Attached files
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EX-32.1 - EXHIBIT 32.1 - WESTMOUNTAIN Co | c17423exv32w1.htm |
EX-31.1 - EXHIBIT 31.1 - WESTMOUNTAIN Co | c17423exv31w1.htm |
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly period ended March 31, 2011
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-53030
WESTMOUNTAIN ASSET MANAGEMENT, INC.
(Exact Name of Issuer as specified in its charter)
Colorado | 26-1315305 | |
(State or other jurisdiction | (IRS Employer File Number) | |
of incorporation) | ||
123 North College Avenue, Ste 200 | ||
Fort Collins, Colorado | 80524 | |
(Address of principal executive offices) | (zip code) |
(970) 212-4770
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that
the registrant was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12
months(or such shorter period that the registrant was required to submit and post such files. Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated
filer, and small reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act) Yes o No þ
The number of shares outstanding of the registrants common stock, as of the latest practicable
date, May 11, 2011, was 9,061,750.
FORM 10-Q
WestMountain Asset Management, Inc.
WestMountain Asset Management, Inc.
TABLE OF CONTENTS
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Exhibit 31.1 | ||||||||
Exhibit 32.1 |
2
Table of Contents
PART I FINANCIAL INFORMATION
For purposes of this report, unless otherwise indicated or the context otherwise requires, all
references herein to WestMountain Asset Management, we, us, and our, refer to WestMountain
Asset Management, Inc, a Colorado corporation, and our wholly-owned subsidiaries WestMountain
Business Consulting, Inc., WestMountain Valuation Services, Inc., and WestMountain Allocation
Analysis, Inc.
ITEM 1. | FINANCIAL STATEMENTS |
WestMountain Asset Management, Inc.
(A Development Stage Company)
(A Development Stage Company)
Condensed Consolidated Balance Sheets
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | (audited) | |||||||
Assets |
||||||||
Cash and cash equivalents (note 1 and note 9) |
$ | 318,005 | $ | 402,152 | ||||
Certificates of deposit (note 2) |
11,803 | 11,800 | ||||||
Accounts receivable, related parties (note 7) |
22,417 | 22,417 | ||||||
Note receivable |
90,000 | 90,000 | ||||||
Prepaid expenses |
2,156 | 1,601 | ||||||
Computers, net (note 3 ) |
3,107 | 3,896 | ||||||
Intangibles, net (note 4 ) |
5,867 | 6,858 | ||||||
Investment, at fair value (note 1 note 9 note 10 note 11) |
8,173,635 | 10,808,319 | ||||||
Deferred tax asset, net (note 5) |
24,664 | 23,947 | ||||||
Deposit (note 10) |
| | ||||||
Total assets |
$ | 8,651,654 | $ | 11,370,990 | ||||
Liabilities and Shareholders Equity |
||||||||
Liabilities: |
||||||||
Accounts payable |
$ | | $ | 433 | ||||
Income tax payable (note 5) |
12,174 | 24,775 | ||||||
Note payable, related parties (note 7) |
500,000 | 500,000 | ||||||
Interest payable, related parties (note 7) |
12,329 | 37,178 | ||||||
Accrued liabilities |
9,764 | 14,523 | ||||||
Accrued liabilities, related parties (note 7) |
500 | 525 | ||||||
Deferred tax liability (note 5) |
2,848,234 | 3,839,311 | ||||||
Total liabilities |
3,383,001 | 4,416,745 | ||||||
Shareholders Equity: (note 6) |
||||||||
Preferred stock, $.10 par value; 1,000,000 shares authorized,
-0- shares issued and outstanding for 2011 and 2010 |
| | ||||||
Common stock, $.001 par value; 50,000,000 shares authorized, 9,061,750 shares issued and outstanding for 2011 and 2010 |
9,062 | 9,062 | ||||||
Additional paid-in-capital |
362,253 | 362,253 | ||||||
Earnings accumulated during development stage |
90,943 | 93,059 | ||||||
Other comprehensive income, net (note 11) |
4,806,395 | 6,489,871 | ||||||
Total shareholders equity |
5,268,653 | 6,954,245 | ||||||
Total liabilities and shareholders equity |
$ | 8,651,654 | $ | 11,370,990 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(unaudited)
For the quarters ended March 31, 2011 and 2010 and for the
period October 18, 2007 (inception) through March 31, 2011
For the quarters ended March 31, 2011 and 2010 and for the
period October 18, 2007 (inception) through March 31, 2011
October 18, 2007 | ||||||||||||
For the quarters ended | (Inception) | |||||||||||
March 31, | Through March 31, | |||||||||||
2011 | 2010 | 2011 | ||||||||||
Revenue: (note 1 and note 7) |
||||||||||||
Advisory/consulting fees, related parties |
$ | | $ | 82,482 | $ | 132,717 | ||||||
Management fees, related parties |
22,417 | 22,425 | 341,451 | |||||||||
Total revenue |
22,417 | 104,907 | 474,168 | |||||||||
Operating expenses: (note 8) |
||||||||||||
Sales, general and administrative expenses |
13,008 | 26,980 | 262,419 | |||||||||
Total sales, general and administraive expenses |
13,008 | 26,980 | 262,419 | |||||||||
Net income from operations |
9,409 | 77,927 | 211,749 | |||||||||
Other income/(expense) |
||||||||||||
Interest income |
87 | 281 | 13,288 | |||||||||
Interest expense |
(12,329 | ) | (3,699 | ) | (56,708 | ) | ||||||
Loss on investment |
| | (50,000 | ) | ||||||||
Total other income/(expense) |
(12,242 | ) | (3,418 | ) | (93,420 | ) | ||||||
Net income before income taxes |
(2,833 | ) | 74,509 | 118,329 | ||||||||
Provision for income taxes (note 5) |
(717 | ) | 15,846 | 27,386 | ||||||||
Net income |
$ | (2,116 | ) | $ | 58,663 | $ | 90,943 | |||||
Basic and diluted income per share |
$ | (0.00 | ) | $ | 0.01 | |||||||
Basic and diluted weighted average common
shares outstanding |
9,061,750 | 9,061,750 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
(A Development Stage Company)
Condensed Statement of Changes in Shareholders Equity
(unaudited)
For the period from October 18, 2007 (inception) through March 31, 2011
For the period from October 18, 2007 (inception) through March 31, 2011
Earnings | ||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | During | Unrealized | ||||||||||||||||||||||||||||
