or 5% Stockholders, and our affiliates toare discussed with the board of directors for their consideration and approval. Any such transaction will require approval by a majority of the disinterested directors and such transactions will be on terms no less favorable than those available to disinterested third parties. Appropriate protocols regarding conflicts of interest and transactions with related persons are addressed in writing in our Code of Business Conduct and Ethics. During fiscal years 2013 and 2012 and through ~~the~~February 25, ~~date of this prospectus~~2014, we have engaged in the following transactions with related parties:

~~Buffalo~~ ~~Management LLC. In August, 2010, Old Prospect Global entered into a management services agreement with~~ Buffalo Management LLC, which was amended in November, 2010 and was assigned to us at the merger closing. Buffalo Management provides advisory and management services to Prospect which includes but is not limited to identifying, analyzing, and structuring growth initiatives, strategic acquisitions and investments and arranging debt and equity financing. To date, Buffalo has sourced investors, facilitated Prospect’s leasehold position in the Holbrook Basin and generated business development opportunities throughout international sales markets. As compensation for these services, we agreed to pay Buffalo Management (i) a consulting fee of $20,000 per month, (ii) an annual management fee in an amount equal to 2% of our annual gross revenues as shown on our audited financial statements each year, (iii) an acquisition advisory fee with respect to the consummation of each future acquisition or business combination engaged in by us equal to 1% of the transaction value, and (iv) an advisory fee of $650,000 related to consummating a transaction in which Old Prospect Global merges with or becomes a wholly-owned subsidiary of a publicly traded company. We also agreed to reimburse Buffalo Management for office expenses up to $5,000 per month. Buffalo Management also received a warrant to purchase 36,271 shares of our common stock at an exercise price of $187.50 per share and such warrant expires June 21, 2016. In connection with the management services agreement with Buffalo Management, we entered into a registration rights agreement which requires us to register for resale the common stock and the shares of common stock issuable upon exercise of the warrant. During 2011, Old Prospect Global and Buffalo Management reached an agreement whereby Buffalo received 1,516,667 shares of Old Prospect Global’s common stock, with an estimated fair value of $288,167, in lieu of cash for amounts due for management fees, office expenses and advisory fees through February 11, 2011. From January 1, 2011 through July 31, 2012, Prospect paid Buffalo $407,500, of which $257,500 related to amounts accrued by Prospect and owed to Buffalo through December 31, 2011.

38 In August, 2010, Old Prospect Global entered into a management services agreement with Buffalo Management LLC, which was amended in November, 2010 and was assigned to us at the merger closing. Buffalo Management provides advisory and management services to Prospect which includes but is not limited to identifying, analyzing, and structuring growth initiatives, strategic acquisitions and investments and arranging debt and equity financing. To date, Buffalo has sourced investors, facilitated Prospect's leasehold position in the Holbrook Basin and generated business development opportunities throughout international sales markets. As compensation for these services, we agreed to pay Buffalo Management (i) a consulting fee of $20,000 per month, (ii) an annual management fee in an amount equal to 2% of our annual gross revenues as shown on our audited financial statements each year, (iii) an acquisition advisory fee with respect to the consummation of each future acquisition or business combination engaged in by us equal to 1% of the transaction value, and (iv) an advisory fee of $650,000 related to consummating a transaction in which Old Prospect Global merges with or becomes a wholly-owned subsidiary of a publicly traded company. We also agreed to reimburse Buffalo Management for office expenses up to $5,000 per month. Buffalo Management also received a warrant to purchase 36,271 shares of our common stock at an exercise price of $187.50 per share and such warrant expires June 21, 2016. In connection with the management services agreement with Buffalo Management, we entered into a registration rights agreement which requires us to register for resale the common stock and the shares of common stock issuable upon exercise of the warrant. During 2011, Old Prospect Global and Buffalo Management reached an agreement whereby Buffalo received 1,516,667 shares of Old Prospect Global's common stock, with an estimated fair value of $288,167, in lieu of cash for amounts due for management fees, office expenses and advisory fees through February 11, 2011. From January 1, 2011 through July 31, 2012, Prospect paid Buffalo $407,500, of which $257,500 related to amounts accrued by Prospect and owed to Buffalo through December 31, 2011.

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On August 1, 2012 we entered into a termination of management services agreement with Buffalo Management. The management services agreement, which was terminable only by Buffalo Management, provided for fees to Buffalo Management for management services rendered in connection with significant transactions such acquisitions, dispositions and financings. Also on August 1, 2012 Chad Brownstein, the principal at Buffalo Management who rendered services to us pursuant to the management services agreement and our non-executive board chairman, became our executive vice chairman, a salaried employee of Prospect.

Pursuant to the termination agreement we: (i) paid Buffalo Management $975,000 cash and a warrant to purchase 7,043 shares of our common stock for $130.00 per share in satisfaction of the $1,500,000 fee payable to Buffalo Management in connection with the acquisition of the 50% of American West Potash LLC that we did not previously own and described above; (ii) issued Buffalo Management a warrant to purchase 5,366 shares of our common stock for $130.00 per share in connection with services rendered by Buffalo Management in connection with our public offering of 308,000 shares of common stock at $130.00 per share; and (iii) issued Buffalo a warrant to purchase 40,000 shares of our common stock for $130.00 per share in consideration of Buffalo Management’s terminating its right to future transaction fees and the $25,000 monthly consulting and office space reimbursement fee under the management services agreement. The fee payable to Buffalo Management equal to 2% of Prospect’s annual gross revenues provided for under the management services agreement survives the termination in perpetuity.64

In connection with restructuring the Karlsson senior debt (as described more fully below), we were required to increase Karlsson’s royalty interest from 1% to 2% without increasing the aggregate amount of royalty interests payable to third parties in the aggregate. In order to achieve this result, we negotiated with Buffalo to reduce our royalty payable to Buffalo from 2% to 1%. We compensate Buffalo for this royalty by issuing Buffalo 1.5 million shares of our redeemable preferred stock and warrants to purchase 1,005,284 shares of our common stock for $4.05 per share, expiring on August 19, 2018. To value the surrendered royalty we engaged a third party valuation firm, and our board designated board member Ari Swiller to finalize these negotiations with Buffalo Management, who has no personal or economic interest in Buffalo Management. Quincy Prelude LLC, one of our stockholders beneficially owning more than 5% of our common stock, owns 100% of the voting interests and 82.5% of the economic interests of Buffalo Management and has sole voting and dispositive power of the shares of our common stock owned by Buffalo Management LLC. Chad Brownstein, one of our directors and our executive vice chairman, is the sole member of Quincy Prelude LLC and has sole voting and dispositive power of the shares of our common stock beneficially owned by Quincy Prelude LLC and Barry Munitz, our chairman, owns a 17.5% non-voting economic interest in Buffalo Management.

Hexagon Investments, LLC. One of our former board members, Scott Reiman, who served on our board from August, 2011 to March, 2012, is the founder of Hexagon Investments, LLC. Conway Schatz, also one of our former directors, is an Employee of Hexagon Investments. The details for these transactions with Hexagon are summarized below:

· On April 25, 2011, we issued a $2,500,000 face value secured convertible note in exchange for net proceeds of $2,500,000. The note converted to 17,630 shares of our common stock on November 22, 2011. We also issued Hexagon two warrants to purchase our common stock. Both warrants are exercisable until August 1, 2017 for up to 63,333 of our shares at an exercise price of $15.00 per share. In connection with issuance of the convertible note we granted piggy-back registration rights to Hexagon for the shares issuable upon conversion of the note and exercise of the warrants.

· On September 19, 2011, we issued a $1,500,000 convertible secured note in exchange for net proceeds of $1,500,000. This note converted to 7,981 shares of our common stock on November 22, 2011. We also issued Hexagon a warrant to purchase up to 19,608 shares of our common stock at an exercise price of $15.00 per share, which is exercisable until August 1, 2017. In connection with issuance of the convertible note, we granted piggy-back registration rights to Hexagon for the shares issuable upon conversion of the note and exercise of the warrants.

· On November 22, 2011 we sold 51,765 shares of common stock and a warrant to purchase 51,765 shares of common stock at $212.50 per share for total cash proceeds of $10,999,999 to Very Hungry LLC, an affiliate of Hexagon. The warrant is exercisable at any time through August 1, 2017. We granted piggy-back registration rights for the shares purchased and issuable upon exercise of the warrant.

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~~· Also~~ Pursuant to onthe ~~November 22,~~termination ~~2011~~agreement we: ~~entered into a royalty agreement with Grandhaven Energy,~~(i) ~~LLC,~~paid ~~another~~Buffalo ~~affiliate~~Management ~~of Hexagon~~$975,000 ~~whereby~~cash weand ~~sold~~a ~~Grandhaven~~warrant anto ~~overriding~~purchase ~~royalty~~7,043 ~~interest~~shares of ~~1% of the gross proceeds received by~~ our ~~subsidiary,~~common ~~American~~stock ~~West~~for ~~Potash,~~$130.00 orper ~~AWP,~~share ~~from~~in satisfaction ~~the extraction~~ of ~~potash~~the ~~from its existing land holdings for~~ $251,500,000 ~~cash.~~fee Ifpayable ~~(i) the Arizona State Land Department declines~~ to ~~issue~~Buffalo ~~any~~Management ~~lease~~in toconnection ~~AWP~~ with ~~respect~~the toacquisition ~~any~~of ~~state~~the ~~exploration~~50% ~~permit,~~of orAmerican ~~(ii)~~West Potash ~~the~~LLC ~~Arizona~~that ~~State~~we ~~Land~~did ~~Department~~not ~~terminates~~previously ~~any~~own ~~state~~and ~~exploration~~described ~~permit,~~above; or (~~iii~~ii) ~~the~~issued ~~Arizona~~Buffalo ~~State~~Management ~~Land~~a ~~Department~~warrant ~~refuses~~ to ~~consent~~purchase to5,366 ~~the~~shares ~~assignment~~ of ~~any~~our ~~royalty~~common ~~interests~~stock infor ~~any~~$130.00 ~~Arizona~~per ~~state~~share ~~lease,~~in orconnection with ~~requires~~services ~~any~~rendered ~~reduction~~by ofBuffalo orManagement ~~imposes~~in ~~any~~connection ~~condition~~with onour ~~such~~public ~~royalty~~offering ~~interests as a condition~~ of ~~approving~~308,000 anshares ~~assignment~~ of ~~such~~common ~~royalty~~stock ~~interests~~at or$130.00 ~~approving~~per ~~any~~share; ~~royalty~~and ~~reduction or other action with respect to a state lease, or~~ (iviii) ~~if AWP has not been~~ issued ~~all~~Buffalo ofa ~~the~~warrant ~~state leases and conveyed~~ to ~~Grandhaven~~purchase ~~all royalty interests in all of AWP’s Arizona state leased premises on or before March 1~~40,000 shares ~~2013, Grandhaven shall have the option to receive substitute royalty interests from us in the same number~~ of ~~acres in portions of~~ our ~~non-Arizona~~common ~~state~~stock ~~properties, in a percentage sufficient to compensate Grandhaven~~ for ~~the~~$130.00 ~~reduced~~per ~~royalty~~share ~~interests~~ in ~~the~~consideration ~~affected~~of ~~state~~Buffalo ~~lease.~~Management's Ifterminating ~~AWP~~its ~~has~~right ~~not~~to ~~been~~future ~~issued~~transaction ~~any~~fees ~~Arizona~~and ~~state leases as of~~ the ~~date~~$25,000 monthly ~~that~~consulting ~~AWP~~and ~~conveys~~office ~~assignments~~space reimbursement offee ~~the~~under ~~royalty interest in~~ the ~~non-Arizona~~management ~~state~~services ~~properties~~agreement. ~~Grandhaven~~The ~~may~~fee ~~elect~~payable to ~~receive~~Buffalo inManagement ~~substitution~~equal anto ~~assignment of a 1.388~~2% ~~royalty interest in all~~ of ~~the~~Prospect's ~~non-Arizona~~annual ~~state~~gross ~~leased~~revenues ~~premises.~~provided Iffor weunder ~~do not deliver assignments of~~ the ~~royalty~~management ~~interest~~services ~~from~~agreement survives ~~AWP to Grandhaven by December 31, 2013, Grandhaven has~~ the ~~option,~~termination ~~at any time thereafter, to purchase shares of our common stock at $212.50 per share~~ in ~~exchange for the surrender by Grandhaven of royalty interests for which assignments have not been obtained, valued at their fair market value at that time~~perpetuity.

~~· On~~ In connection ~~June 7,~~with ~~2012~~restructuring the Karlsson senior debt (as described more fully below), ~~Hexagon~~we ~~consummated~~were required to increase Karlsson's royalty interest from 1% to 2% without increasing the aggregate ~~contribution~~amount of ~~all~~royalty ofinterests ~~its~~payable to third parties in the aggregate. In order to achieve this result, we negotiated with Buffalo to reduce our royalty payable to Buffalo from 2% to 1%. We compensated Buffalo for this royalty by issuing Buffalo 15.0 million shares of ~~common~~our redeemable preferred stock and warrants to purchase 1,005,283 shares of our common stock tofor ~~Very~~$4.50 ~~Hungry~~per share, expiring on August ~~LLC~~19, 2018. ~~Subsequent~~Pursuant to ~~that~~the ~~transaction~~full ratchet anti-dilution provisions of Buffalo's warrants, we subsequently issued Buffalo an additional 1,062,728 warrants and reduced the ~~Scott~~strike price ~~Reiman~~on ~~1991~~all ~~Trust~~Buffalo ~~liquidated~~warrants ~~its~~from ~~membership~~$4.05 ~~Interest~~to in$3.50. ~~Very~~To ~~Hungry~~value ~~and~~the ~~received~~surrendered royalty we engaged a ~~pro~~third ~~rata~~party ~~distribution~~valuation offirm, ~~its~~and ~~interests~~our board designated board member Ari Swiller finalized these negotiations with Buffalo Management, who has no personal or economic interest in ~~Very~~Buffalo ~~Hungry~~Management. Quincy Prelude LLC, ~~including~~one ~~equity~~of ~~securities~~our stockholders beneficially owning more than 5% of ~~Prospect.~~our ~~The~~common stock, ~~table~~owns ~~set~~100% ~~forth~~of ~~under~~the ~~“Security~~voting ~~Ownership~~interests and 82.5% of ~~Certain~~the ~~Beneficial~~economic ~~Owners~~interests of Buffalo Management and has sole voting and dispositive power of the shares of our common stock owned by Buffalo Management” LLC. ~~reflects~~Chad ~~these~~Brownstein, ~~transactions~~one of our directors and our executive vice chairman, is the sole member of Quincy Prelude LLC and has sole voting and dispositive power of the shares of our common stock beneficially owned by Quincy Prelude LLC, and Barry Munitz, our chairman, owns a 17.5% non-voting economic interest in Buffalo Management.

~~· On~~ ~~July 5,~~Hexagon ~~2012~~Investments, ~~Very Hungry purchased 96,154~~ ~~shares of our common stock at $130.00 per share in our public offering.~~LLC

~~· Very~~ One ~~Hungry~~of ~~and~~our ~~the~~former ~~Scott~~board ~~Reiman 1991 Trust~~members, ~~referred~~Scott ~~to as the Very Hungry Parties~~Reiman, ~~made~~who aserved ~~$5.0 million loan to us~~ on ~~May 2, 2013 and received from us subordinated notes in an aggregate principal amount of $5.5 million. In consideration for the subordinated loan we reduced the exercise price on warrants to purchase~~ our ~~common~~board ~~stock held by the Very Hungry Parties to $15.00 per share (in each case~~ from ~~exercise~~August, ~~prices~~2011 ~~ranging from $212.50 per share~~ to ~~$150.00~~March, ~~per~~2012, ~~share)~~is ~~and extended~~ the ~~maturity~~founder of ~~all such warrants to August 1~~Hexagon Investments, ~~2017~~ LLC. ~~The~~Conway ~~subordinated notes bore no interest and matured on September 9~~Schatz, ~~2013.~~also ~~The~~one ~~Very Hungry Parties invested the aggregate principal amount~~ of ~~their subordinated notes into~~ our ~~preferred~~former ~~stock that on August 30~~directors, ~~2013~~is ~~converted into~~ an ~~aggregate~~Employee of ~~916,668~~Hexagon ~~shares~~Investments. ofThe ~~common~~details ~~stock,~~for ~~916,668~~these ~~Series A~~transactions ~~Warrants~~with ~~and~~Hexagon ~~916,668~~are ~~Series B Warrants, identical to those issued in our June 2013 public offering.~~summarized below:

•: On April 25, 2011, we issued a $2,500,000 face value secured convertible note in exchange for net proceeds of $2,500,000. The note converted to 17,630 shares of our common stock on November 22, 2011. We also issued Hexagon two warrants to purchase our common stock. Both warrants are exercisable until August 1, 2017 for up to 63,333 of our shares at an exercise price of $15.00 per share. In connection with issuance of the convertible note we granted piggy-back registration rights to Hexagon for the shares issuable upon conversion of the note and exercise of the warrants.
•: On September 19, 2011, we issued a $1,500,000 convertible secured note in exchange for net proceeds of $1,500,000. This note converted to 7,981 shares of our common stock on November 22, 2011. We also issued Hexagon a warrant to purchase up to 19,608 shares of our common stock at an exercise price of $15.00 per share, which is exercisable until August 1, 2017. In connection with issuance of the convertible note, we granted piggy-back registration rights to Hexagon for the shares issuable upon conversion of the note and exercise of the warrants.