Par | Par | Paid-in | Development | Holdings | ||||||||||||||||||||||||||||
Shares | Value | Shares | Value | Capital | Stage | Gain/(Loss) | Total | |||||||||||||||||||||||||
Balance at October 18, 2007 |
| $ | | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||||
November 19, 2007 common stock shares sold
at $0.001 per share |
| | 290,000 | 290 | | | | 290 | ||||||||||||||||||||||||
November 20, 2007 common stock shares sold
at $0.01 per share |
| | 235,000 | 235 | 2,115 | | | 2,350 | ||||||||||||||||||||||||
November 28, 2007 common stock shares sold
at $0.04 per share |
| | 8,050,000 | 8,050 | 311,950 | | | 320,000 | ||||||||||||||||||||||||
November 30, 2007 common stock shares sold
at $0.10 per share |
| | 486,750 | 487 | 48,188 | | | 48,675 | ||||||||||||||||||||||||
Net loss, October 18, 2007 (inception) through
December 31, 2007 |
| | | | | (29,460 | ) | | (29,460 | ) | ||||||||||||||||||||||
Balance at December 31, 2007 |
| | 9,061,750 | 9,062 | 362,253 | (29,460 | ) | | 341,855 | |||||||||||||||||||||||
Net income, for the year ended
December 31, 2008 |
| | | | | 916 | | 916 | ||||||||||||||||||||||||
Balance at December 31, 2008 |
| | 9,061,750 | 9,062 | 362,253 | (28,544 | ) | | 342,771 | |||||||||||||||||||||||
Other comprehensive income for the year ended
December 31, 2009 |
| | | | | 12,566,353 | 12,566,353 | |||||||||||||||||||||||||
Net income, for the year ended
December 31, 2009 |
| | | | | 74,274 | | 74,274 | ||||||||||||||||||||||||
Balance at December 31, 2009 |
| | 9,061,750 | 9,062 | 362,253 | 45,730 | 12,566,353 | 12,983,398 | ||||||||||||||||||||||||
Other comprehensive income for the year ended
December 31, 2010 |
| | | | | | (6,076,482 | ) | (6,076,482 | ) | ||||||||||||||||||||||
Net income, for the year ended
December 31, 2010 |
| | | | | 47,329 | | 47,329 | ||||||||||||||||||||||||
Balance at Dectember 31, 2010 |
| $ | | 9,061,750 | $ | 9,062 | $ | 362,253 | $ | 93,059 | $ | 6,489,871 | $ | 6,954,245 | ||||||||||||||||||
Other comprehensive income for the quarter
ended
March 31, 2011 |
| | | | | | (1,683,476 | ) | (1,683,476 | ) | ||||||||||||||||||||||
Net loss, for the quarter ended
March 31, 2011 |
| | | | | (2,116 | ) | | (2,116 | ) | ||||||||||||||||||||||
Balance at March 31, 2011 |
| $ | | 9,061,750 | $ | 9,062 | $ | 362,253 | $ | 90,943 | $ | 4,806,395 | $ | 5,268,653 | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
(A Development Stage Company)
Condensed Statements of Cash Flows
(unaudited)
For the quarters ended March 31, 2011 and 2010 and for the
period October 18, 2007 (inception) through March 31, 2011
For the quarters ended March 31, 2011 and 2010 and for the
period October 18, 2007 (inception) through March 31, 2011
October 18, 2007 | ||||||||||||
For the quarters ended | (Inception) | |||||||||||
March 31, | through March 31, | |||||||||||
2011 | 2010 | 2011 | ||||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ | (2,116 | ) | $ | 58,663 | $ | 90,943 | |||||
Adjustments to reconcile net income to net cash used by operating
activities: |
||||||||||||
Depreciation and amortization (note 3 and 4) |
1,780 | 3,348 | 20,929 | |||||||||
Stock received for advisory fees (note 7) |
| (72,483 | ) | (122,717 | ) | |||||||
Changes in operating assets and operating liabilities: |
||||||||||||
Prepaid expenses |
(555 | ) | (1,924 | ) | (2,156 | ) | ||||||
Accounts receivable, related parties (note 7) |
| 8,011 | (22,417 | ) | ||||||||
Accounts payable and accrued liabilities |
(30,066 | ) | 13,684 | 22,593 | ||||||||
Income tax payable (note 5) |
(13,318 | ) | (4,174 | ) | (12,490 | ) | ||||||
Net cash (used in)provided by operating activities |
(44,275 | ) | 5,125 | (25,315 | ) | |||||||
Cash flows from investing activities: |
||||||||||||
Purchases of property and equipment (note 3 and 4) |
| (1,792 | ) | (29,903 | ) | |||||||
Payments for investments (note 10) |
(39,869 | ) | (2,000 | ) | (396,289 | ) | ||||||
Notes receivable |
| | (90,000 | ) | ||||||||
Payments for and proceeds from certificates of deposit (note 2) |
(3 | ) | (277 | ) | (11,803 | ) | ||||||
Net cash (used in) investing activities |
(39,872 | ) | (4,069 | ) | (527,995 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Payments for notes payable, related parties (note 7) |
| | ||||||||||
Proceeds from notes payable, related parties (note 7) |
| | 500,000 | |||||||||
Proceeds from sale of common stock (note 6) |
| | 371,315 | |||||||||
Net cash provided by financing activities |
| | 871,315 | |||||||||
Net change in cash |
(84,147 | ) | 1,056 | 318,005 | ||||||||
Cash and cash equivalents, beginning of period |
402,152 | 70,328 | | |||||||||
Cash and cash equivalents, end of period |
$ | 318,005 | $ | 71,384 | $ | 318,005 | ||||||
Supplemental disclosure of cash flow information: |
||||||||||||
Cash paid during the period for: |
||||||||||||
Income tax |
$ | 13,000 | $ | 20,000 | $ | 25,867 | ||||||
Interest |
$ | | $ | | $ | 7,200 | ||||||
Non cash investing activities |
||||||||||||
Unrealized gains on investments |
$ | (2,674,553 | ) | $ | (1,524,249 | ) | $ | 7,654,629 | ||||
Deferred income taxes |
$ | (991,077 | ) | $ | (999,541 | ) | $ | (2,848,234 | ) | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(1) Nature of Organization and Summary of Significant Accounting Policies
Nature of Organization and Basis of Presentation
WestMountain Asset Management, Inc. was incorporated in the state of Colorado on October 18, 2007
and on this date approved its business plan and commenced operations.
The Company is a development stage enterprise in accordance with AFC 915 Accounting and Reporting
by Development Stage Enterprises formerly SFAS No. 7. The Companys plan is to act as an
investment asset manager by raising, investing and managing private equity and direct investment
funds for third parties including high net worth individuals and institutions.