COR Advisors LLC. On July 5, 2011, we entered into an Investor Relations Consulting Agreement with COR Advisors LLC, pursuant to which COR provides investor relations services to us. This Investor Relations Consulting Agreement was subsequently amended on May 9, 2012 and on August 1, 2012. In connection with these amendments, COR’s services were extended through July 4, 2015 and expanded to provide additional services beyond investor relations following our July 2012 public offering. For services performed during the year ending on July 5, 2012, COR received (a) as compensation 6,000 shares of our common stock with 2,000 shares fully vesting on execution, 2,000 shares vesting on January 5, 2012 and 2,000 shares vesting on July 5, 2012 and (b) a onetime bonus of 800 shares of our common stock upon the listing of our shares on The NASDAQ Capital Market. COR received as compensation an additional 6,000 shares of our common stock for services performed during the year ending on July 5, 2013 with 1,500 of the shares vesting at the end each quarter during the renewal period. COR also receives a monthly retainer of $20,000 through July 4, 2015 as compensation for its services. COR and its affiliates beneficially owned more than 5% of our common stock during fiscal years 2012 and 2013.65

Related Party Receivables from AWP. Prospect Global paid approximately $14,112 in 2011 on behalf of AWP. As a result of the consolidation of financial statements, related party receivables are eliminated upon consolidation.

Purchase of Remaining 50% Interest of AWP from The Karlsson Group. Prospect entered into an agreement with The Karlsson Group, Inc. on May 30, 2012 whereby Prospect agreed to acquire the 50% of American West Potash LLC that it did not currently own for an aggregate purchase price of $150,000,000. The transaction closed on August 1, 2012 at which time Prospect became the sole owner and operator of American West Potash.

Our wholly-owned subsidiary, Old Prospect Global signed a purchase agreement dated May 30, 2012 with The Karlsson Group, Inc. for the acquisition. We paid The Karlsson Group a non-refundable deposit consisting of (a) $6,000,000 cash, of which $5,500,000 was credited against the purchase price, and (b) a warrant to purchase 112,117 shares of our common stock for $12.50 per share. At closing, (a) we paid The Karlsson Group an additional $19,500,000 in cash, (b) Old Prospect Global issued The Karlsson Group a senior secured $125,000,000 promissory note and (c) American West Potash granted The Karlsson Group the right to receive 1% of the gross sales received by American West Potash from potash production from the real property over which American West Potash currently has leases, licenses and permits for mining purposes, capped at $75,000,000. In the event of a sale of at least 50% of American West Potash or a merger of American West Potash with or into an unaffiliated entity on or prior to August 1, 2016, we agreed to pay The Karlsson Group an additional payment equal to 15% of the net proceeds received from the transaction, capped at $75,000,000. In addition, at the closing, American West Potash received an option to purchase approximately 5,080 acres in Apache County, Arizona from an affiliate of The Karlsson Group for $250,000 which is exercisable for 150 days after payment in full of the promissory note. The Stockholders of The Karlsson Group have agreed not to compete with American West Potash within the Holbrook Basin of Arizona prior to August 1, 2015.

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•: On November 22, 2011 we sold 51,765 shares of common stock and a warrant to purchase 51,765 shares of common stock at $212.50 per share for total cash proceeds of $10,999,999 to Very Hungry LLC, an affiliate of Hexagon. The warrant is exercisable at any time through August 1, 2017. We granted piggy-back registration rights for the shares purchased and issuable upon exercise of the warrant.
•: Also on November 22, 2011 we entered into a royalty agreement with Grandhaven Energy, LLC, another affiliate of Hexagon, whereby we sold Grandhaven an overriding royalty interest of 1% of the gross proceeds received by our subsidiary, American West Potash, or AWP, from the extraction of potash from its existing land holdings for $25,000 cash. If (i) the Arizona State Land Department declines to issue any lease to AWP with respect to any state exploration permit, or (ii) the Arizona State Land Department terminates any state exploration permit, or (iii) the Arizona State Land Department refuses to consent to the assignment of any royalty interests in any Arizona state lease, or requires any reduction of or imposes any condition on such royalty interests as a condition of approving an assignment of such royalty interests or approving any royalty reduction or other action with respect to a state lease, or (iv) if AWP has not been issued all of the state leases and conveyed to Grandhaven all royalty interests in all of AWP's Arizona state leased premises on or before March 1, 2013, Grandhaven shall have the option to receive substitute royalty interests from us in the same number of acres in portions of our non-Arizona state properties, in a percentage sufficient to compensate Grandhaven for the reduced royalty interests in the affected state lease. If AWP has not been issued any Arizona state leases as of the date that AWP conveys assignments of the royalty interest in the non-Arizona state properties Grandhaven may elect to receive in substitution an assignment of a 1.388% royalty interest in all of the non-Arizona state leased premises. If we do not deliver assignments of the royalty interest from AWP to Grandhaven by December 31, 2013, Grandhaven has the option, at any time thereafter, to purchase shares of our common stock at $212.50 per share in exchange for the surrender by Grandhaven of royalty interests for which assignments have not been obtained, valued at their fair market value at that time.
•: On June 7, 2012, Hexagon consummated the contribution of all of its shares of common stock and warrants to purchase common stock to Very Hungry LLC. Subsequent to that transaction, the Scott Reiman 1991 Trust liquidated its membership Interest in Very Hungry and received a pro rata distribution of its interests in Very Hungry, including equity securities of Prospect. The table set forth under "Security Ownership of Certain Beneficial Owners and Management" reflects these transactions.
•: On July 5, 2012, Very Hungry purchased 96,154 shares of our common stock at $130.00 per share in our public offering.
•: Very Hungry and the Scott Reiman 1991 Trust, referred to as the Very Hungry Parties, made a $5.0 million loan to us on May 2, 2013 and received from us subordinated notes in an aggregate principal amount of $5.5 million. In consideration for the subordinated loan we reduced the exercise price on warrants to purchase our common stock held by the Very Hungry Parties to $15.00 per share (in each case from exercise prices ranging from $212.50 per share to $150.00 per share) and extended the maturity of all such warrants to August 1, 2017. The subordinated notes bore no interest and matured on September 9, 2013. The Very Hungry Parties invested the aggregate principal amount of their subordinated notes into our preferred stock that on August 30, 2013 converted into an aggregate of 916,668 shares of common stock, 916,668 Series A Warrants and 916,668 Series B Warrants, identical to those issued in our June 2013 public offering. Pursuant to the full ratchet anti-dilution provisions of the Series A Warrants, we subsequently issued the Very Hungry Parties an additional $3.7 million Series A Warrants and reduced the strike price on all their Series A Warrants from $6.00 to $1.50.

~~Debt Restructuring~~66

On April 15, 2013, June 26 2013 and September 16, 2013 we entered into Extension Agreements with The Karlsson Group which restructured the senior first priority secured promissory note (the “Karlsson Note”) that we issued to The Karlsson Group on August 1, 2012 in connection with our purchase of Karlsson’s 50% interest in AWP (the “Initial KG Transaction”). In connection with the First Extension Agreement, we amended some of the related documents, including the Karlsson Note (the “Karlsson Note Amendment”), and restructured the two promissory notes issued to affiliates of Apollo Global Management, LLC (“Apollo”) on March 7, 2013 in the aggregate principal amount of $6.8 million (the “Apollo Notes”).

The First Karlsson Note Amendment requires us to make future tax “gross-up” payments to The Karlsson Group to compensate them for increases in federal and state income taxes and other tax related matters .We currently estimate the cost of these tax “gross-up” payments to be approximately $26.3 million ($20.1 million if you include the tax gross-up payments owing prior to the Amendment date); however, the tax gross-up payments are subject to change based on future changes in tax rates (including increases in effective income tax rates caused by “minimum tax” provisions such as the “Buffett rule” or “flat tax” proposals) and/or future changes in certain interest rates published by the Internal Revenue Service.

Karlsson Note Amendments

Under the First Karlsson Note Amendment, the maturity date was extended to the earlier of (i) 12 months following completion of a DFS and (ii) July 1, 2015. An interim principal payment of $30.0 million was due on the earlier of (i) six months following completion of a DFS and (ii) January 2, 2015 (the “First Payment Date”). Prior to the First Karlsson Note Amendment, we were required to prepay the Karlsson Note with 40% of the net proceeds of any capital raised, whereas under the First Karlsson Note Amendment we were required to prepay the Karlsson Note with 10% of the gross proceeds of any capital raised following the first $10.0 million of capital raised. Under the First Karlsson Note Amendment, the annual interest rate of 9% changed from simple to compounding and is now payable quarterly in kind by automatically increasing the principal balance of the Karlsson Note.

Under the First Karlsson Note Amendment, we were generally restricted from incurring debt other than Approved Subordinated Debt, which is defined as debt that (i) is unsecured, (ii) is subordinate to the Karlsson Note and (iii) may be convertible to equity if issued on or prior to September 10, 2013. We were also required to meet the following capital raising milestones: (i) $5.0 million by May 15, 2013, which was satisfied by the Very Hungry Parties’ $5.0 million subordinated loan (see below), (ii) an additional $7.0 million by June 17, 2013, of which all or any portion may be raised as Approved Subordinated Debt, (iii) an additional $18.0 million by September 10, 2013, of which all or any portion may be raised as Approved Subordinated Debt, and (iv) an additional $25.0 million no later than August 1, 2014, of which no more than $15.0 million may be raised as Approved Subordinated Debt. We were also required to deposit $9.2 million of the first $30.0 million of capital we raise into escrow, which funds may be released solely to fund specified development expenses for our potash project in the Holbrook Basin. Additionally, we were allowed to incur up to $10.0 million in additional Approved Subordinated Debt prior to the First Payment Date, but may incur no more than $1.0 million of debt after the First Payment Date.

Prior to the First Karlsson Note Amendment, we had 15 days to cure a payment default and 30 days to cure any non-payment default after, in each case, receiving notice thereof. Under the First Karlsson Note Amendment, there are no notices or cure rights for any payment defaults or any defaults related to the financing milestones or escrow funding described above, or cross-defaults with other agreements. The majority of other non-monetary defaults now have a ten day notice and cure period.

Under the First Karlsson Note Amendment, Karlsson may assign the Karlsson Note and any of the other Karlsson related documents following the earlier of (i) September 10, 2013, (ii) an event of default under the Karlsson Note, and (iii) once we have raised at least $30.0 million of capital.

The First Extension Agreement contains customary lender releases and indemnification language.

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~~Consideration~~ toCOR ~~Karlsson for First Extension Agreement~~Advisors LLC

In On ~~addition~~July 5, to2011, ~~changing~~we ~~the~~entered ~~interest~~into ~~rate~~an ~~under~~Investor ~~the~~Relations ~~Karlsson~~Consulting ~~Note~~Agreement ~~from~~with ~~simple~~COR toAdvisors LLC, ~~compounding~~pursuant ~~and~~to ~~payment~~which ofCOR provides ~~the~~investor ~~tax~~relations ~~gross-up~~services ~~amounts described above, as consideration~~ to ~~The~~us. ~~Karlsson~~This ~~Group~~Investor ~~for~~Relations ~~entering~~Consulting ~~into the First Extension~~ Agreement ~~and~~was ~~the~~subsequently ~~related~~amended ~~documents,~~on weMay 9, ~~among~~2012 ~~other~~and ~~things,~~on ~~(i)~~August ~~increased~~1, ~~The~~2012. ~~Karlsson~~In ~~Group’s~~connection ~~royalty~~with ~~interest~~these amendments, ~~from~~COR's 1%services towere 2%extended ~~(Buffalo~~through ~~Management~~July 4, ~~LLC~~2015 ~~has~~and ~~decreased~~expanded ~~its~~to ~~royalty~~provide ~~interest~~additional ~~from~~services 2%beyond toinvestor ~~1% as~~relations ~~described~~following ~~below)~~our ~~and~~July ~~eliminated~~2012 ~~the~~public ~~$75~~offering.0 ~~million~~For ~~cap~~services performed onduring ~~The~~the ~~Karlsson~~year ~~Group’s~~ending ~~previous~~on 1%July 5, ~~royalty interest~~2012, COR received (iia) ~~decreased~~as ~~the~~compensation ~~exercise price on The Karlsson Group’s warrants to purchase up to 112~~6,~~117~~ 000 shares of our common stock ~~from~~with ~~$212.50~~2,000 toshares ~~$12.50~~fully ~~and~~vesting ~~allowed~~on ~~all~~execution, of2,000 shares ~~The~~vesting ~~Karlsson~~on ~~Group’s~~January 5, ~~warrants~~2012 toand be2,000 ~~exercisable~~shares vesting on aJuly 5, ~~cashless~~2012 ~~basis,~~and (~~iii~~b) ~~provided Karlsson with an enhanced collateral package, including~~ a ~~parent~~onetime ~~guaranty~~bonus ~~from~~of us800 ~~and~~shares aof ~~pledge~~our bycommon usstock ofupon ~~100% of~~ the ~~shares~~listing of our ~~wholly~~shares ~~owned~~on ~~subsidiary~~The ~~Prospect~~NASDAQ Capital ~~Global~~Market. ~~Resources~~COR ~~Inc,~~received aas ~~Delaware~~compensation ~~corporation~~an ~~and~~additional ~~the~~6,000 ~~owner~~shares of ~~100%~~our ofcommon ~~American~~stock ~~West~~for ~~Potash~~services ~~LLC,~~performed ~~(iv) extended~~during the ~~term~~year ofending ~~Karlsson’s~~on ~~right~~July 5, to2013 ~~receive~~with ~~15%~~1,500 of the ~~net~~shares ~~proceeds~~vesting ~~from~~at the end ~~sale~~each ofquarter during the ~~Company~~renewal byperiod. ~~one~~COR ~~year~~also toreceives ~~August 1,~~a ~~2017~~monthly retainer of $20,000 ~~and~~through ~~(v)~~July ~~agreed~~4, to2015 ~~pay~~as ~~Karlsson $275,000~~compensation for its ~~attorneys’~~services. ~~fees~~COR and ~~costs~~its ~~associated~~affiliates ~~with~~beneficially ~~consummation~~owned more than 5% of ~~the~~our ~~Extension~~common ~~Agreement~~stock ~~and~~during ~~related~~fiscal ~~agreements~~years 2012 and 2013.

~~Karlsson~~ ~~Second~~Related ~~Extension~~Party ~~Agreement~~Receivables from AWP

On Prospect ~~June 26,~~Global ~~2013,~~paid weapproximately ~~entered~~$14,112 ~~into~~in ~~the~~2011 ~~Second~~on ~~Extension~~behalf ~~Agreement~~of ~~with~~AWP ~~The~~for ~~Karlsson~~contract ~~Group~~labor ~~which further restructured the Karlsson Note~~ and related ~~documents~~expenses.

~~Under~~ ~~this~~Purchase ~~amendment, the interim principal payment~~ of ~~$30.0~~Remaining ~~million that was due on the earlier of (i) six months following completion of a definitive feasibility study and (ii) January 2, 2015 has been eliminated. We were also required to place~~ 50% ofInterest ~~the net proceeds~~ of ~~the~~AWP next $24.0 million of capital we raise (for a total of $12.0 million) into escrow, which funds may be released solely to fund specified development expenses for our potash project in the Holbrook Basin. Two million dollars of the proceeds we received from ~~our~~The ~~June,~~Karlsson ~~2013 $5.0 million public offering (see below) were placed into this escrow, reducing our remaining escrow obligation to $10 million.~~Group

~~This~~ Prospect ~~amendment~~entered ~~eliminated~~into ~~the~~an ~~financing~~agreement ~~milestones~~with ~~and~~The ~~added~~Karlsson ~~the following development milestones: (i)~~Group, ~~complete~~Inc. ~~total depth~~ on ~~at least eight wells on or before November~~May 130, ~~2013,~~2012 ~~(ii) deliver~~whereby aProspect ~~completed~~agreed ~~and~~to ~~updated~~acquire ~~final~~the 50% NIof ~~43-101 resource~~American ~~report~~West ~~on or before February~~Potash 1,LLC ~~2014, (iii) deliver completed metallurgical and rock mechanic test work results~~ that ~~will~~it bedid ~~used~~not tocurrently ~~complete~~own ~~the~~for ~~mine~~an ~~and~~aggregate ~~processing~~purchase ~~plant~~price ~~designs~~of ~~for~~$150,000,000. ~~the~~The ~~definitive~~transaction ~~feasibility~~closed ~~study~~ on ~~or before June~~August 1, ~~2014~~2012 ~~and~~at ~~(iv) deliver~~which atime ~~completed~~Prospect ~~and~~became ~~published~~the sole ~~definitive~~owner ~~feasibility~~and ~~study~~operator onof orAmerican ~~before~~West ~~December 31, 2014~~Potash.