Unaudited Financial Information
The accompanying financial information as of March 31, 2011 and for the three months ended March
31, 2011 and 2010, and the period from October 18, 2007 (inception) through March 31, 2011, is
unaudited. In the opinion of management, all normal and recurring adjustments which are necessary
to provide a fair presentation of the Companys financial position at March 31, 2011 and its
operating results for the three months ended March 31, 2011 and 2010 and the period from October
18, 2007 (inception) through March 31, 2011, have been made. Certain information and footnote data
necessary for a fair presentation of financial position and results of operations in conformity
with accounting principles generally accepted in the United States of America have been condensed
or omitted. It is therefore suggested that these financial statements be read in conjunction with
the summary of significant accounting policies and notes to financial statements included in the
Companys annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC)
for the year ended December 31, 2010. The results of operations for the three months ended March
31, 2011 is not necessarily an indication of operating results to be expected for the year.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less
when acquired to be cash equivalents. As of March 31, 2011 and December 31, 2010, there were
$102,653 and $102,571 cash equivalents respectively.
Accounts Receivable
Accounts receivable consists of amounts due from management fees. The Company considers accounts
more than 30 days old to be past due. The Company uses the allowance method for recognizing bad
debts. When an account is deemed uncollectible, it is written off against the allowance. Management
records reasonable allowances to fairly represent accounts receivable amounts that are collectable.
For the quarters ended March 31, 2011 and 2010, the company did not record any allowance against
our accounts receivable balance.
Revenue
The Company generates revenue by raising, investing and managing private equity and direct
investment funds for high net worth individuals and institutions. Revenue is recognized through
management fees based on the size of the funds that are managed and incentive income based on the
performance of these funds.
Revenue is recognized under the full accrual method. Under the full accrual method, profit may be
realized in full when funds are invested and managed, provided (1) the profit is determinable and
(2) the earnings process is virtually complete (the Company is not obligated to perform significant
activities).
7
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
Fair Value of Financial Instruments
On January 1, 2008, the Company adopted ASC 820 Fair Value Measures, formerly SFAS 157. ASC 820
defines fair value, establishes a framework for measuring fair value and enhances disclosures about
fair value measures required under other accounting pronouncements, but does not change existing
guidance as to whether or not an instrument is carried at fair value. The Companys estimates of
fair value for financial assets and financial liabilities are based on the framework established in
SFAS 157. The framework is based on the inputs used in valuation and gives the highest priority to
quoted prices in active markets and requires that observable inputs be used in the valuations when
available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the
significant inputs into the valuation are observable. In determining the level of the hierarchy in
which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in
active markets and the lowest priority to unobservable inputs that reflect the Companys
significant market assumptions. The three levels of the hierarchy are as follows: The Companys
assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC
820 at March 31, 2011, were as follows:
Level 1: Unadjusted quoted market prices for identical assets or liabilities in active markets that
the Company has the ability to access.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets in inactive markets; or valuations based on models where the
significant inputs are observable (e.g., interest rates, yield curves, default rates, etc.) or can
be corroborated by observable market data.
Level 3: Valuations based on models where significant inputs are not observable. The unobservable
inputs reflect the Companys own assumptions about the assumptions that market participants would
use.
The determination of where assets and liabilities fall within this hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. The carrying amounts of
financial assets require to be measured at fair value on a recurring basis including our major
assets that approximates fair value as determined by using the future expected net cash flows on
the sale of the investments. The valuations of the majority of the assets are considered Level 1
fair value measures under ASC 820.
We adopted the remaining provisions of ASC-820 for non-financial assets and liabilities beginning
January 1, 2009. Financial Accounting Standards Board (FASB) Staff Position (FSP) FAS 157-2
deferred the effective date of ASC-820 for one year relative to nonfinancial assets and liabilities
that are measured at fair value, but are recognized or disclosed at fair value on a nonrecurring
basis. This deferral applied to such items as indefinite-lived intangible assets and nonfinancial
long-lived asset groups measured at fair value for impairment assessments. The adoption of the
remaining provisions of ASC-820 did not have a material impact on our consolidated results of
operations or financial condition.
The following methods and assumptions were used to estimate the fair value of each class of
financial instruments:
1. | Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities: The carrying amounts approximate fair value because of the short maturity of these instruments. | ||
2. | Investments: Available-for-sale securities are recorded at fair value based on unadjusted quoted market prices. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income (loss) until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. |
A decline in the market value of any available-for-sale security below cost that is deemed to
be other than temporary results in a reduction in carrying amount to fair value. The impairment is
charged to earnings and a new cost basis for the security is established. Premiums and discounts
are amortized or accreted over the life of the related available-for-sale security as an adjustment
to yield using the effective interest method. Dividend and interest income are recognized when
earned.
Available-for-sale securities are accounted for on a specific identification basis. As of
March 31, 2011, we held available-for-sale securities with an aggregate fair value of $8,173,634,
including $4,806,395 of net unrealized gains recorded in accumulated other comprehensive income.
As of March 31, 2011, all of our available-for-sale securities were invested in publically traded
equity holdings. Available-for-sale securities were classified as current based on the percentage
of the equity controlled by the Company as well as our intended use the assets. (See Note 9 for
details of available for sale investments).
3. | Note payable to related parties: The carrying value of our debt is presented as the face amount of the note due to the short term maturity of the instrument. |
8
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
Assets and Liabilities Measured at Fair Value on a Recurring Basis as of March 31, 2011
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Other | Significant | ||||||||||||||
Identical Assets and | Observable | Unobservable | Balance as of | |||||||||||||
Liabilities | Inputs | Inputs | March 31, | |||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | 2011 | ||||||||||||
Assets: |
||||||||||||||||
Available-for-sale
securities |
$ | 6,512,184 | $ | 1,661,450 | $ | | $ | 8,173,634 |
(2) Certificates of Deposit
The company has made it a policy to invest funds over and above its forecasted operating
expenses in certificates of deposit. The terms on the certificates have ranged from three to six
months.
(3) Computers
The Company currently has three computers that are being depreciated over three years. One
computer was place in service in 2008 in the amount of $4,800. An additional computer was
purchased in October 2009 in the amount of $3,738. The last computer was purchased in February
2010 in the amount of $935. Depreciation for the quarter ended March 31, 2011 and 2010 was $789 and
$763 respectively.
(4) Intangibles
The Company purchased a software program in 2007 in the amount of $8,550. In 2009, additional
purchases were made to upgrade the software program in the amount of $402. The software and
upgrades are amortized over three years. In the third and fourth quarters of 2009 the Company
implemented a website. Total costs recorded for the year ended December 31, 2009 was $10,622. In
March 2010 we had additional work done on the website in the amount of $858. We amortize the
website costs over a three year period of time. Amortization for the quarters ended March 31, 2011
and 2010 was $990 and $2,584 respectively.
(5) Income Taxes
The Company accounts for income taxes using the asset and liability method of accounting for
deferred income taxes. Deferred tax assets and liabilities are recognized for the future tax
consequence attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis, operating losses and tax credit
carryforwards.