~~With~~ Our wholly-owned ~~this~~subsidiary, ~~amendment~~Old Prospect Global signed a purchase agreement dated May 30, 2012 with The Karlsson ~~may~~Group, Inc. ~~assign~~for the acquisition. We paid The Karlsson Group ~~Note~~a atnon-refundable ~~any~~deposit ~~time~~consisting toof ~~any~~(a) $6,000,000 ~~person;~~cash, ~~previously~~of itwhich $5,500,000 was ~~assignable~~credited ~~following~~against the ~~earlier~~purchase ofprice, and (ib) ~~September 10~~a warrant to purchase 112,117 ~~2013~~shares of our common stock for $12.50 per share. At closing, (iia) we paid The Karlsson Group an ~~event~~additional of$19,500,000 ~~default~~in ~~under~~cash, ~~the~~(b) Old Prospect Global issued The Karlsson ~~Note~~Group a senior secured $125,000,000 promissory note and (~~iii~~c) ~~once~~American weWest ~~have~~Potash ~~raised~~granted atThe ~~least~~Karlsson ~~$30.0~~Group ~~million~~the right to receive 1% of ~~capital~~the gross sales received by American West Potash from potash production from the real property over which American West Potash currently has leases, licenses and ~~there~~permits ~~were~~for ~~restrictions~~mining onpurposes, ~~assignees.~~capped Weat ~~also~~$75,000,000. ~~extended~~In the ~~term~~event of ~~Karlsson’s~~a ~~right~~sale of at least 50% of American West Potash or a merger of American West Potash with or into an unaffiliated entity on or prior to ~~receive~~August 1, 2016, we agreed to pay The Karlsson Group an additional payment equal to 15% of the net proceeds received from the transaction, capped at $75,000,000. In addition, at the ~~sale~~closing, American West Potash received an option to purchase approximately 5,080 acres in Apache County, Arizona from an affiliate of The Karlsson Group for $250,000 which is exercisable for 150 days after payment in full of the ~~Company~~promissory bynote. ~~six~~The ~~months~~Stockholders of The Karlsson Group have agreed not to ~~February~~compete with American West Potash within the Holbrook Basin of Arizona prior to August 1, ~~2018~~2015.

We have restructured our obligations to The ~~Second~~Karlsson ~~Extension~~Group ~~Agreement~~several ~~contains~~times. ~~customary~~For ~~lender~~a ~~releases~~current description of our obligations to them see "Management's Discussion and ~~indemnification~~Analysis ~~language~~of Financial Condition and Results of Operations—Liquidity and Capital Resources" and—"Commitments and Contingencies".

~~Consideration to Karlsson for Second Extension Agreement~~67

With this amendment, we issued Karlsson a five year warrant to purchase 3.0 million of our common shares at $6.00 per share and amended our registration rights agreement with Karlsson to include the shares issuable upon exercise of the new warrant. The warrant may be exercised on a cashless basis. We also reimbursed Karlsson $125,000 for its legal fees and expenses.

Karlsson Third Extension Agreement

On September 13, 2013, we entered into the Third Extension Agreement with The Karlsson Group which further restructured the Karlsson Note and related documents.

Under this amendment, the approximately $1.2 million tax gross-up payment that was due on September 13, 2013 is now due on November 15, 2013. Also, our obligation to apply 10% of the amount of capital we raise to the Karlsson Note and to place 50% of the net proceeds of the next $22.0 million of net proceeds of capital we raise into escrow to be released solely to fund specific project development expenses has been waived with respect to the next $2.0 million net proceeds of capital we raised prior to November 15, 2013 (this applied to the first $2.0 million of proceeds we received from the warrant exercise in September 2013). In connection with these amendments we agreed to terminate the non-competition agreements by Karlsson and its affiliates and to reimburse Karlsson $100,000 for their legal fees.

The Third Extension Agreement contains customary lender releases and indemnification language.

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The principal balance owing on Karlsson Note as of September 30, 2013 was approximately $117.5 million. In addition, we are currently liable to Karlsson for accrued and unpaid interest and accrued tax gross-ups totally approximately $27.9 million, of which approximately $1.2 million is payable on November 15, 2013 with the balance being due on the Note’s maturity date. We have a $1.2 million payment due to The Karlsson Group on February 10, 2014.

Brownstein Hyatt Farber Schreck, LLP

On July 5, 2011, we entered into a Fee Agreement with Brownstein Hyatt Farber Schreck LLP, pursuant to which Brownstein Hyatt provides government relations services to us. Chad Brownstein, one of our directors, is the son of a founding partner of Brownstein Hyatt Farber Schreck, LLP which serves as Prospect Global’'s principal outside legal counsel. Prospect Global has paid Brownstein Hyatt approximately $0.5 million for fiscal year 2012 and $3.6 million for fiscal year 2013 for legal and lobbying fees. In addition, we have issued to Brownstein Hyatt, as compensation for government relations and legal services, an aggregate of 105,998 fully vested shares of common stock and fully vested options to purchase 2,400 shares of our common stock at $130 expiring in 2021. Mr. Brownstein’'s father controls an additional 13,924 shares of Prospect Global’'s common stock. ~~Chad~~ Chad Brownstein, our director and ~~non-~~executive vice chairman, does not share in any of these fees or issuances.

Conflict of Interests

We have established protocols for corporate conflict of interests in our Code of Business Conduct and Ethics policy that prohibits conflicts of interests unless approved by the board of directors. Our board of directors has established a course of conduct whereby it considers in each case whether the proposed transaction is on terms as favorable or more to Prospect Global than would be available from a non-related party. Our board also looks at whether the transaction is fair and reasonable to us, taking into account the totality of the relationships between the parties involved, including other transactions that may be particularly favorable or advantageous to us. Each of the related party transactions was presented to our board of directors for consideration and each of these transactions was unanimously approved by our board of directors after reviewing the criteria set forth in the preceding two sentences. Each of the related party transaction was individually negotiated, and none of the transactions was contingent upon or otherwise related to any other transaction. As discussed above, copies of our Code of Business Conduct and Ethics policy and Code of Ethics for Senior Financial Advisors can be found on our website: www.prospectgri.com under the tab “"Investors”".

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to beneficial ownership of our common stock as of ~~October~~ February 16[ ], ~~2013~~2014 by each of our executive officers and directors and each person known to be the beneficial owner of 5% or more of the outstanding common stock. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’'s name, subject to community property laws, where applicable. Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended. In computing the number of shares beneficially owned by a person or a group and the percentage ownership of that person or group, shares of our common stock subject to options or warrants currently exercisable or exercisable within 60 days after the date hereof are deemed outstanding, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. As of ~~October~~February 1625, ~~2013~~ 2014, we had 4,~~210~~970,~~022~~ 578 issued and outstanding shares of common stock. Unless otherwise indicated, the address of each stockholder listed in the table is c/o Prospect Global Resources Inc., 1401 17th Street, Suite 1550, Denver, CO 80202.

	Shares Beneficially Owned
Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)		~~Percent of Class(2)~~	Percent of Class(2)
Central Valley Administrators, Inc.	210,772		5.01	%
Very Hungry LLC(3)		3,982,259			49.40	%
Very Hungry LLC (3)	3,561,932		51.77	%
The Scott Reiman 1991 Trust(4)		955,151			16.68	%
The Scott Reiman 1991 Trust (4)	854,335		17.56	%
Avalon Portfolio, LLC(5)		570,142			10.54	%
Avalon Portfolio, LLC (5)	331,892		7.53	%
Hudson Bay Master Fund(6)		1,511,250			25.05	%
Hudson Bay Master Fund	787,500		16.76	%
Empery Asset Master Fund(7)		579,313			10.77	%
Empery Asset Master Fund	301,875		6.87	%
Hartz Capital Investments(8)		619,563			11.32	%
Hartz Capital Investments	301,875		6.87	%
Capital Ventures International(9)		806,000			14.56	%
Capital Ventures International	420,000		9.40	%
Tenor Opportunity Master Fund(10)		750,588			13.65	%
Tenor Opportunity Master Fund	391,125		8.79	%
Alpha Capital Anstalt(11)		319,500			6.21	%
Alpha Capital Anstalt	313,704		7.05	%
Cranshire Master Fund(12)		634,725			11.72	%
Cranshire Master Fund	330,750		7.49	%
Midsummer Small Cap Master, Ltd.(13)		675,025			12.40	%
Kingsbrook Opportunities Master Fund	275,625		6.29	%
Kingsbrook Opportunities Master Fund(14)		528,938			9.90	%
Midsummer Small Cap Master, Ltd.	351,750		7.94	%
FiveMore Special Situations Fund, Ltd.(15)		403,000			7.67	%
Directors and Executive Officers
Anson Investments Master Fund LP(16)		302,250			5.83	%
Dr. Barry Munitz, Chairman of the board of directors (6)	36,500		0.86	%
Directors and Executive Officers
Chad Brownstein, Executive Vice Chairman of the board of directors (7)	1,928,615		31.75	%
Dr. Barry Munitz, Chairman of the board of directors(17)		136,500			2.68	%
J. Ari Swiller, Director (8)	7,800		0.19	%
Chad Brownstein, Executive Vice Chairman of the board of directors(18)		2,209,456			31.05	%
Reed Dickens (9)	—		0.00	%
J. Ari Swiller, Director(19)		107,800			2.12	%
Daniel J. Neumann (10)	—		0.00	%
Reed Dickens, Director(20)		100,000			1.97	%
Damon Barber, Chief Executive Officer and President (11)	13,334		0.32	%
Daniel Neumann, Director(21)		100,000			1.97	%
Gregory Dangler, Interim Chief Financial Officer (12)	20,000		0.47	%
Damon Barber, Chief Executive Officer and President(22)		13,334			0.27	%
Wayne Rich, Senior Vice President, Accounting and Treasury and Treasurer (13)
Gregory Dangler, Interim Chief Financial Officer(23)		108,800			2.14	%
Total beneficial ownership of directors and officers as a group (eight persons) (6)(7)(8)(9)(10)(11)(12)(13)	2,006,248		32.74	%
Wayne Rich, Sr. Vice President Accounting & Treasury and Treasurer(24)		95,000			1.88	%
Total beneficial ownership of directors and officers as a group (eight persons)(17)(18)(19)(20)(21)(22)(23)(24)		2,870,890			37.03	%

43 (1)Each person listed has sole investment and/or voting power with respect to the shares indicated, except as otherwise noted. The inclusion herein of any shares as beneficially owned does not constitute an admission of beneficial ownership. Amounts listed in this column reflect shares

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issuable upon the exercise of options and warrants exercisable on February 25, 2014 or within 60 days thereafter. (12) ~~Each~~Number of ~~person~~shares ~~listed~~deemed ~~has~~outstanding ~~sole~~includes ~~investment~~4,970,578 shares of our common stock outstanding as of February 25, 2014 and/ any grants, options and warrants for shares that are exercisable by such beneficial owner as of February 25, 2014 or ~~voting~~within ~~power~~60 days ~~with~~thereafter. (3)Very Hungry LLC ~~respect~~holds 891,112 shares of our common stock and immediately exercisable warrants to purchase 96,833 shares of our common stock at $15.00 per share expiring on August 1, 2017, warrants to purchase 739,337 shares of our common stock at $1.50 per share expiring on August 30, 2018, warrants to purchase 355,977 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 1,899,001 shares of our common stock at $1.50 per share expiring on February 12, 2019. The address of the reporting person is 730 17th St., Suite 800, Denver, CO 80202. (4)The Scott Reiman 1991 Trust holds 199,086 shares ~~indicated~~of our common stock and immediately exercisable warrants to purchase 37,874 ~~except~~shares asof ~~otherwise~~our ~~noted~~common stock at $15.00 per share expiring on August 1, 2017, warrants to purchase 177,331 shares of our common stock at $1.50 per share expiring on August 30, 2018, warrants to purchase 85,382 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 455,478 shares of our common stock at $1.50 per share expiring on February 12, 2019. The address ~~inclusion~~of ~~herein~~the reporting person is 730 17th St., Suite 800, Denver, CO 80202. (5)Avalon Portfolio, LLC holds 131,392 shares of ~~any~~our common stock and immediately exercisable warrants to purchase 50,000 shares asof ~~beneficially~~our ~~owned~~common ~~does~~stock ~~not~~at $1.50 ~~constitute~~per anshare ~~admission~~expiring on June 26, 2018, warrants to purchase 112,500 shares of ~~beneficial~~our ~~ownership~~common stock at $1.50 ~~Amounts~~per ~~listed~~share inexpiring ~~this~~on ~~column~~September 26, ~~reflect~~2018 and warrants to purchase 276,250 shares ~~issuable~~of ~~upon~~our common stock at $1.50 per share expiring on February 12, 2019. The address of the ~~exercise~~reporting person is 5786 La Jolla Blvd., La Jolla, CA 92037. (6)Hudson Bay Master Fund holds 450,000 shares of ~~options~~our common stock and immediately exercisable warrants to purchase 337,500 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 723,750 shares of our common stock at $1.50 per share expiring on February 12, 2019. (7)Empery Asset Master Fund holds 172,500 shares of our common stock and immediately exercisable warrants to purchase 129,375 shares of our common stock at $1.50 per share expiring on ~~October~~September 1626, ~~2013~~2018 orand ~~within~~warrants 60to purchase 277,438 shares of our common stock at $1.50 per share expiring on February ~~days~~12, ~~thereafter~~2019. (8)Hartz Capital Investments holds 115,000 shares of our common stock and immediately exercisable warrants to purchase 57,500 shares of our common stock at $1.50 per share expiring on June 26, 2018, warrants to purchase 129,375 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 317,688 shares of our common stock at $1.50 per share expiring on February 12, 2019. (9)Capital Ventures International holds 240,000 shares of our common stock and immediately exercisable warrants to purchase 180,000 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 386,000 shares of our common stock at $1.50 per share expiring on February 12, 2019. (10)Tenor Opportunity Master Fund holds 223,500 shares of our common stock and immediately exercisable warrants to purchase 167,625 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 359,463 shares of our common stock at $1.50 per share expiring on February 12, 2019.

(2) Number of shares deemed outstanding includes 4,210,022 shares of our common stock outstanding as of October 16, 2013 and any grants, options and warrants for shares that are exercisable by such beneficial owner on October 16, 2013 or within 60 days thereafter.70

(3) Very Hungry LLC holds 891,112 shares of our common stock and immediately exercisable warrants to purchase 96,833 shares of our common stock at $15.00 per share expiring on August 1, 2017, warrants to purchase 739,337 shares of our common stock at $4.05 per share expiring on August 30, 2018, warrants to purchase 355,977 shares of our common stock at $4.05 per share expiring on September 26, 2018 and warrants expiring on January 9, 2014 to purchase for $6.00 per unit 739,337 shares of our common stock along with warrants to purchase an additional 739,337 shares of common stock at $6.00 per share. The address of the reporting person is 730 17th St., Suite 800, Denver, CO 80202.

(4) The Scott Reiman 1991 Trust holds 199,086 shares of our common stock and immediately exercisable warrants to purchase 37,874 shares of our common stock at $15.00 per share expiring on August 1, 2017, warrants to purchase 177,331 shares of our common stock at $4.05 per share expiring on August 30, 2018, warrants to purchase 85,382 shares of our common stock at $4.05 per share expiring on September 26, 2018 and warrants expiring on January 9, 2014 to purchase for $6.00 per unit 177,331 shares of our common stock along with warrants to purchase an additional 177,331 shares of common stock at $6.00 per share. The address of the reporting person is 730 17th St., Suite 800, Denver, CO 80202.

(5) Avalon Portfolio, LLC holds 131,392 shares of our common stock and immediately exercisable warrants to purchase 38,000 shares of our common stock at $150.00 per share expiring on February 3, 2014, warrants to purchase 50,000 shares of our common stock at $4.05 per share expiring on June 26, 2018 and warrants to purchase 112,500 shares of our common stock at $4.05 per share expiring on September 26, 2018. The address of the reporting person is 5786 La Jolla Blvd., La Jolla, CA 92037.

(6) Dr. Munitz, our board chairman, holds 22,500 shares of our common stock and immediately exercisable options to purchase 14,000 shares of our common stock. Of the 14,000 options, 8,000 have an exercise price of $212.50 per share and an expiration date of December 26, 2021 while 6,000 have an exercise price of $130.00 per share and an expiration date of July 1, 2022. Dr. Munitz also owns a 15% non-voting ownership interest in Buffalo Management LLC. Chad Brownstein, our executive vice chairman, has sole voting and dispositive power of the shares owned by Buffalo.

(7) This amount includes (i) Mr. Brownstein’s personal holdings of immediately exercisable options to purchase 2,000 shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021 and options to purchase 4,000 shares of our common stock at an exercise price of $130.00 per share expiring on July 1, 2022, (ii) 270 shares of our common stock held by Mr. Brownstein’s minor children, (iii) 5,494 shares of our common stock and warrants to purchase 1,858,852 shares of our common stock at a weighted average exercise price of $10.03 per share held by Buffalo Management LLC and (iv) 58,000 shares of our common stock owned by Quincy Prelude LLC. Mr. Brownstein owns 100% of the voting interest of Quincy Prelude LLC. Quincy Prelude LLC owns 100% of the voting interests and 75% of the economic interests of Buffalo Management LLC and has sole voting and dispositive power of the shares owned by Buffalo.

(8) Mr. Swiller, one of our directors, holds 3,000 shares of our common stock and immediately exercisable options to purchase 2,000 shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021 and options to purchase 2,800 shares of our common stock at an exercise price of $130.11 per share expiring on July 1, 2022.

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(911) Alpha Capital Anstalt holds 145,000 shares of our common stock and immediately exercisable warrants to purchase 38,704 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 135,796 shares of our common stock at $1.50 per share expiring on February 12, 2019. (12)Cranshire Master Fund holds 189,000 shares of our common stock and immediately exercisable warrants to purchase 141,750 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 303,975 shares of our common stock at $1.50 per share expiring on February 12, 2019. (13)Midsummer Small Cap Master, Ltd. holds 201,000 shares of our common stock and immediately exercisable warrants to purchase 150,750 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 323,275 shares of our common stock at $1.50 per share expiring on February 12, 2019. (14)Kingsbrook Opportunities Master Fund LP holds 157,500 shares of our common stock and immediately exercisable warrants to purchase 118,125 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 253,313 shares of our common stock at $1.50 per share expiring on February 12, 2019. (15)FiveMore Special Situations Fund, Ltd. holds 120,000 shares of our common stock and immediately exercisable warrants to purchase 90,000 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 193,000 shares of our common stock at $1.50 per share expiring on February 12, 2019. (16)Anson Investments Master Fund LP holds 90,000 shares of our common stock and immediately exercisable warrants to purchase 67,500 shares of our common stock at $1.50 per share expiring on September 26, 2018 and warrants to purchase 144,750 shares of our common stock at $1.50 per share expiring on February 12, 2019. (17)Dr. Munitz, our board chairman, holds 22,500 shares of our common stock and immediately exercisable options to purchase 114,000 shares of our common stock. Of the 114,000 options, 8,000 have an exercise price of $212.50 per share and an expiration date of December 26, 2021, 6,000 have an exercise price of $130.00 per share and an expiration date of July 1, 2022 while 100,000 have an exercise price of $2.36 per share and an expiration date of November 6, 2023. Dr. Munitz also owns a 15% non-voting ownership interest in Buffalo Management LLC. Chad Brownstein, our executive vice chairman, has sole voting and dispositive power of the shares owned by Buffalo. (18)This amount includes (i) Mr. ~~Dickens~~Brownstein's personal holdings of immediately exercisable options to purchase 2,000 shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021 and options to purchase 4,000 shares of our common stock at an exercise price of $130.00 per share expiring on July 1, 2022, (ii) 270 shares of our common stock held by Mr. Brownstein's minor children, (iii) 5,494 shares of our common stock and warrants to purchase 2,139,693 shares of our common stock at a weighted average exercise price of $8.71 per share held by Buffalo Management LLC and (iv) 58,000 shares of our common stock owned by Quincy Prelude LLC. Mr. Brownstein owns 100% of the voting interest of Quincy Prelude LLC. Quincy Prelude LLC owns 100% of the voting interests and 75% of the economic interests of Buffalo Management LLC and has sole voting and dispositive power of the shares owned by Buffalo. (19)Mr. Swiller, one of our directors, isholds ~~expected~~3,000 shares of our common stock and immediately exercisable options to bepurchase ~~granted~~2,000 ~~shortly~~shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021, options to purchase 2,800 shares of our common stock at an exercise price of $130.00 per share expiring on July 1, 2022 and options to purchase 100,000 shares of our common stock at an exercise price of $2.36 expiring on November 6, 2023.

~~(10) Mr. Neumann, one of our directors, is expected to be granted shortly options to purchase 100,000 shares of our common stock.~~71

(11) Mr. Barber, our president and chief executive officer, holds options to purchase 20,000 shares of our common stock at an exercise price of $130.00 per share, of which 6,667 options are fully vested, 6,667 options will vest on December 13, 2013 and 6,666 options will vest on December 13, 2014. The options expire on December 13, 2022.

(12) Mr. Dangler, our interim chief financial officer since March 7, 2013 and before that our vice present of corporate finance, holds options to purchase 2,800 shares of our common stock at an exercise price of $144.00 per share expiring on July 1, 2022 which are fully vested, and options to purchase 6,000 shares of our common stock at an exercise price of $130.00 per share expiring on October 18, 2022 which are fully vested.

(13) Mr. Rich, our senior vice president, accounting and treasury and treasurer, holds options to purchase 20,000 shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021. These options are immediately exercisable.

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(20): Mr. Dickens, one of our directors, holds immediately exercisable options to purchase 100,000 shares of our common stock at an exercise price of $2.36 expiring on November 6, 2023.
(21): Mr. Neumann, one of our directors, holds immediately exercisable options to purchase 100,000 shares of our common stock at an exercise price of $2.36 expiring on November 6, 2023.
(22): Mr. Barber, our president and chief executive officer, holds options to purchase 20,000 shares of our common stock at an exercise price of $130.00 per share, of which 13,334 options are fully vested and 6,666 options will vest on December 13, 2014. The options expire on December 13, 2022.
(23): Mr. Dangler, our interim chief financial officer since March 7, 2013 and before that our vice present of corporate finance, holds immediately exercisable options to purchase 2,800 shares of our common stock at an exercise price of $144.00 per share expiring on July 1, 2022, options to purchase 6,000 shares of our common stock at an exercise price of $130.00 per share expiring on October 18, 2022 and options to purchase 100,000 shares of our common stock at an exercise price of $2.36 per share expiring on November 6, 2023.
(24): Mr. Rich, our senior vice president, accounting and treasury and treasurer, holds immediately exercisable options to purchase 20,000 shares of our common stock at an exercise price of $212.50 per share expiring on December 26, 2021 and options to purchase 75,000 shares of our common stock at an exercise price of $2.25 per share expiring on November 1, 2023.

DESCRIPTION OF SECURITIES

The following summary description of securities is not complete and is qualified in its entirety by reference to our articles of incorporation, as amended, ~~our bylaws,~~ and ~~the forms of Series A Warrant and Series B Warrant filed as exhibits to~~ our ~~Current Report on Form 8-K filed on June 21, 2013 and as an exhibit to the registration of which this prospectus forms a part~~bylaws.

Our authorized capital stock consists of 400,000,000 shares of capital stock, $0.001 par value, of which 300,000,000 shares are designated as Common Stock and 100,000,000 shares are designated as Preferred Stock. We have outstanding 4,~~210~~970,~~022~~578 shares of common stock and 15.0 million shares of redeemable preferred stock onas ~~the date~~ of February [ ], ~~this prospectus~~2014.

Description of Common Stock

Holders of our common stock are entitled to one vote per share in all matters as to which holders of common stock are entitled to vote. Holders of not less than a majority of all of the shares of the stock entitled to vote at any meeting of stockholders constitute a quorum unless otherwise required by law. Our directors are elected by a plurality of the votes cast by the holders of our common stock in a meeting at which a quorum is present. “"Plurality”" means that the individuals who receive the largest number of votes cast are elected as directors, up to the maximum number of directors to be chosen at the meeting. Our stockholders may vote to remove any director for cause by the affirmative vote of a majority of the voting power of outstanding common stock. In the event of our liquidation, dissolution or winding up, holders of our common stock have the right to receive ratably and equally all of the assets remaining after payment of liabilities and liquidation preferences of any preferred stock then outstanding.

We have never declared or paid dividends on our common stock nor do we anticipate paying any cash dividends on our common stock within the foreseeable future. Our board of directors has the ability and may so choose to declare cash dividends on our common stock, at their discretion, in the future. In their determination to declare dividends, the board will consider, among other factors, the company’'s financial positions, results of operations, cash requirements, and any applicable outstanding covenants. Holders of our common stock will be entitled to receive dividends when, as and if declared by our board, out of funds legally available for their payment, subject to the rights of holders of any preferred stock that we may issue.

Central Valley Administrators, Inc., which holds 210,772 shares of our common stock (approximately 5.0% of our outstanding shares) holds demand and piggyback registration rights with respect to those shares. Buffalo Management LLC, which holds or controls 5,763 shares of our common stock and warrants to purchase an additional 1,858,852 shares, holds demand and piggyback registration rights with respect to all those shares. In addition, other holders of approximately 440,000 shares of our common stock and warrants have piggyback registration rights.72

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Central Valley Administrators, Inc., which holds 210,772 shares of our common stock (approximately 5.0% of our outstanding shares) holds demand and piggyback registration rights with respect to those shares. Buffalo Management LLC, which holds or controls 5,763 shares of our common stock and warrants to purchase an additional 2,139,693 shares, holds demand and piggyback registration rights with respect to all those shares. In addition, other holders of approximately 440,000 shares of our common stock and warrants have piggyback registration rights.

Description of Redeemable Preferred Stock

The redeemable preferred stock is non-voting and non-convertible and has a $1.00 liquidation preference. In the event of a liquidity event the holders of the outstanding redeemable preferred stock shall be entitled to receive the liquidity preference plus all accrued and unpaid dividends prior to any distribution to the holders of common stock, subject to a cap of 10% of our market capitalization at the time of redemption. A liquidity event is defined as (i) liquidation, dissolution, or winding-up of Prospect, (ii) a person or group other than Buffalo Management LLC and its affiliates becomes the direct or indirect owner of our common equity representing more than 50% of the voting power of the outstanding shares of voting stock, (iii) any consolidation or merger of Prospect or similar transaction or any sale, lease or other transfer of all or substantially all of our consolidated assets, with, into or to any person other than one of our subsidiaries or Buffalo Management or its affiliates, other than a transaction in which the persons that owned, directly or indirectly, voting shares of Prospect immediately prior to such transaction owning voting shares representing a majority of the continuing or surviving person immediately after the transaction, or (iv) our board no longer consists of a majority of members who were members of the board as of the filing of the certificate of designation creating the preferred stock or were nominated for election or appointed to the board with the approval of a majority of such directors or directors so nominated or appointed; provided that clauses (ii)-(iv) shall not constitute a liquidity event if waived by the holders of a majority of the shares of redeemable preferred stock.

Dividends commenced accruing on the redeemable preferred stock from the issue date on August 14, 2013 and will continue to accrue, whether or not declared, at an annual rate on the liquidation preference equal to 8%. All accrued and unpaid dividends shall be payable on the date that is six months following the first day of the month following the month in which a minimum of 50,000 tonnes of potash has first been shipped for delivery from our potash facility in Holbrook, Arizona. Dividends shall be payable thereafter quarterly in arrears on March 15, June 15, September 15 and December 15 of each year.

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We may redeem the redeemable preferred stock, in whole or in part, at any time following the three year anniversary of issuance. The holders of the redeemable preferred stock may redeem their shares, in whole or in part, at any time following the three year anniversary of the first day of the month following the sixth month after which a minimum of 50,000 tonnes of potash has first been shipped for delivery from our potash facility in Holbrook, Arizona. In either case, the redemption will be made by cash payment in a per share amount equal to the liquidation value per share plus all accrued and unpaid dividends through the date of redemption; provided, that the redemption payment may not exceed 10% of our market capitalization value at the time of redemption.

Description of Series A and Series B Warrants

THE HOLDER OF A WARRANT WILL NOT POSSESS ANY RIGHTS AS A STOCKHOLDER

UNDER THAT WARRANT UNTIL THE HOLDER EXERCISES THE WARRANT.

We will reserve and keep available at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise of all outstanding warrants. In addition, so long as the common stock is listed on a stock exchange or is quoted on an interdealer quotation system, we will use our best efforts to list, or to be quoted, as the case may be, subject to notice of issuance, the common stock issuable upon the exercise of the warrants.

Series A Warrants

Duration and Exercise Price. Each Series A Warrant offered hereby will entitle the holder thereof to purchase one share of our common stock at an initial exercise price of $4.05 per share, commencing immediately on the date of issuance and will expire on the fifth anniversary of the initial date of issuance. The exercise price is subject to appropriate adjustment in the event of (i) certain stock dividends and distributions, stock splits, stock combinations, reclassifications of common stock or similar events affecting our shares of common stock and (ii) the pro rata distribution to all holders of our common stock of evidences of our indebtedness or assets, rights or certain warrants..

Anti-Dilution Protection. The Series A Warrants contain full-ratchet anti-dilution protection upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the Series A Warrants, with certain exceptions. The terms of the Series A Warrants, including these anti-dilution protections, may make it difficult for us to raise additional capital at prevailing market terms in the future.

Cashless Exercise. If, at any time during a Series A Warrant’s exercisability period, the issuance of shares of our common stock upon exercise of the Series A Warrant is not covered by an effective registration statement and under certain other circumstances, we or the holder are permitted to effect a cashless exercise of the Series A Warrant (in whole or in part) by having the holder deliver to us a duly executed exercise notice, canceling a portion of the Series A Warrant in payment of the purchase price payable in respect of the number of shares of our common stock purchased upon such exercise.

Transferability. The Series A Warrants may be transferred at the option of the Series A Warrant holder upon surrender of the Series A Warrants with the appropriate instruments of transfer.

Exchange Listing. There is no established public trading market for the Series A Warrants, and there can be no assurance that such a market will develop. We do not plan on making an application to list the Series A Warrants on The Nasdaq Capital Market, any other national securities exchange or other nationally recognized trading system. Without an active market, the liquidity of the Series A Warrants will be limited. In addition, in the event our common stock price does not exceed the per share exercise price of the warrants during the period when the warrants are exercisable, the warrants will have little or no value.

Rights as a Stockholder. Except by virtue of a holder’s ownership of shares of our common stock, the holders of the Series A Warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise their Series A Warrants.

Fundamental Transactions. In the event of any fundamental transaction, as described in the Series A Warrants and generally including any merger with another entity, the sale, transfer or other disposition of all or substantially all of our assets to another entity, or the acquisition by a person of more than 50% of our common stock, then the holders of the Series A Warrants will thereafter have the right to receive upon exercise of the Series A Warrants such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of shares of our common stock equal to the number of shares of our common stock issuable upon exercise of the Series A Warrants immediately prior to the fundamental transaction, had the fundamental transaction not taken place, and appropriate provision will be made so that the provisions of the Series A Warrants (including, for example, provisions relating to the adjustment of the exercise price) will thereafter be applicable, as nearly equivalent as may be practicable in relation to any share of stock, securities or assets deliverable upon the exercise of the Series A Warrants after the fundamental transaction. In lieu of the right to receive upon exercise the shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of shares of our common stock, the holders of the Series A Warrants may require us under certain circumstances to redeem the Series A Warrant for a purchase price payable in cash of the Black-Scholes value of the Series A Warrant, as calculated pursuant to the terms of the Series A Warrant.

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Limits on Exercise of Series A Warrants. Except upon at least 61 days’ prior notice from the holder to us, the holder will not have the right to exercise any portion of a Series A Warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise. A holder may increase or decrease this beneficial ownership limitation upon not less than 61 days’ prior notice to us but in no event may the limitation exceed 9.99% of the number of shares of our common stock issued and outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of a warrant.

Amendments. We and a holder may modify or amend the terms of a Series A Warrant or waive provisions thereof upon written consent.