A valuation allowance is required to the extent it is more likely than not that a deferred tax
asset will not be realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in operations in the period that includes the enactment date.
In assessing the realization of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible.
Management considers the projected future taxable income and tax planning strategies in making this
assessment.
(6) Stockholders Equity
On November 19, 2007 the Company sold 290,000 shares of its common stock for $290 or $0.001 per
share.
On November 20, 2007 the Company sold 235,000 shares of its common stock for $2,350 or $0.01 per
share.
On November 28, 2007 the Company sold 8,050,000 shares of its common stock to WestMountain Blue,
LLC, an affiliate, for a cash price of $320,000 or $0.04 per share. The stock transaction made
WestMountain Blue, LLC the Companys majority shareholder.
On November 30, 2007 the Company sold 486,750 shares of its common stock for $48,675 or $0.10 per
share. The stock sale was made in reliance on an exemption from registration of a trade in the
United States under Rule 504 and/or Section 4(6) of the Act. The Company relied upon exemptions
from registration believed by it to be available under federal and state securities laws in
connection with the offering.
9
Table of Contents
WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
A total of 9,061,750 shares were issued for a total cash price of $371,315. As of December 31,
2007, the common stock issued and outstanding at par is $9,062 or $0.001 per share. The amount
over and above the $0.001 par value per share is recorded in the additional paid-in capital account
in the amount of $362,253.
There were no changes in common stock and additional paid in capital for the quarters ended March
31, 2011 and 2010.
(7) Related Parties
Bohemian Companies, LLC and BOCO Investments, LLC are two companies under common control. Mr.
Klemsz, our President, has been the Chief Investment Officer of BOCO Investments, LLC since March
2007. Since there is common control between the two companies and a relationship with our Company
President, we are considering all transactions with Bohemian Companies, LLC and BOCO Investments,
LLC, related party transactions.
On January 1, 2008, we entered into a Service Agreement with Bohemian Companies, LLC to provide us
with certain defined services. These services include financial, bookkeeping, accounting, legal and
tax matters, as well as cash management, custody of assets, preparation of financial documents,
including tax returns and checks, and coordination of professional service providers as may be
necessary to carry out the matters covered by the Service Agreement. We compensate Bohemian
Companies, LLC by reimbursing this entity for the allocable portion of the direct and indirect
costs of each employee of Bohemian Companies, LLC that performs services on our behalf. We receive
invoices monthly from Bohemian Companies, LLC. This Service Agreement matures on December 31, 2011.
Total expenses incurred with Bohemian Companies were $3,000 for each quarter ending March 31, 2011
and 2010. As of March 31, 2011 the Company did not have a balance due to Bohemian Companies, LLC.
For the three months ended March 31, 2011 and 2010 the Company recorded $22,417 and $22,425 in
revenue for management fees charged to WestMountain Prime, LLC, a related party. For the period
October 18, 2007 (inception) through March 31, 2011 the Company recorded $341,451 in management
fees. The Company earns management fees based on the size of the funds managed, and incentive
income based on the performance of the funds.
For the three months ended March 31, 2011 and 2010 the Company recorded $-0- and $82,482,
respectively, in revenue for advisory fees charged to CapTerra Financial Group, Inc. and Accredited
Members, Inc. AMI, formerly Across America Real Estate Exchange, Inc., both are related parties.
For the period October 18, 2007 (inception) through March 31, 2011 the Company recorded a total of
$132,717 in advisory fees.
As of March 31, 2011 and 2010, the Company recorded $22,417 and 22,425 as an accounts receivable.
The accounts receivable balance, for both years, represent fourth quarter management fees that were
due from WestMountain Prime, LLC. Both amounts were paid off in the following respective first
quarters.
On October 15, 2008, the Company signed a promissory note in the amount of $75,000 from BOCO
Investments, Inc. The interest rate on the note was 12%. All principal and interest of this note
was paid in full in 2009. On September 15, 2009 the Company signed a promissory note with BOCO
Investments, Inc. (BOCO), a related party, in the amount of $150,000. The note matured in March
2010 and has been extended to March 2011. On June 30, 2010 the Company entered into a new note for
$500,000 with an interest rate of 10% and a maturity date of June 30, 2011. The September 15, 2009
note for $150,000 was canceled and the principal and interest was rolled into the new note. As of
March 31, 2011 the full amount of the note and related accrued interest, in the amount of $512,329
is outstanding.
The Company entered into an agreement with SP Business Solutions (SP) to provide accounting and
related services for the Company. The owner, Joni Troska, was appointed Secretary of WestMountain
Asset Management, Inc on March 19, 2010, and is considered to be a related party. As of March 31,
2011 an accrual of $500 has been recorded for unpaid services.
In December 2009 the Company formed three new companies, WestMountain Business Consulting, Inc.,
WestMountain Allocation Analytics, Inc. and WestMountain Valuation Services, Inc. that are included
in our consolidated financial statements. We transferred $2,000 into each checking account in
December 2009. As of March 31, 2011, no other activity has been recorded.
On September 29, 2010 CapTerra Financial Group, Inc. merged with Nexcore Group LP. The Company
provided advisory services related to the transaction and for those services received 1,645,000
warrants. In December the warrants were exercised and the resulting investment in equity securities
have been recorded at a fair value of $2,451,050 as of December 31, 2010. The equity securities
have been restricted and cannot be sold for two years.
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WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(8) Operating Expenses
The total administrative expense recorded on the financials for the period October 18, 2007 through
March 31, 2011 was $262,419. For the quarter ended March 31, 2011 and 2010 operating expenses were
$13,008 and $26,980 respectively. Most of the operating expenses consist of professional and legal
fees charged to the Company.
(9) Concentration of Credit Risk
Cash
The Company has concentrated its credit risk for cash by maintaining deposits in financial
institutions, which may at times exceed the amounts covered by insurance provided by the United
States Federal Deposit Insurance Corporation (FDIC). As of March 31, 2011 the Company had $40,389
for the excess of the deposit liabilities reported by the financial institution over the amount
that would have been covered by FDIC. The Company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk to cash.
Investments
The Companys investment in Omni Bio Pharmaceutical, Inc. currently makes up approximately 59% of
the Companys assets as of March 31, 2011. The investment in Omni Bio Pharmaceutical, Inc.
consists of the original cost, exercise of the options from GDBA Investments, Inc. and the
valuation of the investment that is based on the quoted market price as of March 31, 2010. Since
the Company bases this investment on market price, the amount reflected on the balance sheet will
change based on the market price on the date of the balance sheet.
(10) Investments and Deposits
The Company invested in two companies in the fourth quarter of 2008. The investments are Marine
Exploration and Omni Bio Pharmaceutical, Inc. (OMNI, formerly Across America Financial Services,
Inc. In February 2010 the Company paid $2,000 for 200,000 warrants of Accredited Members, Inc.
(AMI, formerly Across America Real Estate Exchange, Inc.)
In 2008 the Company invested $50,000 for 175,000,000 shares of common stock in Marine Exploration.
The Company recorded this long-term investment using the equity method of accounting for
investments. Any net income or net loss must be recorded against the Companys investment, not to
exceed the original investment of $50,000. Marine Exploration lost significantly more than $50,000
in 2008. This loss was significantly over and above the Companys percentage ownership of the
loss. In 2008, the Company recorded the loss at the amount of the total investment, or $50,000. On
August 24, 2010, Marine Exploration authorized a reverse split of 1 new share for 500 old shares of
their common stock. As of this date, the Company has less than 20% ownership in Marine Exploration.
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WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
In the year 2008 the Companys other investment was in Omni, formerly Across America Financial
Services, Inc., that is recorded at the cost of the original investment plus the exercise price of
the option from GDBA Investments, Inc. The ownership in Omni continues to be less than 20%. The
original cost of $6,072, is a noncash transaction that represents the fair value of services
performed by the Company in exchange for shares of common stock of Omni. In 2009 an additional
noncash transaction in the amount of $27,713 was recorded as part of the investment. This cost
represents the fair value of services performed by the
Company in exchange for shares of common stock of Omni. As of March 31, 2011 the fair value of
Omni stock was $3.00. The Company booked an unrealized loss of $1.7M based on the change in the
market value from December 31, 2010 of $4.00.
A deposit of $35,078 was paid to GDBA Investments, LLC in the 4th quarter of 2008 for an option to
purchase 1,169,250 shares of common stock in Across America Financial Services for $122,771 or
$0.105 per share. The option may be exercised beginning 91 days after the date GDBA Investments,
LLC ceases to be an affiliate of the Company and continues to be exercisable for 180 days
thereafter. In October 2009 the option was exercised and is included as part of the Companys
investment in Omni.
A deposit of $35,077 was paid to GDBA Investments, LLC in the 4th quarter of 2008 for an option to
purchase 1,169,250 shares of common stock in Across America Real Estate Exchange for $122,771.25 or
$0.105 per share. The option may be exercised beginning 91 days after the date GDBA Investments,
LLC ceases to be an affiliate of the Company and continues to be exercisable for 180 days
thereafter. This option was extended for an additional year. A payment of $35,077 was made in
October 2009 for this extension. 1,169,250 shares represent 64.6% ownership in Across America Real
Estate Exchange. On February 24, 2010 Across America Real Estate Exchange merged with AMI. In
addition, the Company received 329,463 shares at a cost of
$0.22 per share or $72,482 as part of the investment. This cost represents the value of services
performed by the Company in exchange for shares of common stock of AMI. In March 2010, after the
merger, the Company paid $2,000 for 200,000 warrants of AMI. As of March 31, 2011, the fair value
of AMI stock was $0.80. The Company booked an unrealized loss of $170K based on the change in the
market value from December 31, 2010 of $0.90.
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WestMountain Asset Management, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
On September 29, 2010 CapTerra Financial Group, Inc. merged with Nexcore Group LP, now called
NexCore Healthcare Capital Corp (NexCore). The Company provided advisory services related to the
transaction and for those services received 1,625,000 warrants. As of March 31, 2011 the fair value
of the warrants was $1.01. The Company booked an unrealized loss of $790K based on the change in
the market value from December 31, 2010 of $1.49. The warrants have been restricted and cannot be
exercised for two years.
(11) Comprehensive Income
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income
(loss). Other comprehensive income (loss) includes an unrealized gain of marketable equity
securities. The details of comprehensive income are as follows:
For the quarter ended | For the quarter ended | |||||||
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Net Income, as reported |
$ | (2,116 | ) | $ | 58,663 | |||
Other Comprehensive Income(loss): |
||||||||
Unrealized gain of marketable equity securities |
4,806,395 | 11,042,104 | ||||||
Comprehensive Income |
$ | 4,804,279 | $ | 11,100,767 | ||||
(12) Subsequent Events
On May 12, 2011 the market price of Omni is $2.15 per share, a decrease of $0.85 from $3.00 as
of March 31, 2011. Based on this net change in market price, the value of the investments would
decrease by $1,451,040.
On May 12, 2011 the market price of Accredited Members is $0.31 per share, a decrease of $0.49
from $0.80 as of March 31, 2011. Based on this net change in market price, the value of the
investments would decrease by $832,369.
On May 12, 2011 the market price of CapTerra Financial Group is $0.70 per share, a decrease of
$0.31 from $1.01 as of March 31, 2011. Based on this net change in market price, the value of the
investments would decrease by
$509,950. The determination of this investment is measured on a recurring basis using Level 2
valuation measures. See Footnote 1 for further details on fair value measurements.
On May 12, 2011 the market price of Silver Verde May Mining Co. is $0.23 per share, a decrease of
$0.05 from $0.28 as of March 31, 2011. Based on this net change in market price, the value of the
investments would decrease by $5,696.
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ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION |
The following discussion of our financial condition and results of operations should be read
in conjunction with, and is qualified in its entirety by, the consolidated financial statements and
notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains
forward-looking statements that involve risks and uncertainties. Actual results may differ
materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference
contain forward-looking statements. Such forward-looking statements are based on current
expectations, estimates, and projections about our industry, management beliefs, and certain
assumptions made by our management. Words such as anticipates, expects, intends, plans,
believes, seeks, estimates, variations of such words, and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties, and assumptions that are difficult to
predict; therefore, actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Unless required by law, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information, future events, or
otherwise. However, readers should carefully review the risk factors set forth herein and in other
reports and documents that we file from time to time with the Securities and Exchange Commission,
particularly Annual Reports on Form 10-K, Quarterly reports on Form 10-Q and any Current Reports on
Form 8-K.
General
We act as an investment asset manager by raising, investing and managing private equity
and direct investment funds for third parties including high net worth individuals and
institutions. We are currently generating revenues. As is the industry practice, we earn management
fees based on the size of the funds that we manage and incentive income based on the performance of
these funds. We do not focus on any particular industry but will look at any and all opportunities.
We will screen investments with emphasis towards finding opportunities with long term potential.
To date, we have never had any discussions with any possible acquisition candidate nor
have we any intention of doing so.