Series B Warrants

Duration and Exercise Price. Each Series B Warrant offered hereby will entitle the holder thereof to purchase one unit, consisting of one share of our common stock and one Series A Warrant, at an initial exercise price of $6.00, commencing immediately on the date of issuance and will expire on January 9, 2013 (subject to extension). The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications of common stock or similar events affecting our shares of common stock.

Transferability. The Series B Warrants may be transferred at the option of the Series B Warrant holder upon surrender of the Series B warrants with the appropriate instruments of transfer.

Exchange Listing. There is no established public trading market for the Series B Warrants, and there can be no assurance that such a market will develop. We do not plan on making an application to list the Series B Warrants on The Nasdaq Capital Market, any other national securities exchange or other nationally recognized trading system. Without an active market, the liquidity of the Series B Warrants will be limited. In addition, in the event our common stock price does not exceed the per share exercise price of the warrants during the period when the warrants are exercisable, the warrants will have little or no value.

Rights as a Stockholder. Except by virtue of a holder’s ownership of shares of our common stock, the holders of the Series B Warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise their Series B Warrants.

Fundamental Transactions. In the event of any fundamental transaction, as described in the Series B Warrants and generally including any merger with another entity, the sale, transfer or other disposition of all or substantially all of our assets to another entity, or the acquisition by a person of more than 50% of our common stock, then the holders of the Series B Warrants will thereafter have the right to receive upon exercise of the Series B Warrants such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of shares of our common stock equal to the number of shares of our common stock issuable upon exercise of the Series B Warrants immediately prior to the fundamental transaction, had the fundamental transaction not taken place, and appropriate provision will be made so that the provisions of the Series B Warrants (including, for example, provisions relating to the adjustment of the exercise price) will thereafter be applicable, as nearly equivalent as may be practicable in relation to any share of stock, securities or assets deliverable upon the exercise of the Series B Warrants after the fundamental transaction. In lieu of the right to receive upon exercise the shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of shares of our common stock, the holders of the Series B Warrants may require us under certain circumstances to redeem the Series B Warrant for a purchase price payable in cash of the Black-Scholes value of the Series B Warrant, as calculated pursuant to the terms of the Series B Warrant.

Limits on Exercise of Series B Warrants. Except upon at least 61 days’ prior notice from the holder to us, the holder will not have the right to exercise any portion of a Series B Warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise. A holder may increase or decrease this beneficial ownership limitation upon not less than 61 days’ prior notice to us but in no event may the limitation exceed 9.99% of the number of shares of our common stock issued and outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of a warrant.

Amendments. We and a holder may modify or amend the terms of a Series B warrant or waive provisions thereof upon written consent.

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Transfer Agent and Registrar

The Transfer Agent and Registrar with respect to our Common Stock is Corporate Stock Transfer, 3200 Cherry Creek Dr. South, Suite 430, Denver, Colorado 80209.

~~SELLING SECURITY HOLDERS~~73

~~The~~ ~~persons~~ listed in the following table plan to offer the securities shown opposite their respective names by means of this prospectus. The selling security holders acquired the securities being offered hereby in the transactions described in the footnotes below. UNDERWRITING

Name of Selling Security Holder	Shares of Common Stock Owned	Series A Warrants Owned	Series B Warrants Owned	Shares to be Sold in This Offering	Series A Warrants to be Sold in this Offering	Series B Warrants to be Sold in this Offering	Shares of Common Stock Owned After This Offering	Series A Warrants Owned After This Offering	Series B Warrants Owned After This Offering
Hudson Bay Master Fund, Ltd.(1)	300,000	487,500	-0-	300,000	487,500	-0-	-0-	-0-	-0-
Empery Asset Master, LTD(1)	115,000	186,875	-0-	115,000	186,875	-0-	-0-	-0-	-0-
Hartz Capital Investments, LLC(1)	115,000	186,875	-0-	115,000	186,875	-0-	-0-	-0-	-0-
Capital Ventures International(1)	160,000	260,000	-0-	160,000	260,000	-0-	-0-	-0-	-0-
Tenor Opportunity Master Fund, Ltd.(1)	149,000	242,125	-0-	149,000	242,125	-0-	-0-	-0-	-0-
Cranshire Master Fund, Ltd.(1)	126,000	204,750	-0-	126,000	204,750	-0-	-0-	-0-	-0-
Equitec Specialists, Ltd.(1)	14,000	22,750	-0-	14,000	22,750	-0-	-0-	-0-	-0-
Midsummer Small Cap Master, Ltd.(1)	134,000	217,750	-0-	134,000	217,750	-0-	-0-	-0-	-0-
Kingsbrook Opportunities Master Fund LP(1)	105,000	170,625	-0-	105,000	170,625	-0-	-0-	-0-	-0-
Avalon Portfolio, LLC(1)	131,392	162,500	-0-	100,000	162,500	-0-	31,392	-0-	-0-
FiveMore Special Situations Fund Limited(1)	80,000	130,000	-0-	80,000	130,000	-0-	-0-	-0-	-0-
Anson Investments Master Fund LP(1)	60,000	97,500	-0-	60,000	97,500	-0-	-0-	-0-	-0-
Lincoln Park Capital Fund, LLC(1)	16,000	26,000	-0-	16,000	26,000	-0-	-0-	-0-	-0-
Alpha Capital Anstalt(2)	75,000	105,000	-0-	75,000	105,000	-0-	-0-	-0-	-0-
Globis Capital Partners, L.P.(2)	14,000	21,000	-0-	14,000	21,000	-0-	-0-	-0-	-0-
Randolph & Janice Berg JTWROS(2)	1,000	1,500	-0-	1,000	1,500	-0-	-0-	-0-	-0-
The S&L Goon Revocable Trust(2)	1,000	1,500	-0-	1,000	1,500	-0-	-0-	-0-	-0-
Greenfield Investments SVC, LLC(2)	6,000	9,000	-0-	6,000	9,000	-0-	-0-	-0-	-0-
Mark Mays(2)	17,798	26,697	-0-	17,798	26,697	-0-	-0-	-0-	-0-
Rajo Capital Management, LLC(2)	5,000	7,500	-0-	5,000	7,500	-0-	-0-	-0-	-0-
Ikona Global Partners(2)	5,000	7,500	-0-	5,000	7,500	-0-	-0-	-0-	-0-
Very Hungry, LLC(3)	891,112	1,095,314	739,337	739,337	1,095,314	739,337	155,775	-0-	-0-
Scott Reiman 1991 Trust(3)	199,086	262,713	177,331	177,331	177,331	177,331	21,755	-0-	-0-

We and Roth Capital Partners, LLC, whom we refer to as the Underwriter, will enter into an underwriting agreement with respect to the shares being offered hereby. Subject to the terms and conditions of the underwriting agreement, the Underwriter has agreed to purchase from us the following number of shares on the closing of the offering at an offering price less the underwriting discount set forth on the cover page of this prospectus.

Underwriter		Number of Shares

Roth Capital Partners, LLC			17,000,000

~~Table~~ The Underwriter has generally agreed to purchase all of ~~Contents~~the shares sold under the underwriting agreement if any of the shares are purchased, other than shares covered by the over-allotment option described below. The underwriting agreement provides that the Underwriter's obligation to purchase shares depends on the satisfaction of the conditions contained in the underwriting agreement including:

•: the representations and warranties made by us to the Underwriter are true;
•: there is no material change in our business; and
•: we deliver customary closing documents to the Underwriter.

~~(1) The securities offered by these selling security holders were issued on September 26~~ Additionally, ~~2013 when~~ the ~~holders~~obligations of ~~737,000~~the ofUnderwriter ~~our~~under ~~Series B~~the ~~Warrants~~underwriting ~~issued~~agreement inmay ~~June~~be ~~2013~~terminated ~~exchanged~~at ~~their~~the ~~Series B~~Underwriter's ~~Warrants~~discretion ~~for~~upon ~~Series B-1~~the ~~Warrants~~occurrence ~~and~~of ~~thereafter~~certain ~~exercised~~stated ~~their B-1 Warrants~~events. ~~The~~We ~~Series B-1~~have agreed ~~Warrants were identical~~ to ~~the~~indemnify ~~Series B Warrants except that~~ the ~~exercise~~Underwriter ~~price~~and ~~was~~its ~~reduced~~directors, ~~from~~officers, ~~$6.00~~stockholders, toagents ~~$4.05 per share~~ and ~~the~~employees ~~Series B-1~~against ~~Warrants~~certain liabilities ~~were~~and ~~exercisable~~expenses, ~~for~~including ~~one~~liabilities ~~share~~under ofthe ~~common~~Securities ~~stock and 1~~Act.75 ~~Series A~~We ~~Warrants~~have ~~(compared~~also agreed to ~~one~~contribute ~~share~~to ofpayments ~~common~~the ~~stock~~Underwriter ~~and~~may ~~one~~be ~~Series A~~required ~~Warrant~~to make in ~~the~~respect ~~Series B~~of ~~Warrants)~~such liabilities.

~~(2)~~ The underwriting ~~securities~~agreement ~~offered~~will byprovide ~~these~~that ~~selling~~we ~~security~~will ~~holders~~pay ~~were~~the ~~issued~~Underwriter ona ~~September 26,~~discount ~~2013 to the holders~~ of ~~our~~[ ]% ~~Series B~~($[ ] ~~Warrants~~per ~~that~~share) ~~did not participate~~ in consideration of the ~~exchange~~Underwriter's ~~and~~services ~~exercise described~~ in ~~note~~connection ~~(1). They~~with ~~were issued pursuant to~~ the ~~anti-dilution provisions of their Series B Warrants~~offering.

~~(3)~~ The Underwriter ~~common~~has ~~stock,~~advised ~~916,668~~us ofthat ~~the~~they ~~Series A~~propose ~~Warrants~~initially ~~and~~to ~~all~~offer ofthe shares to the ~~Series B~~public ~~Warrants~~at ~~offered~~the bypublic ~~these~~offering ~~selling~~price ~~security~~on ~~holders~~the ~~were~~cover ~~issued~~page onof ~~August 30,~~this ~~2013~~prospectus ~~pursuant~~supplement and to ~~the~~dealers at ~~terms~~that ofprice ~~our~~less ~~senior~~a ~~mandatorily~~concession ~~redeemable~~not ~~preferred~~in ~~stock~~excess of $[ ] per share. The ~~remaining~~Underwriter ~~Series A~~will ~~Warrants~~not ~~were~~allow, ~~issued~~and onthe ~~September 26~~dealers may not re-allow, ~~2013~~any discount to ~~these~~other ~~holders~~dealers. After ~~pursuant~~the tooffering, the ~~anti-dilution~~offering ~~provisions~~price and other selling terms may be changed. The Underwriter may receive from purchasers of ~~their~~the ~~Series B~~shares ~~Warrants~~normal brokerage commissions in amounts agreed with such purchasers.

~~PLAN~~ We have OFgranted ~~DISTRIBUTION~~the Underwriter an option, which expires on the 30th day following the date of this prospectus, to purchase from us, at a price equal to the public offering price, less the underwriting discount, up to an additional 15% of the number of shares sold in the offering to cover over-allotments, if any.

The offering ~~Warrant~~price ~~Shares~~and ~~being~~terms ~~offered by us to holders~~ of ~~our Series A Warrants and Series B Warrants are not being offered to~~ the ~~public.~~offering ~~The Class B Warrants~~ were ~~issued~~established inthrough ~~June~~arms-length ~~2013~~negotiation ~~pursuant to an underwriting agreement~~ between us and ~~Roth Capital Partners, LLC, whom we refer to as~~ the Underwriter~~. The~~ ~~Underwriter~~with ~~purchased~~consideration ~~from~~given us 833,335 units, each unit consisting of one share of common stock, one Class A Warrant and one Class B Warrant. The Underwriter also purchased from us for a nominal price an additional 23,464 Class A Warrants and Class B Warrants pursuant to ~~an option to purchase those warrants to cover over-allotments. All of~~ the ~~Class B~~trading ~~Warrants~~price ~~issued in June 2013 have been exercised or have expired. In August 2013 the preferred stock held by Very Hungry, LLC and Scott Reiman 1991 Trust automatically converted into an aggregate~~ of ~~916,668~~our ~~shares of~~ common stock, ~~916,668~~as ~~Class B~~reported ~~Warrants~~on ~~and~~the ~~916,668~~Nasdaq ~~Class A~~Capital ~~Warrants~~Market.

50 The following table shows the per share and total underwriting discounts and commissions we are obligated to pay to the Underwriter.

Table of Contents

	Per Share	Total

Public offering price	$	$
Underwriting discounts and commissions	$	$

The Underwriter will receive an underwriting commission of $0.48 per share for each share of common stock issued pursuant to the exercise of both the 856,798 Series A Warrants issued in the June 2013 public offering and 737,000 of the Series A Warrants issued in September 2013 upon exercise of 737,000 Series B Warrants. The underwriting agreement is included as an exhibit to our current report on Form 8-K filed with the SEC on June 24, 2013.74

~~Each~~ We estimate ~~selling~~that ~~security~~expenses ~~holder~~payable ~~listed~~by ~~under~~us ~~“Selling~~in ~~Security~~connection ~~Holders”~~with ~~and~~this ~~any~~offering, ofincluding ~~their pledgees~~registration, ~~assignees~~filing and ~~successors-in-interest~~listing ~~may~~fees, ~~from~~printing ~~time~~fees toand ~~time,~~legal ~~sell~~and ~~any~~accounting orexpenses, ~~all~~but ofexcluding the ~~their~~underwriting ~~shares~~commissions, ofwill ~~common~~be ~~stock~~approximately ~~securities~~$[ ] million. ~~covered~~In ~~hereby~~no onevent will the ~~OTC~~total orcompensation ~~any~~payable ~~other~~to ~~stock~~the ~~exchange,~~Underwriter ~~market~~and orany ~~trading~~other ~~facility~~member onof the ~~which~~Financial ~~our~~Industry ~~common~~Regulatory ~~stock~~Authority, Inc. ~~is traded~~ or inindependent ~~private~~broker-dealer ~~transactions.~~(including ~~These~~any ~~sales~~financial ~~may~~advisor) bein atconnection ~~fixed~~with orthe ~~negotiated~~sale ~~prices.~~of Athe ~~selling~~shares ~~stockholder~~offered ~~may~~hereby ~~use~~exceed ~~any~~8.0% ~~one or more~~ of the gross ~~following~~proceeds ~~methods~~of ~~when~~this ~~selling~~offering. ~~shares:~~

~~· ordinary~~ The Company ~~brokerage~~and ~~transactions~~its directors and ~~transactions~~executive officers have agreed to certain lock-up provisions with regard to future sales of our common stock, beginning on the date of the underwriting agreement and ending on, and including, the date that is [ ] days (except in ~~which~~the case of the ~~broker-dealer~~Company, ~~solicits~~[ ] ~~purchasers;~~days) after such date, as set forth in the underwriting agreement.

~~· block~~ In connection ~~trades~~with the offering, the Underwriter may purchase and sell common stock in ~~which~~the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the ~~broker~~sale by an Underwriter of a greater number of shares than it is required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the Underwriter's over-~~dealer~~allotment ~~will~~option ~~attempt~~to purchase additional shares of common stock from us in the offering. The Underwriter may close out any covered short position by either exercising its over-allotment option to ~~sell~~purchase additional shares or purchasing shares in the open market. In determining the source of shares of common stock to close out the covered short position, the Underwriter will consider, among other things, the price of common stock available for purchase in the open market as ~~agent~~compared ~~but~~to the price at which they may purchase additional shares of common stock pursuant to the over-allotment option granted to it. "Naked" short sales are any sales in excess of such over-allotment option. The Underwriter must close out any naked short position by ~~and~~purchasing ~~resell~~shares aof ~~portion~~common stock in the open market. A naked short position is more likely to be created if the Underwriter is concerned that there may be downward pressure on the price of the common ~~block~~stock asin ~~principal~~the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the Underwriter in the open market prior to ~~facilitate~~the completion of the ~~transaction;~~offering.

~~· purchases~~ Purchases to bycover a ~~broker-dealer~~short position and stabilizing transactions, as ~~principal~~well ~~and~~as ~~resale~~other purchases by the ~~broker-dealer~~Underwriter for ~~its~~their ~~account;~~own accounts, may have the effect of preventing or delaying a decline in the market price of our shares of our common stock, and may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq Capital Market or otherwise.

~~· an~~ This prospectus ~~exchange~~in ~~distribution~~electronic format may be made available on Internet sites or through other online services maintained by the Underwriter or by its affiliates. Other than any prospectus made available in ~~accordance~~electronic ~~with~~format in this manner, the ~~rules~~ information on any website containing this prospectus is not part of this prospectus or the ~~applicable~~registration ~~exchange;~~statement of which this prospectus forms a part, and such information has not been approved or endorsed by us or any Underwriter in such capacity and should not be relied on by prospective investors.