Our principal business address is 123 North College Avenue, Suite 200, Fort
Collins, Colorado 80524. We operate out of one office in Colorado. We have no specific plans at
this point for additional offices. On January 1, 2008, we entered into a Service Agreement with
Bohemian Companies, LLC to provide us with certain defined services. These services include
financial, bookkeeping, accounting, legal and tax matters, as well as cash management, custody of
assets, preparation of financial documents, including tax returns and checks, and coordination of
professional service providers as may be necessary to carry out the matters covered by the Service
Agreement. We will compensate Bohemian Companies, LLC by reimbursing this entity for the allocable
portion of the direct and indirect costs of each employee of Bohemian Companies, LLC who performs
services on our behalf. We will receive invoices not less than quarterly from Bohemian Companies,
LLC. This Service Agreement matures on December 31, 2011. Total expenses incurred with Bohemian
Companies were $3,000 for the quarter ending March 31, 2011. As of March 31, 2011 the Company had
no balance due to Bohemian Companies, LLC.
We have not been subject to any bankruptcy, receivership or similar proceeding.
Results of Operations
The following discussion involves our results of operations for the quarter ended March
31, 2011 and 2010. For the quarter ended March 31, 2011 we had revenues of $22,417 compared to
$104,907 for the quarter ended March 31, 2010. Our revenues are associated with advisory services
and management fees.
Operating expenses, consisting primarily of selling, general and administrative costs
were $13,008 for the quarter ended March 31, 2011, compared to $26,980 for the quarter ended March
31, 2010. We do not anticipate professional fees to be significant in the future. However we
believe that our selling, general and administrative costs will increase as we grow our business
activities going forward.
We had a net loss of $2,116 for the quarter ended March 31, 2011, compared to net income of
$58,663 for the quarter ended March 31, 2010.
Liquidity and Capital Resources
Our cash or cash equivalents on March 31, 2011 were $318,005, compared to cash or cash
equivalents on March 31, 2010 of $275,328.
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Cash flows used in operating activities were $44,275 for the three months ended March 31,
2011, compared to cash flows provided by operating activities of $5,125 for the three months ended
March 31, 2010. Most of the variance was due to an increase in net income.
Net cash used in investing activities was $39,872 for the three months ended March 31, 2011,
compared to net cash used investing activities of $4,069 for the three months ended March 31, 2010.
Cash flows provided by financing activities were $-0- for the three months ended March 31,
2011 and March 31, 2010. We had $871,315 from our inception on October 18, 2007 through March 31,
2011.
Over the next twelve months we do not expect any material our capital costs for our
operations. We plan to buy office equipment to be used in our operations.
Because we do not pay salaries, and our major professional fees have been paid for the year,
operating expenses are expected to remain fairly constant.
Currently, we believe that we have sufficient capital to implement our business operations or
to sustain them at our present level indefinitely. To date, we have never had any discussions with
any possible acquisition candidate nor have we any intention of doing so.
We operate out of one office in Colorado. We have no specific plans at this
point for additional offices.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements with any party.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition
are based upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
consolidated 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. We evaluate our estimates on an ongoing basis, including those
related to provisions for uncollectible accounts receivable, inventories, valuation of intangible
assets and contingencies and litigation. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the results
of which 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.
We adopt changes issued by ASC 855 Subsequent Events, formerly FASB 165, which
establishes general standards for accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued or are available to be issued.
The pronouncement requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date, whether that date represents the date the financial
statements were issued or were available to be issued. In conjunction with the preparation of
these financial statements, an evaluation of subsequent events was performed through May 12, 2011,
which is the date the financial statements were issued.
The Company accounts for income taxes under the provisions of ASC 740 Accounting for
Income Taxes, formerly SFAS 109 and FIN 48. ASC 740 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that have been included
in the financial statements or tax returns. Under this method, deferred tax liabilities and assets
are determined based on the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse.
On January 1, 2008, the Company adopted ASC 820 Fair Value Measures, formerly SFAS 157. ASC
820 defines fair value, establishes a framework for measuring fair value and enhances disclosures
about fair value measures required under other accounting pronouncements, but does not change
existing guidance as to whether or not an instrument is carried at fair value. The Companys
estimates of fair value for financial assets and financial liabilities are based on the framework
established in SFAS 157. The framework is based on the inputs used in valuation and gives the
highest priority to quoted prices in active markets and requires that observable inputs be used in
the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is
based on whether the significant inputs into the valuation are observable. In determining the level
of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted
quoted prices in active markets and the lowest priority to unobservable inputs that reflect the
Companys significant market assumptions. The three levels of the hierarchy are as follows: The
Companys assets measured at fair value on a recurring basis subject to the disclosure requirements
of ASC 820 at March 31, 2011, were as follows:
Level 1: Unadjusted quoted market prices for identical assets or liabilities in active markets that
the Company has the ability to access.
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Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets in inactive markets; or valuations based on models where the
significant inputs are observable (e.g., interest rates, yield curves, default rates, etc.) or can
be corroborated by observable market data.
Level 3: Valuations based on models where significant inputs are not observable. The unobservable
inputs reflect the Companys own assumptions about the assumptions that market participants would
use.
The determination of where assets and liabilities fall within this hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. The carrying amounts of
financial assets require to be measured at fair value on a recurring basis including our major
assets that approximates fair value as determined by using the future expected net cash flows on
the sale of the investments. The valuations of the majority of the assets are considered Level 1
fair value measures under ASC 820.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
None.
ITEM 4. | CONTROLS AND PROCEDURES |
Not applicable
ITEM 4T. | CONTROLS AND PROCEDURES |
As of the end of the period covered by this report, based on an evaluation of our disclosure
controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act),
our Chief Executive Officer and the Chief Financial Officer has concluded that our disclosure
controls and procedures are effective to ensure that information required to be disclosed by us in
our Exchange Act reports is recorded, processed, summarized, and reported within the applicable
time periods specified by the SECs rules and forms.
There were no changes in our internal controls over financial reporting that occurred during
our most recent fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
This report does not include an attestation report of the companys registered public
accounting firm regarding internal control over financial reporting. Identified in connection with
the evaluation required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of this chapter that
occurred during the registrants last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
There are no legal proceedings, to which we are a party, which could have a material adverse
effect on our business,
financial condition or operating results.
ITEM 1A. | RISK FACTORS |
You should carefully consider the risks and uncertainties described below; and all
of the other information included in this document. Any of the following risks could materially
adversely affect our business, financial condition or operating results and could negatively impact
the value of your investment.
The occurrence of any of the following risks could materially and adversely affect
our business, financial condition and operating result. In this case, the trading price of our
common stock could decline and you might lose all or part of your investment.
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Risks Related to Our Business and Industry
We have limited operating history, and may never sustain a profit. If we cannot operate
profitably, we could go out of business.
We were formed as a Colorado business entity in October, 2007. While we have been profitable
in our last two fiscal years, there can be no guarantee that we will be able to sustain our history
of profitability. We were not profitable in our most recent fiscal
quarter. If we cannot sustain profitability, we could go out of business.
Our lack of substantial operating history makes it difficult for us to evaluate our future business
prospects and make decisions based on those estimates of our future performance. An investor could
lose his entire investment.
We have a limited operating history. An investor has no frame of reference to evaluate
our future business prospects. This makes it difficult, if not impossible, to evaluate us as an
investment. An investor could lose his entire investment if our future business prospects do not
result in our ever sustaining profitability.
If we do not generate adequate revenues to finance our operations, our business may fail.
We generate revenues
and have been profitable, although we were not profitable in our most recent fiscal quarter. As of March 31, 2011, we
had a cash position of $318,005. We had certificates of deposit of $11,803. We anticipate that
operating costs will be approximately $50,000 for the fiscal year ending December 31, 2011. These
operating costs include insurance, taxes, utilities, maintenance, contract services and all other
costs of operations. We will use contract employees who will be paid on an hourly basis as each
investment transaction is evaluated. However, the operating costs and expected revenue generation
are difficult to predict. We expect to generate revenues in the next twelve months from making
investments and receiving fees for the placement of capital. Since there can be no assurances that
revenues will be sufficient to cover operating costs for the foreseeable future, it may be
necessary to raise additional funds. Due to our lack of substantial operating history, raising
additional funds may be difficult.
Competition in the investment industry is intense.
Our business plan involves acting as an investment manager. This business is highly
competitive. There are numerous similar companies providing such services in the United States of
America. Our competitors will have greater financial resources and more expertise in this business.
Our ability to develop our business will depend on our ability to successfully market our services
in this highly competitive environment. We cannot guarantee that we will be able to do so
successfully.
The share control position of WestMountain Blue, LLC will limit the ability of other
shareholders to influence corporate actions.
Our largest shareholder, WestMountain Blue, LLC owns 8,050,000 shares and thereby controls
approximately 90% of our outstanding shares. Because WestMountain Blue, LLC individually
beneficially controls more than a majority of the outstanding shares, other shareholders,
individually or as a group, will be limited in their ability to effectively influence the election
or removal of our directors, the supervision and management of our business or a change in control
of or sale of our company, even if they believed such changes were in the best interest of our
shareholders generally.
Our future success depends, in large part, on the continued service of our Chief Executive Officer
and President
We depend almost entirely on the efforts and continued employment of Mr. Brian L. Klemsz, our
Chief Executive and Financial Officer and sole Director and Mr. Steve Anderson, our President. Mr.
Anderson is our primary executive officer, and we will depend on him for nearly all aspects of our
operations. We do not have an employment contract with Mr. Anderson or Mr. Klemsz, and we do not
carry key person insurance on the life of either gentleman. The loss of the services of either Mr.
Klemsz or Mr. Anderson through incapacity or otherwise, would have a material adverse effect on our
business. It would be very difficult to find and retain qualified personnel such as either Mr.
Klemsz or Mr. Anderson.
Our revenue and profitability fluctuate, particularly inasmuch as we cannot predict the timing of
realization events in our business, which may make it difficult for us to achieve steady earnings
growth on a quarterly basis and may cause volatility in the price of our shares.
We may experience significant variations in revenues and profitability during the year
and among years because we are paid incentive income from certain funds only when investments are
realized, rather than periodically on the basis of increases in the funds net asset values. The
timing and receipt of incentive income generated by our funds is event driven and thus highly
variable, which contributes to the volatility of our revenue, and our ability to realize incentive
income from our funds may be limited. We cannot predict when, or if, any realization of investments
will occur. If we were to have a realization event in a particular quarter, it may have a
significant impact on our revenues and profits for that particular quarter which may not be
replicated in subsequent quarters. In addition, our investments are adjusted for accounting
purposes to fair value at the end of each quarter, resulting in revenue attributable to our
principal investments, even though we receive no cash distributions from our funds, which could
increase the volatility of our quarterly earnings.
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Difficult market conditions can adversely affect our funds in many ways, including by reducing the
value or performance of the investments made by our funds and reducing the ability of our funds to
raise or deploy capital, which could materially reduce our revenue and results of operations.
If economic conditions are unfavorable our funds may not perform well and we may not
be able to raise money in existing or new funds. Our funds are materially affected by conditions in
the global financial markets and economic conditions throughout the world. The global market and
economic climate may deteriorate because of many factors beyond our control, including rising
interest rates or inflation, terrorism or political uncertainty. In the event of a market downturn,
our businesses could be affected in different ways. Our funds may face reduced opportunities to
sell and realize value from their existing investments, and a lack of suitable investments for the
funds to make. In addition, adverse market or economic conditions as well as a slowdown of
activities in a particular sector in which portfolio companies of these funds operate could have an
adverse effect on the earnings of those portfolio companies, and therefore, our earnings.
A general market downturn, or a specific market dislocation, may cause our revenue and
results of operations to decline by causing:
| the net asset value of the assets under management to decrease, lowering management fees; | ||
| lower investment returns, reducing incentive income; | ||
| material reductions in the value of our fund investments in portfolio companies which reduce our surplus and, therefore, our ability to realize incentive income from these investments; and | ||
| investor redemptions, resulting in lower fees. |
Furthermore, while difficult market conditions may increase opportunities to make
certain distressed asset investments, such conditions also increase the risk of default with
respect to investments held by our funds with debt investments.
The success of our business depends, in large part, upon the proper selection of investments,
which may be difficult to find, acquire and develop.
We believe that the identification, acquisition and development of appropriate
investments are key drivers of our business. Our success depends, in part, on our ability to obtain
these investments under favorable terms and conditions and have them increase in value. We cannot
assure you that we will be successful in our attempts to find, acquire, and/or develop appropriate
investments, will not be challenged by competitors which may put us at a disadvantage. Further, we
cannot assure you that others will not independently develop similar or superior programs or
investments, which may imperil our profitability.
Risks Related to an Investment in Our Common Stock
The lack of a broker or dealer to create or maintain a market in our stock could adversely
impact the price and liquidity of our securities.
We have no agreement with any broker or dealer to act as a market maker for our
securities and there is no assurance that we will be successful in obtaining any market makers.
Thus, no broker or dealer will have an incentive to make a market for our stock. The lack of a
market maker for our securities could adversely influence the market for and price of our
securities, as well as your ability to dispose of, or to obtain accurate information about, and/or
quotations as to the price of, our securities.
We have limited experience as a public company.
We have only operated as a public company since 2008. Thus, we have limited experience in
complying with the various rules and regulations which are required of a public company. As a
result, we may not be able to operate successfully as a public company, even if our operations are
successful. We plan to comply with all of the various rules and regulations which are required of a
public company. However, if we cannot operate successfully as a public company, your investment may
be materially adversely affected. Our inability to operate as a public company could be the basis
of your losing your entire investment in us.