~~· privately~~ The underwriting ~~negotiated~~agreement ~~transactions;~~will be included as an exhibit the registration statement of which this prospectus forms a part.

~~· settlement~~ The shares ofwill ~~short~~be ~~sales~~offered ~~entered~~in ~~into after~~ the ~~effective~~United ~~date~~States ofthrough the ~~registration~~Underwriter ~~statement~~either ofdirectly ~~which~~or, ~~this~~if ~~prospectus~~applicable, isthrough aits ~~part;~~registered broker-dealer affiliates.

~~· in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;~~75

· through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

· a combination of any such methods of sale; or

· any other method permitted pursuant to applicable law.

The selling security holders may also sell shares under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.

Broker-dealers engaged by the selling security holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the shares or interests therein, the selling security holders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume. The selling security holders may also sell shares short and deliver these shares to close out their short positions, or loan or pledge the shares to broker-dealers that in turn may sell these shares. The selling security holders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The Series A Warrants and Series B Warrants held by the selling security holders may only be sold in privately negotiated transactions as no public market exists for the Series A Warrants or the Series B Warrants.

LEGAL MATTERS

The validity of the common stock ~~and warrants~~ offered by this prospectus ~~has~~will ~~been~~be passed upon for us by Brownstein Hyatt Farber Schreck, LLP, Denver, Colorado. The Underwriter ofis ~~the~~being ~~June 26, 2013 public offering was~~ represented by ~~Morrison & Foerster LLP~~[ ], ~~Palo Alto~~[city], ~~California~~[state]. Brownstein Hyatt Farber Schreck and ~~one~~three of its partners collectively own 119,922 shares of our common stock and options to purchase 2,400 shares of our common stock. Norman Brownstein, a founding partner of Brownstein Hyatt Farber Schreck, is the father of Chad Brownstein, our executive vice chairman. See ‘‘"Transactions with Related Persons’’".

EXPERTS

The financial statements ~~incorporated~~ in this prospectus have been so incorporated in reliance on the report of EKS&H LLLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

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INFORMATION WITH RESPECT TO THE REGISTRANT

Prospect was incorporated in the State of Nevada on July 22, 2008 and Onon February 11, 2011 we completed a reverse merger and acquired Prospect Global Resources Inc., a Delaware corporation, which is now our wholly-owned subsidiary. We changed our name from Triangle Castings, Inc. to Prospect Global Resources Inc., a Nevada corporation, at the time of the merger. In March 2012, we changed our fiscal year end from December 31 to March 31.

WHERE YOU CAN FIND MORE INFORMATION

We file and furnish annual, quarterly and current reports and other information, including proxy statements, with the SEC. You may read and copy any document we file or furnish with the SEC at the SEC’'s Public Reference Room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Our SEC filings are available to the public on the SEC’'s website at www.sec.gov. Our SEC filings are also available through the “"Investors”" section of our website at www.prospectgri.com.

5276

Table of Contents

FINANCIAL STATEMENTS

Prospect Global Resources Inc.

(AAn ~~Development~~Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

~~June~~ December 3031, 2013

CONTENTS
Financial Statements:
Consolidated Balance Sheets as of June 30, 2013 and March 31, 2013	F-2
Consolidated Balance Sheets as of December 31, 2013 and March 31, 2013		F-2
Consolidated Statements of Operations for the three months ended June 30, 2013 and 2012 and for the cumulative period from August 5, 2010 (Inception) through June 30, 2013	F-3
Consolidated Statements of Operations for the three and Nine months ended December 31, 2013 and 2012 and for the cumulative period from August 5, 2010 (Inception) through December 31, 2013		F-3
Consolidated Statements of Cash Flows for the three months ended June 30, 2013 and 2012 and for the cumulative period from August 5, 2010 (Inception) through June 30, 2013	F-4
Consolidated Statements of Cash Flows for the Nine months ended December 31, 2013 and 2012 and for the cumulative period from August 5, 2010 (Inception) through December 31, 2013		F-4
Consolidated Statements of Shareholders’ Equity (Deficit) from August 5, 2010 (Inception) to June 30, 2013	F-5
Consolidated Statements of Shareholders' Equity (Deficit) from August 5, 2010 (Inception) to December 31, 2013		F-5
Notes to Consolidated Financial Statements	~~F-6~~	F-6

F-1

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PROSPECT GLOBAL RESOURCES INC.

CONSOLIDATED BALANCE SHEETS

(aAn ~~Development~~Exploration Stage Company)

(In thousands, except number of shares and par value amounts)

	December 31, 2013 (unaudited)			March 31, 2013
	June 30, 2013			March 31, 2013
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	~~1,372~~51		$	1,024
Restricted cash	2,432			—
Related party receivable		25			25
Accounts receivable	4			6
Other current assets		297			1,171
Related party receivable	25			25

Other current assets	1,066			1,165
Total current assets		373			2,220
Total current assets	4,899			2,220
Noncurrent assets
Land	~~399~~	399		~~380~~	380
Mineral properties	~~41,922~~	13,047		~~39,994~~	13,690
Equipment (net of accumulated depreciation of $184 and $132, respectively)	569			613
Equipment (net of accumulated depreciation of $283 and $132, respectively)		394			613
Deferred fees (Note 6)	7,751			7,751
Other long-term assets		75			104
Other long-term assets	219			104

Total noncurrent assets	~~50,860~~	13,915		~~48,842~~	14,787
Total assets	$	5514,~~759~~288		$	5117,~~062~~007
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	2,265		$	2,849
Accounts payable and accrued liabilities	$	4,693		$	7,356
Accrued liabilities	3,125			11,758
Grandhaven Obligation (Note 10)		4,060			4,060
Buffalo liability (Note 8)	9,200			—
Current portion of long-term debt, net		116,536			122,032
Grandhaven option	4,060			4,060
Tax compensation on note payable (Note 8)		19,152			6,226
Current portion of long-term debt (net of unamortized discount of $2,601 and nil, respectively)	2,899			122,032
Accrued interest		10,875			7,251
Tax gross-up on note payable (Note 9)	1,164			6,226
Derivative warrant liabilities (Note 14)		12,481			—
Derivative warrant liabilities (Note 13)	4,505			—

Total current liabilities	~~27,218~~	167,797		~~146,925~~	146,925
Noncurrent liabilities
Tax gross-up on note payable (Note 9)	16,465			—
Other noncurrent liabilities		650			—
Noncurrent portion of long-term debt (net of unamortized discount of $30,278 and nil, respectively)	91,304			—

Interest payable	10,001			—
Total noncurrent liabilities		650			—
Other long-term liabilities	100			—
Total liabilities		168,447			146,925
Total noncurrent liabilities	117,870			—
Commitments and Contingencies (Note 16)
Total liabilities	145,088			146,925
Redeemable preferred stock: $0.001 par value; 100,000,000 shares authorized; 15,000,000 shares outstanding with a liquidation preference of $15,000,000 and nil at December 31, 2013 and March 31, 2013, respectively. (Note 9)		4,996			—
Commitments and Contingencies (Note 15)
EQUITY(1)
SHAREHOLDERS’ DEFICIT
Common stock: $0.001 par value; 300,000,000 shares authorized; 4,191,658 and 1,451,914 issued and outstanding at December 31, 2013 and March 31, 2013, respectively		4			1
Preferred stock: $0.001 par value; 100,000,000 shares authorized; none outstanding	—			—
Additional paid-in capital		39,025			30,335
Common stock: $0.001 par value; 300,000,000 shares authorized; 2,302,388 and 1,451,914 issued and outstanding at June 30, 2013 and March 31, 2013, respectively	2			1
Losses accumulated in the exploration stage		(198,184	)		(160,254	)
Additional paid-in capital	40,712			35,713

Losses accumulated in the development stage	(130,043		)	(131,577		)
Total shareholders' deficit		(159,155	)		(129,918	)
Total shareholders’ deficit	(89,329		)	(95,863		)
Total liabilities, redeemable preferred stock and shareholders' deficit	$	14,288		$	17,007
Total liabilities and shareholders’ deficit	$	55,759		$	51,062

(1): All common share amounts and computations using such amounts have been retroactively adjusted to reflect the September 4, 2013 1-for-50 reverse stock split.

The accompanying notes are an integral part of these statements.

F-2

Table of Contents

PROSPECT GLOBAL RESOURCES INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(aAn ~~Development~~Exploration Stage Company)

(unaudited)

(In thousands, except per share amounts)

	Three Months Ended December 31, 2013			Three Months Ended December 31, 2012			Nine Months Ended December 31, 2013			Nine Months Ended December 31, 2012			Cumulative from August 5, 2010 (Inception) through December 31, 2013
	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012			Cumulative from August 5, 2010 (Inception) through June 30, 2013
Expenses:
Exploration	$	—777		$	—5,646		$	54,~~600~~848		$	17,016		$	30,072
General and administrative	~~6,112~~	4,950		~~3,328~~	15,723		~~67,213~~	9,306			29,611			70,490
Total expenses	6,112			3,328			72,813
Off-take fee		—			7,751			(438	)		7,751			7,313
Loss from operations	(6,112		)	(3,328		)	(72,813		)
(Gain) loss on change in warrant liability		(5,918	)		324			(867	)		5,943			5,099
Other income (expense):

Derivative gains (losses)	2,900			—			(53,766		)
Total expenses		(191	)		29,444			12,849			60,321			112,974
Gain in of debt extinguishment (Note 9)	13,114			—			11,114

Loss on sale of fixed assets	(2		)	—			(2		)
Gain (loss) from operations		191			(29,444	)		(12,849	)		(60,321	)		(112,974	)
Interest, net	(8,366		)	—			(17,666		)
Other income (expense):
Total other income (expense)	7,646			—			(60,320		)
Derivative gains (losses)		650			(1,900	)		2,162			(1,900	)		(54,504	)
Income tax expense	—			—			—
Loss on extinguishments, net		(11,423	)		—			(49	)		—			(2,049	)
Net gain (loss)	1,534			(3,328		)	(133,133		)
Asset impairment		(643	)		—			(1,224	)		—			(1,224	)
Net gain (loss) attributable to non-controlling interest	—			7			3,090
Interest, net		(9,360	)		(2,741	)		(25,970	)		(4,612	)		(35,270	)
Net gain (loss) loss attributable to Prospect Global Resources Inc.	$	1,534		$	(3,321	)	$	(130,043	)

Earnings per share
Total other expenses		(20,776	)		(4,641	)		(25,081	)		(6,512	)		(93,047	)
Basic and diluted
Income tax expense		—			—			—			—			—
Gain (Loss) per share	$	1.02		$	(4.20	)	$	(165.87	)
Net loss		(20,585	)		(34,085	)		(37,930	)		(66,833	)		(206,021	)
Weighted average number of shares outstanding	1,505			790			784
Net loss attributable to non-controlling interest		—			—			—			4,069			7,837

Net loss attributable to Prospect Global Resources Inc.	$	(20,585	)	$	(34,085	)	$	(37,930	)	$	(62,764	)	$	(198,184	)


Earnings per share(1)
Basic and diluted
Loss per share	$	(5.01	)	$	(26.50	)	$	(13.62	)	$	(59.32	)	$	(142.61	)
Weighted average number of shares outstanding		4,203			1,286			2,820			1,058			1,393

(1): All common share amounts and computations using such amounts have been retroactively adjusted to reflect the September 4, 2013 1-for-50 reverse stock split.

The accompanying notes are an integral part of these statements.

F-3

Table of Contents

PROSPECT GLOBAL RESOURCES INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(aAn ~~Development~~Exploration Stage Company)

(unaudited)

(In thousands)

	Nine Months Ended December 31, 2013			Nine Months Ended December 31, 2012			Cumulative from August 5, 2010 (Inception) through December 31, 2013
	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012			Cumulative from August 5, 2010 (Inception) through June 30, 2013
CASH FLOWS FROM USED IN OPERATING ACTIVITIES:
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net income (loss)	$	1,534		$	(3,328	)	$	(133,133	)
Net loss	$	(37,930	)	$	(66,833	)	$	(206,021	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Services paid for with securities	256			167			3,413
Services paid for with stock		1,569			4,547			8,600
Apollo fees paid with promissory note	—	—		—	—		~~6,750~~	6,750
Derivative (gains) losses	~~(2,900~~	(2,162	)	—	1,900		~~53,766~~	54,504
Gain on debt extinguishment	(13,514		)	—			(11,514		)
(Gain) loss on debt extinguishment		(497	)		—			1,503
Loss on sale of fixed assets	2			—			2
Impairment of assets		724			—			724
Stock-based compensation	~~951~~	1,840		~~444~~	9,285		~~24,463~~	21,831
Warrant Expense	3,300			—			3,300
Warrant expense		(867	)		5,943			5,099
Interest expense	~~5,286~~	10,699		—	4,620		~~14,596~~	20,009
Amortization of debt discount	~~3,800~~	14,586		—	—		~~3,800~~	14,586
Amortization of deferred financing costs	22	673		—	—		22	673
Karlsson Group Tax Gross Up	—			—			6,226
Karlsson Group tax compensation		1,537			6,226			7,763
Depreciation	54	161		9	72		~~167~~	275
SKLH land option extinguishment		500			0			500
Changes in operating assets and liabilities:
Accounts receivable	2			—			(4		)
Other current assets		7			170			(769	)
Other current assets	172			(64		)	(493		)
Accounts payable and accrued liabilities		(2,905	)		5,979			4,463
Deferred fees	—			—			(2,288		)
Change in derivative warrant liabilities		(806	)		—			(806	)
Deposits	—			—			(104		)
Change in other long-term assets		38			—			38
Accounts payable	(35		)	434			1,134

Accrued liabilities	414			258			(117		)
Net cash used in operating activities		(12,833	)		(28,091	)		(60,278	)
Change in derivative warrant liabilities	(785		)	—			(785		)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Change in other long-term assets	(210		)	—			(210		)
Mineral properties	$	—		$	(98	)	$	(2,690	)
Change in other long-term liabilities	100			—			100
Land acquisitions		(19	)		—			(399	)
Net cash (used) in operating activities	$	(1,551	)	$	(2,080	)	$	(30,909	)
Increase in restricted cash		(1	)		—			(1	)
CASH FLOWS USED IN FROM INVESTING ACTIVITIES:
Equipment acquisitions		(23	)		(643	)		(748	)
Mineral properties	$	(2,288	)	$	(3,787	)	$	(23,062	)

Land acquisitions	(19		)	—			(399		)
Net cash used in investing activities		(43	)		(741	)		(3,838	)
Increase in restricted cash	(4,063		)	—			(4,063		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Equipment acquisitions	(11		)	(150		)	(738		)
Net cash (used) in investing activities	$	(6,381	)	$	(3,937	)	$	(28,262	)
CASH FLOWS FROM USED IN FINANCING ACTIVITIES:
Proceeds from convertible notes	$	5,000		$	—		$	14,049
Merkin note amendment	—	—		—	—		~~(2,000~~	(2,000	)
Karlsson Note principal payments	—			—			(9,718		)
Karlsson note principal payments		(96	)		—			(9,814	)
Proceeds from common stock issued	3,280			1,000			83,212
Apollo notes principal payments		(95	)		—			(95	)
Non-controlling interest acquisition	—			(5,000		)	(25,000		)
Karlsson tax compensation payments		(14	)		(9,718	)		(14	)
Net cash provided by (used in) financing activities	$	8,280		$	(4,000	)	$	60,543
Net Proceeds from common stock issued		7,108			61,884			87,041
Net increase (decrease) in cash and cash equivalents	348			(10,017		)	1,372
Cash paid for non-controlling interest acquisition		—			(25,000	)		(25,000	)
Cash and cash equivalents- beginning of period	1,024			11,300			—

Cash and cash equivalents - end of period	$	1,372		$	1,283		$	1,372
Net cash provided by financing activities	$	11,903		$	27,166		$	64,167
Cash paid for interest	$	—		$	—		$	—
Net increase (decrease) in cash and cash equivalents		(973	)		(1,666	)		51
Cash and cash equivalents—beginning of period		1,024			11,300			—

Cash and cash equivalents—end of period	$	51		$	9,634		$	51


Cash paid for interest		12			—			—
Supplemental disclosure of non-cash transactions:
Convertible notes and accrued interest converted into shares of common stock	$	—		$	—		$	(9,493	)
Common stock attributable to reverse merger	—	—		—	—		2	2
Fair value of land contributed by non-controlling interest	—	—		—	—		~~(11,000~~	(11,000	)
Note receivable in exchange for shares of common stock	—	—		—	—		~~(1,125~~	(1,125	)
Warrants issued and recorded as deferred financing costs	1,714			—			(1671		)
Grandhaven Obligation, net of $25,000 receivable		—			—			4,036
Grandhaven Option, net of $25,000 receivable	—			—			4,036
Non-controlling interest acquisition		—			—			500
Accrued development activities	2,352			3,282			3,166
SK Land Holdings Option		(500	)		500			—
Accrued cost of public offering	298			350			298
Convertible note into preferred stock		5,439			—			5,439
Non-controlling interest acquisition	—			500			500
Preferred stock into common stock and warrants		(5,439	)		—			(5,439	)
Capitalized equity based compensation	361			—			3,439
Embedded derivative liability (noncurrent)		650			—			650
SK Land Holdings Option	—			—			500
Buffalo revenue interest exchange		8,712			—			8,712
Sichuan success fee (in accrued liabilities)	—			—			1,588
Sichuan success fee (equity component)	—			—			3,876

The accompanying notes are an integral part of these statements.

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PROSPECT GLOBAL RESOURCES INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’' EQUITY (DEFICIT)

(aAn ~~Development~~Exploration Stage Company)

(In thousands, except number of shares)

													Losses Accumulated in the Exploration Stage

	Preferred Stock					Common Stock(1)													Total Shareholders' Equity/ (Deficit)			Temporary Equity (Preferred Stock)
	Preferred Stock					Common Stock(1)				Additional Paid- in Capital(1)						Non- Controlling Interest
	Shares			Amount		Shares		Amount		Additional Paid- in Capital(1)						Non- Controlling Interest
Balance at August 5, 2010 (Inception)		—		$	—		—	$	—	$	—		$	—		$	—		$	—		$	—
Stock issued in private placements					—		328,273		—		54			—			—			54			—
Stock-based compensation		—			—		17,000		—		1			—			—			1			—
Contributions		—			—		—		—		—			—			11,000			11,000			—
Stock issued for services		—			—		42,833		—		316			—			—			316			—
Stock acquired through merger		—			—		34,700		—		—			—			—			—			—
Convertible notes and accrued interest converted into common stock		—			—		7,171		—		1,076			—			—			1,076			—
Net loss		—			—		—		—		—			(16,834	)		(375	)		(17,209	)		—


Balance at March 31, 2011		—			—		429,977		—		1,447			(16,834	)		10,625			(4,762	)		—


Stock issued in private placements		—			—		85,552		—		13,972			—						13,972			—
Stock issued for services		—			—		10,000		—		2,061			—			—			2,061			—
Stock-based compensation		—			—		14,000		—		9,717			—			—			9,717			—
Convertible notes and accrued interest converted into common stock		—			—		250,254		—		64,800			—			—			64,800			—
Net loss		—			—		—		—		—			(63,566	)		(3,391	)		(66,957	)		—


Balance at March 31, 2012		—			—		789,783		—		91,997			(80,400	)		7,234			18,831			—


Stock issued for services		—			—		40,425		—		4,652			—			—			4,652			—
Non-controlling interest acquisition		—			—		—		—		(179,056	)		—			(3,163	)		(182,219	)		—
The Karlsson Group warrant issuance		—			—		—		—		34,620			—			—			34,620			—
Stock issued in private placements		—			—		4,706		—		1,000			—			—			1,000			—
Stock issued in public offerings		—			—		608,000		1		66,289			—			—			66,290			—
Cost of public offerings		—			—		—		—		(5,406	)		—			—			(5,406	)		—
Stock-based compensation		—			—		9,000		—		16,239			—			—			16,239			—
Net loss		—			—		—		—		—			(79,854	)		(4,071	)		(83,925	)		—


Balance at March 31, 2013		—		$	—		1,451,914	$	1	$	30,335		$	(160,254	)	$	—		$	(129,918	)		—


Stock issued for services		—			—		247,742		—		1,569			—			—			1,569			—
Stock issued in public offerings		—			—		1,575,334		2		803			—			—			805			—
Cost of public offerings		—			—		—		—		(790	)		—			—			(790	)		—
Debt to preferred stock conversion		5,500,000			—		—		—		—			—			—			—			5,434
Exchange of preferred stock for common stock and warrants.		(5,500,000	)		—		916,668		1		2,275			—			—			2,276			(5,434	)
Redeemable Preferred Stock (Note 9)		15,000,000			—		—		—		—			—			—			—			4,996
Very Hungry warrant issuance		—			—		—		—		1,715			—			—			1,715			—
The Karlsson Group warrant issuance		—			—		—		—		190			—			—			190			—
Warrant reclass to liability		—			—		—		—		1,088			—			—			1,088			—
Stock-based compensation		—			—		—		—		1,840			—			—			1,840			—
Net loss		—			—		—		—		—			(37,930	)		—			(37,930	)		—


Balance at December 31, 2013 (unaudited)		15,000,000			—		4,191,658		4		39,025			(198,184	)		—			(159,155	)		4,996

(1): All common share amounts and computations using such amounts have been retroactively adjusted to reflect the September 4, 2013 1-for-50 reverse stock split.

The accompanying notes are an integral part of these statements.

	Common Stock			Additional Paid-			Losses Accumulated in the Development			Non- Controlling			Total Shareholders’
	Shares	Amount		in Capital			Stage			Interest			Equity
Balance at August 5, 2010 (Inception)	—	$	—	$	—		$	—		$	—		$	—
Stock issued in private placements	328,273	0		54			—			—			54
Stock-based compensation	17,000	0		1			—			—			1
Contributions	—	—		—			—			11,000			11,000
Stock issued for services	42,833	0		316			—			—			316
Stock acquired through merger	34,700	0		0			—			—			—
Convertible notes and accrued interest converted into common stock	7,171	0		1,076			—			—			1,076
Net loss	—	—		—			(16,834		)	(375		)	(17,209		)
Balance at March 31, 2011	429,977	0		1,447			(16,834		)	10,625			(4,762		)
Stock issued in private placements	85,552	0		13,973			—						13,972
Stock issued for services	10,000	0		2,061			—			—			2,061
Stock-based compensation	14,000	0		9,717			—			—			9,717
Convertible notes and accrued interest converted into common stock	250,254	0		64,799			—			—			64,800
Net loss	—	—		—			(62,877		)	(2,703		)	(65,580		)
Balance at March 31, 2012	789,783	0		91,997			(79,711		)	7,922			20,209
Stock issued for services	40,425	0		4,652			—			—			4,652
Non-controlling interest acquisition	—	—		(174,310		)	—			(7,910		)	(182,220		)
The Karlsson Group warrant issuance	—	—		34,620			—			—			34,620
Stock issued in private placements	4,706	0		999			—			—			999
Stock issued in public offerings	608,000	1		66,289			—			—			66,290
Cost of public offerings	—	—		(5,406		)	—			—			(5,406		)
Stock-based compensation	9,000	0		16,871			—			—			16,871
Net loss							(51,866		)	(12		)	(51,878		)
Balance at March 31, 2013	1,451,914	1		35,712			$	(131,577	)	$	—		$	(95,863	)
Stock issued for services	17,140	0		256			—			—			256
The Karlsson Group warrant issuance	—	—		190			—			—			190
Very Hungry warrant issuance				1,715			—			—			1,715
Stock issued in public offerings	833,334	1		2,143			—			—			2,144
Cost of public offerings	—	—		(1,706		)	—			—			(1,706		)
Warrant reclass to liability							—			—			1,089
Stock-based compensation	—	—		1,312			—			—			1,312
Net income							1,534			—			1,534
Balance at June 30, 2013 (unaudited)	2,302,388	2		40,711			$	(130,043	)	$	—		$	(89,329	)

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PROSPECT GLOBAL RESOURCES INC. Notes to Consolidated Financial Statements (An Exploration Stage Company) (unaudited)

~~Notes~~ to ~~Consolidated~~ In ~~Financial~~this ~~Statements~~Quarterly Report, unless the context otherwise requires:

(a): all references to "Prospect" or "Prospect Global" refer to Prospect Global Resources Inc., a Nevada corporation, incorporated on July 22, 2008.
(b): all references to "we," "us," "our" and "the Company" refer collectively to Prospect and its subsidiaries.
(c): all references to "Karlsson" or "the Karlsson Group" refer to the independent third party that owned the 50% of our now wholly owned subsidiary American West Potash, or AWP, that we did not own prior to our acquisition of the Karlsson Group's interest on August 1, 2012 and all references to "the Karlsson Group Acquisition" refer to the August 1, 2012 acquisition.
(d): all references to "Extension Agreements" refer to the agreements we entered into with the Karlsson Group on April 15, 2013, June 26, 2013, September 13, 2013, December 10, 2013 and January 31, 2014 to restructure the $125.0 million senior secured promissory note (the "Karlsson Note") and related agreements associated with the Karlsson Group Acquisition.

(a ~~Development~~Note 1—Organization ~~Stage~~and ~~Company)~~Business Operations

~~(unaudited)~~ Prospect Global is engaged in the exploration and development of a potash deposit located in the Holbrook Basin of eastern Arizona, which we refer to as the Holbrook Project. We hold our interest in and control the Holbrook Project through our wholly owned subsidiary AWP.

~~Note~~ Between January and November 2011, we invested $11.0 million dollars in AWP and the Karlsson Group contributed to AWP its ownership of mineral rights on eight private sections and potash exploration permits on 42 Arizona state sections, comprising a total of approximately 31,000 gross acres in the Holbrook Basin, for a 50% ownership interest in AWP. In July 2011, AWP entered into a Potash Sharing Agreement covering 101 private mineral estate sections and related mineral leases on approximately 62,000 acres adjacent to or in close proximity to AWP's existing mineral rights. On August 1, —2012 ~~Organization~~we purchased the Karlsson Group's 50% interest in AWP and ~~Business~~became ~~Operations~~the sole owner and operator of AWP. We subsequently relinquished our rights to eight of the ASLD exploration permits. As of December 31, 2013, we held exploration permits and leases on 143 mineral estate sections spanning approximately 88,175 acres.

~~Prospect~~ Global Resources Inc., a Nevada corporation (individually or in any combination with its subsidiaries, “Prospect,” the “Company,” “we,” “us,” or “our”), is engaged in the exploration and development of a potash deposit located in the Holbrook Basin of eastern Arizona, which we refer to as the Holbrook Project.Note 2—Liquidity

We As ~~were~~of ~~incorporated~~February 25, in2014, ~~the~~we ~~state~~had cash of ~~Nevada~~approximately on$0.3 million ~~July~~available for general corporate purposes which we expect to sustain operations through March. On or before March 710, ~~2008~~2014 ~~while~~we have a $25 million payment due under our ~~wholly~~Karlsson ~~owned~~debt ~~subsidiary,~~which ~~Old~~if ~~Prospect~~we ~~Global,~~fail ~~was~~to ~~incorporated~~make payment we will be in default. We will not be able to raise the ~~state~~money ofto ~~Delaware~~pay off the Karlsson Group debt on ~~August~~or before March 510, ~~2010.~~2014 Weand ~~hold~~are ~~our interest~~ in ~~and~~discussions ~~control~~with the ~~Holbrook~~Karlsson ~~Project~~Group ~~through~~to ~~our~~extend ~~ownership~~the due date of ~~our~~this ~~wholly~~payment. ~~owned~~In ~~subsidiary~~connection with this, ~~American~~we ~~West~~plan ~~Potash~~to ~~LLC~~negotiate orparallel extensions ~~AWP~~with Apollo. We may decide to file bankruptcy if we cannot raise sufficient funds to continue our operations.

Between January and November 2011, we invested $11.0 million dollars in AWP and another party, The Karlsson Group Inc. or Karlsson, contributed to AWP its ownership of mineral rights on eight private sections and potash exploration permits on 42 Arizona state sections, comprising a total of approximately 31,000 gross acres in the Holbrook Basin, for a 50% ownership interest in AWP. In July 2011, AWP entered into a Potash Sharing Agreement covering 101 private mineral estate sections and related mineral leases on approximately 63,000 acres adjacent to or in close proximity to AWP’s existing mineral rights. On August 1, 2012 we purchased The Karlsson Group’s 50% interest in AWP and became the sole owner and operator of AWP.

We have incurred net losses totaling $130.0 million since our inception and as of June 30, 2013 we had a working capital deficit of $22.3 million. These consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business for the foreseeable future and do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern.

Short-Term Liquidity and Capital Needs

As of June 30, 2013, we had approximately $3.8 million in cash, including escrowed cash of $2.4 million which can only be used for certain specified purposes related to the development of the Holbrook Project. Excluding this escrowed cash, the Company had available for its general corporate and working capital needs cash of approximately $1.4 million at June 30, 2013.

As of August 14, 2013, we had unrestricted cash balances totaling approximately $0.6 million which according to our projections should be sufficient to fund our on-going operations through mid-to-late September 2013. However, we have a $1.2 million tax gross-up payment that is owed to the Karlsson Group on or before September 10, 2013. We are currently evaluating multiple options to alleviate our liquidity needs including, but not limited to, raising additional funds and re-negotiating our debt agreements.

If we are unable to pay the amount due the Karlsson Group on or before September 10, 2013 or unable to restructure the Karlsson debt on or before this date, we could be declared in default of the Karlsson Note, which including principal, tax gross-ups and accrued interest, totaled approximately $142.7 million at June 30, 2013. A payment default would cause all of our debt to become immediately due and payable and could result in the Karlsson Group foreclosing on AWP or its assets. If we are unable to raise sufficient funds or receive a waiver for such payment from the Karlsson Group before September 10, 2013, we will consider a voluntary bankruptcy filing.

On June 26, 2013 we closed a public offering of common stock and warrants generating gross proceeds of $5.0 million. The participating investors received 856,798 Series A warrants and 856,798 Series B warrants with each Series A warrant entitling the holder thereof the right to purchase one additional share of our common stock in exchange for $6.00 and with each Series B warrant entitling the holder thereof the right to purchase one additional share of our common stock and one additional Series A warrant in exchange for $6.00 per Series B warrant. The Series B warrants expire at the close of business on November 1, 2013. If fully exercised, the B Series warrant would generate immediate cash proceeds to the Company of approximately $5.1 million. However, there can be no assurance that any, or all, of the B Series warrants will be exercised.

In addition, under the terms of the Second Extension Agreement we entered into with Karlsson on June 26, 2013, we were required to deposit 50% of the net proceeds of the next $20.0 million of capital we raise (for a total of $10.0 million) into escrow, which funds may be used solely to fund specified development expenses pursuant to the Extension Agreement. We are also required to pay 20% of all future capital raises to Karlsson and Apollo (10% to each) as payments on their respective promissory notes. These obligations will reduce the cash available from future capital raises that can be used to fund our on-going operations.

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Table of Contents

As PROSPECT ~~part~~GLOBAL ofRESOURCES INC. ~~the Second Extension Agreement, we are also required to meet the following development milestones:~~

~~(i)~~ ~~Complete~~Notes total depth on at least eight wells on or before November 1, 2013, (ii) Deliver a completed and updated final NI 43-101 resource report on or before February 1, 2014, (iii) Deliver completed metallurgical and rock mechanic test work results that will be used to ~~complete~~Consolidated ~~the~~Financial ~~mine~~Statements ~~and processing plant designs for the definitive feasibility study on or before June 1, 2014, and~~ (ivContinued) ~~Deliver a completed and published definitive feasibility study on or before December 31, 2014.~~

If we(An doExploration ~~not~~Stage ~~meet~~Company) any one of the required development milestones, Karlsson will be entitled to foreclose on the collateral securing the Karlsson Note. The Karlsson Note is secured by all of our assets including AWP. In early August 2013 we began our fourth drilling program in the Holbrook Basin during which, if funds allow, we plan to drill up to an additional 18 wells. As long as we are able to complete at least eight wells during this program we will satisfy the first development milestone.

~~The~~ ~~continuation~~(unaudited) of the Company as a going concern is dependent upon the efforts of the Company to raise additional capital to meet operational, mine development and corporate requirements. As disclosed within these financial statements, the capital necessary to meet these requirements is substantial and will require the issuance of additional debt and/or equity securities. These requirements and the potential lack of available funding raise substantial doubt as to the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note~~ 2Note 3—Summary of Significant Accounting Principles

This summary of significant accounting policies of the Company is ~~presented~~intended to assist readers in understanding the Company’'s financial statements. The financial statements and notes are representations of the Company’'s management, which is responsible for their integrity and objectivity.

Basis of Presentation

The accompanying unaudited Interim Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“"GAAP”"), the instructions to Form 10-Q and Article 10 of Regulation S-X. In ~~the~~management's opinion ~~of management~~, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years. These interim financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements unless specifically discussed below. These interim financial statements are unaudited and should be read in conjunction with the Company’'s audited financial statements and related footnotes for the year ended March 31, 2013 included in the Company’'s Annual Report on Form 10-K/A filed with the SEC on ~~July 29~~Febarury 12, ~~2013~~2014.