We may be required to register under the Investment Company Act of 1940, or the
Investment Advisors Act, which could increase the regulatory burden on us and could negatively
affect the price and trading of our securities.
Because our business involves the identification, acquisition and development of
investments, we may be required to register as an investment company under the Investment Company
Act of 1940 or the Investment Advisors Act and analogous state law. While we believe that we are
currently either not an investment company or an investment advisor or are exempt from registration
as an investment company under the Investment Company Act of 1940 or the Investment Advisors Act
and analogous state law, either the SEC or state regulators, or both, may disagree and could
require registration either immediately or at some
point in the future. As a result, there could be an increased regulatory burden on us which
could negatively affect the price and trading of our securities.
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Our stock has a limited public trading market on the OTC Bulletin Board and there is no guarantee
an active trading market will ever develop for our securities.
There has been, and continues to be, a limited public market for our common stock. We trade
under the symbol WASM. An active trading market for our shares has not, and may never develop or
be sustained. If you purchase shares of common stock, you may not be able to resell those shares at
or above the initial price you paid. The market price of our common stock may fluctuate
significantly in response to numerous factors, some of which are beyond our control, including the
following:
* | actual or anticipated fluctuations in our operating results; | ||
* | changes in financial estimates by securities analysts or our failure to perform in line with such estimates; | ||
* | changes in market valuations of other companies, particularly those that market services such as ours; | ||
* | announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; | ||
* | introduction of product enhancements that reduce the need for the products our projects may develop; | ||
* | departures of key personnel. |
Of our total outstanding shares as of March 31, 2011, a total of 8,325,000, or approximately
91.9%, will be restricted from immediate resale but may be sold into the market in the near future.
This could cause the market price of our common stock to drop significantly, even if our business
is doing well.
As restrictions on resale end, the market price of our stock could drop significantly if the
holders of restricted shares sell them or are perceived by the market as intending to sell them.
Applicable SEC rules governing the trading of Penny Stocks limit the liquidity of our common
stock, which may affect the trading price of our common stock.
Our common stock currently trades well below $5.00 per share. As a result, our common stock is
considered a penny stock and is subject to SEC rules and regulations that impose limitations upon
the manner in which our shares can be publicly traded. These regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny
stock and the associated risks. Under these regulations, certain brokers who recommend such
securities to persons other than established customers or certain accredited investors must make a
special written suitability determination for the purchaser and receive the written purchasers
agreement to a transaction prior to purchase. These regulations have the effect of limiting the
trading activity of our common stock and reducing the liquidity of an investment in our common
stock.
The over-the-counter market for stock such as ours is subject to extreme price and volume
fluctuations.
The securities of companies such as ours have historically experienced extreme price and
volume fluctuations during certain periods. These broad market fluctuations and other factors, such
as new product developments and trends in the our industry and in the investment markets generally,
as well as economic conditions and quarterly variations in our operational results, may have a
negative effect on the market price of our common stock.
Buying low-priced penny stocks is very risky and speculative.
Our shares are defined as a penny stock under the Securities and Exchange Act of 1934, and
rules of the Commission. The Exchange Act and such penny stock rules generally impose additional
sales practice and disclosure requirements on broker-dealers who sell our securities to persons
other than certain accredited investors who are, generally, institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer.
For transactions covered by the penny stock rules, a broker-dealer must make a suitability
determination for each purchaser and receive the purchasers written agreement prior to the sale.
In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions,
including the actual sale or purchase price and actual bid and offer quotations, the compensation
to be received by the broker-dealer and certain associated persons, and deliver certain disclosures
required by the Commission. Consequently, the penny stock rules may affect the ability of
broker-dealers to make a market in or trade our common stock and may also affect your ability to
resell any shares you may purchase in the public markets.
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Issuances of our stock could dilute current shareholders and adversely affect the market price
of our common stock, if a
public trading market develops.
We have the authority to issue up to 50,000,000 shares of common stock, 1,000,000 shares of
preferred stock, and to issue options and warrants to purchase shares of our common stock without
stockholder approval. Although no financing is planned currently, we may need to raise additional
capital to fund operating losses. If we raise funds by issuing equity securities, our existing
stockholders may experience substantial dilution. In addition, we could issue large blocks of our
common stock to fend off unwanted tender offers or hostile takeovers without further stockholder
approval.
The issuance of preferred stock by our board of directors could adversely affect the rights of
the holders of our common stock. An issuance of preferred stock could result in a class of
outstanding securities that would have preferences with respect to voting rights and dividends and
in liquidation over the common stock and could, upon conversion or otherwise, have all of the
rights of our common stock. Our board of directors authority to issue preferred stock could
discourage potential takeover attempts or could delay or prevent a change in control through
merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly
to achieve.
Colorado law and our Articles of Incorporation protect our directors from certain types of
lawsuits, which could make it difficult for us to recover damages from them in the event of a
lawsuit.
Colorado law provides that our directors will not be liable to our company or to our
stockholders for monetary damages for all but certain types of conduct as directors. Our Articles
of Incorporation require us to indemnify our directors and officers against all damages incurred in
connection with our business to the fullest extent provided or allowed by law. The exculpation
provisions may have the effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances. The indemnification
provisions may require our company to use our assets to defend our directors and officers against
claims, including claims arising out of their negligence, poor judgment, or other circumstances.
We do not expect to pay dividends on common stock.
We have not paid any cash dividends with respect to our common stock, and it is unlikely that
we will pay any dividends on our common stock in the foreseeable future. Earnings, if any, that we
may realize will be retained in the business for further development and expansion.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
None
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
None
ITEM 5. | OTHER INFORMATION |
None
ITEM 6. | EXHIBITS |
Exhibit | ||||
Number | Description | |||
3.1 | * | Articles of Incorporation |
||
3.2 | * | Bylaws |
||
10.1 | ** | Service Agreement With Bohemian Companies, LLC |
||
31.1 | Certification of CEO/CFO pursuant to Sec. 302 |
|||
32.1 | Certification of CEO/CFO pursuant to Sec. 906 |
* | Previously filed with Form SB-2 Registration Statement, January 2, 2008. | |
** | Previously filed with Form 10-KSB, February 29, 2008. |
Reports on Form 8-K
No reports were filed under cover of Form 8-K for the fiscal quarter ended March 31, 2011.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized May 17, 2011.
WEST MOUNTAIN ASSET MANAGEMENT, INC., a Colorado corporation |
||||
By: | /s/ Brian L. Klemsz | |||
Brian L. Klemsz, President, Chief Executive Officer, | ||||
Chief Financial Officer and Director (Principal Executive, Accounting and Financial Officer) |
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