~~Principles~~ We have incurred net losses totaling $198.2 million since inception and at December 31, 2013 we had a working capital deficit of ~~Consolidation~~$167.4 million. These consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business for the foreseeable future and do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern.

As of June 30, 2013, the Company was the 100% owner of AWP and accordingly provides the consolidated financial statements for the Company and AWP. The purpose of consolidated financial statements is to present the results of operations and the financial position of the Company and its subsidiaries as if the group were a single company. The consolidated financial statements of the Company include the accounts of Prospect and AWP. The Company has disclosed in the financial statements the amount of non-controlling interest attributable to The Karlsson Group (prior to the August 1, 2012 acquisition of the remaining 50% non-controlling interest) and has eliminated all intercompany gains and losses. All intercompany accounts and transactions have been eliminated in the consolidation.

Development Stage

The Company made a determination following the completion of the Resource Report and Preliminary Economic Assessment, or PEA, in late 2011 that it had met the requirements to transition from an exploration stage to a development stage company and accordingly began capitalizing all development related costs related to the Holbrook Project as of January 1, 2012. Prior to this date and while we were in the exploration stage, all costs related to the Holbrook Project were expensed as incurred. Development costs

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that meet the definition of an asset are capitalized when incurred. These development costs include engineering and metallurgical studies, drilling and other related costs to further delineate mineral interests.

As of June 30, 2013, none of the Company’s mineral properties had proven or probable reserves as determined under the requirements of SEC Industry Guide No. 7. Further analysis, including additional in-fill drilling, is required before any portion of the resource, if any, can potentially be upgraded to a proven or probable reserve status pursuant to SEC Industry Guide 7.

Use of Estimates

The preparation of the Company’'s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and ~~the~~ related ~~disclosure~~disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses incurred during the reporting period. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions. Significant estimates with regard to the Company’s consolidated financial statements include the fair value of mineral interests contributed by The Karlsson Group; the calculation of certain conversion features of the Company’s convertible notes; the embedded derivative liabilities associated with those convertible notes and the outstanding warrants issued by the Company (and the associated changes period to period); stock-based compensation expense; the liabilities associated with the Grandhaven option, the Buffalo gross revenue interest and the Karlsson Note Tax Gross-Up amounts and the fair market value of the consideration associated with The Karlsson Group Acquisition and subsequent restructurings thereof.

Cash and Cash Equivalents

Cash is comprised of cash deposits held at banks. Cash equivalents are highly liquid investments with original maturities of three months or less to be cash equivalents. As of June 30, 2013 and March 31, 2013, the Company had no cash equivalents. During the course of our operations, our balance of cash and cash equivalents held in bank accounts may exceed amounts covered by the Federal Deposit Insurance Corporation (FDIC).

Restricted Cash

Restricted cash is comprised of cash deposits held in escrow, which funds may only be withdrawn from escrow for specified purposes. The Company classifies and reports restricted cash separately from its unrestricted cash balances in that the use of these funds is contractually restricted and therefore these funds are not available for the Company’s general use.

Equipment

Equipment is recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful life of the assets. Estimated useful lives of assets currently held range from 2-10 years. The Company’s policy is to review equipment for impairment at least annually.

Mineral Properties

~~Investments~~ The Company is primarily engaged in the acquisition, exploration and exploitation of mineral properties ~~are~~with ~~capitalized~~the asobjective ~~incurred~~of extracting minerals from these properties. ~~The~~Mineral ~~carrying~~property exploration costs ofare ~~mineral~~expensed ~~properties~~as ~~are~~incurred. ~~assessed~~Costs for ~~impairment~~acquired ~~whenever~~mineral ~~changes~~property inare ~~circumstances~~capitalized ~~indicate~~and ~~that~~then impaired if the ~~carrying~~criteria ~~costs~~for capitalization ~~may~~are not ~~be recoverable~~met. ~~When~~Capitalization ~~the~~of ~~Company~~mine ~~reaches~~development ~~the~~costs ~~production~~that ~~stage,~~meet the ~~related~~definition ~~capitalized~~of ~~costs~~an asset will becommence ~~depleted.~~once ~~Refer~~we tohave ~~Note~~proven ~~5—Mineral~~and ~~Properties~~probable ~~for~~reserves ~~additional~~in ~~information~~accordance with SEC Industry Guide 7.

~~Exploration~~ Mineral properties, ~~Expense~~land and water rights are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, a gain or loss is recognized and included in the consolidated statement of operations.

Exploration expense includes geological and geophysical work performed on areas that do not yet have identified resources. These costs are expensed as incurred during the period that if not capitalized in mineral properties would have been expensed had we not been able to capitalize these costs.F-7

The Company made the determination following the completion of its Resource Report and PEA in late 2011 that it had met the requirements to transition from an exploration stage company and accordingly began capitalizing all development related costs related to the Holbrook Project as of January 1, 2012. Prior to this date and while we were in the exploration stage, all costs related to the Holbrook Project were expensed as incurred.

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~~Financial~~ PROSPECT ~~Instruments~~GLOBAL RESOURCES INC.

~~Prospect’s~~ ~~financial~~Notes ~~instruments~~to ~~consist~~Consolidated ofFinancial ~~cash~~Statements ~~and~~(Continued) cash equivalents, accounts receivable, notes payable, accounts payable, accrued liabilities, warrants, stock options and derivative financial instruments. We carry cash and cash equivalents, accounts and notes receivable, notes payable, accounts payable and accrued liabilities at historical costs; their respective estimated fair values approximate carrying values due to their current nature.

We do(An ~~not~~Exploration ~~use~~Stage ~~derivative~~Company) financial instruments to hedge exposures to cash flow, market or foreign-currency risks. However, we have entered into certain other financial instruments and contracts, such as our convertible note financing arrangements and the Karlsson and Very Hungry Notes that contain embedded derivative features. The convertible note financing arrangements were carried as derivative liabilities, at fair value, in our financial statements until their conversion or the conversion option was no longer available.

~~Income~~ ~~Taxes~~(unaudited)

~~The~~ ~~Company~~Note 3—Summary ~~accounts for income taxes using the asset and liability method~~ of ~~accounting~~Significant ~~for~~Accounting ~~deferred~~Principles ~~income~~(Continued) taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.

A In the ~~valuation~~event ~~allowance~~that a mineral property is ~~required~~acquired tothrough the ~~extent~~issuance itof isthe ~~more-likely-than-not~~Company's ~~that~~shares, athe ~~deferred~~mineral ~~tax~~property ~~asset~~is ~~will~~recorded ~~not~~at bethe ~~realized.~~fair ~~Deferred~~value ~~tax~~of ~~assets~~the ~~and~~respective ~~liabilities~~property ~~are~~or ~~measured~~the ~~using~~fair value ~~enacted~~of ~~tax~~common ~~rates~~shares ~~expected~~and toother ~~apply~~instruments toissued, ~~taxable~~whichever ~~income~~is inmore ~~the~~readily ~~years~~determinable. inWhen ~~which~~mineral ~~those~~properties ~~temporary~~are ~~differences~~acquired ~~are~~under ~~expected~~option agreements with future acquisition payments to be ~~recovered~~made orat the ~~settled.~~sole ~~The~~discretion ~~effect~~of onthe ~~deferred~~Company, ~~tax~~those ~~assets~~future ~~and~~payments, ~~liabilities~~whether ofin acash, ~~change~~shares, inor ~~tax~~other ~~rates~~instruments isare ~~recognized~~recorded inonly ~~operations~~when inthe Company has made or is obliged to make the ~~period~~payment ~~that~~or ~~includes~~issue the shares ~~enactment~~or ~~date~~instruments.

~~The~~ ~~Company~~Allocation also reports taxes based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. The Company classifies penalty and interest expense related to income tax liabilities as an income tax expense. There are no penalties or interest recognized in the statement of ~~operations or accrued on the balance sheet.~~Costs

~~Income~~ From ortime ~~Loss~~to ~~per~~time ~~Share~~our capital raise activities will result in the issuance of more than one security, such as shares of our common stock and warrants to purchase our common stock. In these cases, we will allocate the costs of that capital raise between the various securities issued based on the relative fair value of each security issued.

Basic income or loss per share of common stock is calculated by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding for the respective period. Diluted income or loss per common share reflects the potential dilution that would occur if contracts to issue common stock were exercised or converted into common stock. For the three months ended June 30, 2013 and 2012 and from August 5, 2010 (Inception) to June 30, 2013, basic income and loss per common share and diluted loss per common share were the same as any potentially dilutive shares would be anti-dilutive to the periods. Refer to Note 14—Loss per Share for additional information.

Equity-Based Compensation

The Company recognizes compensation costs for share-based awards based on the estimated fair value of the employee awards on their grant date with estimated fair values determined through a Black-Scholes option pricing model. Compensation costs are recognized on a straight-line basis over each issuance’s respective vesting period.

From time to time, the Company will issue share-based awards, including options and warrants, to non-employees. The fair value of these awards issued to non-employees (typically consultants) is measured on the earlier of the date the performance is complete or the date the consultant is committed to perform. In the event that the measurement date occurs after an interim reporting date, the awards are measured at their then-current fair value at each interim reporting date, estimated using the Black-Scholes pricing model. The fair value of awards is expensed on a straight-line basis over the associated performance period.

Warrants

The Company classifies its issued and outstanding warrants as liabilities or equity in its financial statements, depending upon the criteria met and specific circumstances at a given point in time. Refer to Note 11—Equity Based Compensation and Note 12—Shareholders’ Equity for additional information.

Recent Accounting Pronouncements

The Company has considered recently issued accounting pronouncements and does not believe that such pronouncements are of significance, or potential significance, to the Company.

Note 4—Other Current Assets

As of December 31, 2013 and March 31, 2013, other current assets were comprised of:

	December 31, 2013 (thousands)		March 31, 2013 (thousands)

	(unaudited)
Prepaid insurance & deposits	$	186		276
Land purchase option		—		500
Deferred financing fees		70		—
Other		41		395


Total other current assets	$	297	$	1,171

Note 5—Mineral Properties

At both December 31, 2013 and March 31, 2013, the balances of mineral properties were comprised primarily of the value of the mineral rights and exploration permits contributed by the Karlsson Group in exchange for their initial 50% ownership interest in AWP. During the three months ended December 31, 2013, we chose not to renew the leases on four of these permits and reduced the value of the mineral properties contributed by the Karlsson Group by $0.6 million, which is included in asset impairment in the consolidated statement of operations.

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PROSPECT GLOBAL RESOURCES INC.

Notes to Consolidated Financial Statements (Continued)

(An Exploration Stage Company)

(unaudited)

Note 5—Mineral Properties (Continued)

The majority of the $2.6 million in payments to private landowners for mineral rights is comprised of the cash payments made under our July 2011 Potash Sharing Agreement covering 101 private mineral estate sections and the related mineral leases on approximately 62,000 acres.

	December 31, 2013 (thousands)		March 31, 2013 (thousands)

	(unaudited)
Karlsson Group contribution of mineral rights and exploration permits	$	10,357	$	11,000
Payments to private landowners for mineral rights		2,641		2,641
Leasehold options		49		49


Total mineral properties	$	13,047	$	13,690

Note 6—Other Long-term Assets

As of December 31, 2013 and March 31, 2013, our other long-term assets consisted of surety deposits posted under various leasing agreements, utility contracts and exploration permits, all of which are expected to be held for the next twelve months or more.

Note 7—Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at December 31, 2013 and March 31, 2013 were comprised of:

	December 31, 2013 (thousands)		March 31, 2013 (thousands)

	(unaudited)
Drilling/permitting	$	174	$	382
Engineering		1,617		1,796
Private leaseholder obligations		—		1,500
Legal		678		720
Board of Directors' fees		125		125
Off-take arrange fee		50		1,588
Compensation and other		2,049		1,245


Total accounts payable and accrued liabilities	$	4,693	$	7,356

Note 8—Debt and Tax Compensation on Note Payable

On December 10, 2013, we entered into an Extension Agreement with the Karlsson Group under which we can retire all amounts owing under the Karlsson note for the discounted payoff amount of $25 million provided we pay this amount on or before March 10, 2014. We will be unable to pay the $25 million on or before March 10, 2014, the entire undiscounted amount of the Karlsson debt then owing (estimated to be approximately $151.7 million at March 10, 2014) will be immediately due and

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~~Note~~ PROSPECT 3GLOBAL —RESOURCES INC. ~~Restricted Cash~~

~~Under~~ ~~the~~Notes ~~terms of the Second Extension Agreement we entered into with the Karlsson Group on June 26, 2013, we are required~~ to ~~deposit~~Consolidated ~~50%~~Financial ofStatements ~~the net proceeds of the next $20.0 million of capital we raise~~ (~~for a total of $10.0 million~~Continued) into escrow, which funds may be used solely to fund specified development expenses pursuant to the Extension Agreement. As of June 30, 2013, we had approximately $2.4 million remaining in escrow related to our recently completed capital raising activities. Pursuant to the Second Extension Agreement, this escrowed cash will be used to fund our planned in-fill drilling program and other related activities in the Holbrook Basin over the next several months.

~~Note~~ 4(An —Exploration ~~Other~~Stage ~~Current~~Company) ~~Assets~~

As of(unaudited) June 30, 2013 and March 31, 2013, our other current assets related to items such as insurance premiums, service contracts, rental agreements, property deposits and various other operating pre-payments. Also included in other current assets at June 30, 2013 is $0.2 million of net deferred financing fees incurred in connection with the Karlsson Note restructurings expected to be expensed over the next 12 months.

	June 30, 2013 (thousands)		March 31, 2013 (thousands)
	(unaudited)
Prepaid insurance & rent	$	190	$	276
Land purchase option	500		500
Net deferred financing fees*	170		—
Other	206		389
Total other current assets	$	1,066	$	1,165

Note 8—Debt and Tax Compensation on Note Payable (Continued)

*payable. This ~~Comprised~~will ofalso ~~total~~cause ~~deferred~~all ~~financing~~amounts ~~fees~~then ofowing under our Apollo debt (estimated to be approximately $07.3 4 million ~~less~~at ~~amounts~~March 10, ~~amortized~~2014) ofto ~~$22~~be immediately due and payable on March 10,~~000~~ ~~less~~2014. Also see Note 19—Subsequent Events under the ~~non-current~~heading ~~portion~~of "Restructuring of ~~deferred~~Senior ~~financing~~Unsecured ~~fees~~Debt" for additional information on our agreement under which we can retire the Apollo debt on or before March 10, 2014 in exchange for shares of ~~$0.1~~our ~~million~~common stock.

~~Note~~ In accordance ~~5—Mineral~~with ~~Properties~~U.S. GAAP, the December 10, 2013 Extension Agreement with the Karlsson Group was deemed to be a debt extinguishment and therefore we wrote-off the net carrying value of the old (extinguished) note and recorded the new note at its estimated fair value of $134.1 million. The $11.4 million difference between the net carrying value of the extinguished note and the new note was recorded as a loss on extinguishment and is included in Other Expenses on the December 31, 2013 Consolidated Statement of Operations. We also recorded $13.3 million of note discount on the new note for the difference between the $134.1 million estimated fair value of the new note and the $147.4 million then owing under the new note (without taking into consideration the $25 million discounted payoff amount if paid on or before March 10, 2014).

~~Additions~~ As of ~~to mineral properties include development costs such as engineering~~December 31, ~~environmental studies~~2013, ~~drilling,~~our ~~allocated~~indebtedness ~~compensation~~totaled ~~including~~$145.9 million ~~employee~~or ~~salaries,~~$156.8 million ~~employee~~including ~~bonuses~~the ~~and~~$10.9 million ~~employee and non-employee stock compensation, and other costs related to development~~ of ~~the~~accrued ~~Holbrook~~interest ~~Project~~owed.

The recoverability of the carrying values of the Company’s mineral properties is dependent upon the successful start-up and commercial production from, or sale or lease of, these properties and upon economic reserves being discovered or developed on the properties. The Company believes that the fair value of its mineral properties exceeds the carrying value; however, events and circumstances beyond our control may mean that a write-down in the carrying values of the Company’s properties may be required in the future as a result of the economic evaluation of potash production and the application of an impairment test based on estimates of potash quantities, exploration land values, future advanced minimum royalty payments and potash selling prices, among other variables.

	December 31, 2013 (thousands)		March 31, 2013 (thousands)

	(unaudited)
Karlsson senior secured note	$	120,079	$	115,282
Apollo unsecured notes

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