Attached files

file filename
EX-10.19 - FORM OF WARRANT FOR THE PURCHASE OF COMMON STOCK - WESTMOUNTAIN GOLD, INC.wmtn_ex1019.htm
EX-32.2 - CERTIFICATION - WESTMOUNTAIN GOLD, INC.wmtn_ex322.htm
EX-32.1 - CERTIFICATION - WESTMOUNTAIN GOLD, INC.wmtn_ex321.htm
EX-31.2 - CERTIFICATION - WESTMOUNTAIN GOLD, INC.wmtn_ex312.htm
EX-31.1 - CERTIFICATION - WESTMOUNTAIN GOLD, INC.wmtn_ex311.htm
EX-21.1 - SUBSIDIARY - WESTMOUNTAIN GOLD, INC.wmtn_ex211.htm
EX-10.23 - COMMERCIAL LEASE APRIL 1, 2011 BY AND BETWEEN WESTMOUNTAIN INDEX ADVISOR, INC. AND WATERFRONT PROPERTY MANAGEMENT LLC. - WESTMOUNTAIN GOLD, INC.wmtn_ex1023.htm
EX-10.22 - COMMERCIAL LEASE AMENDMENT II SIGNED JUNE 5, 2013 BY AND BETWEEN WESTMOUNTAIN INDEX ADVISOR, INC. AND WATERFRONT PROPERTY MANAGEMENT LLC. - WESTMOUNTAIN GOLD, INC.wmtn_ex1022.htm
EX-10.21 - COMMERCIAL LEASE AGREEMENT SIGNED SEPTEMBER 3, 2012 BY AND BETWEEN JAMES BAUGHMAN AND 2186 S. HOLLY LLC. - WESTMOUNTAIN GOLD, INC.wmtn_ex1021.htm
EX-10.20 - FORM OF SUBSCRIPTION AGREEMENT FOR THE PURCHASE OF PREFERRED STOCK - WESTMOUNTAIN GOLD, INC.wmtn_ex1020.htm
EX-10.18 - FORM OF WARRANT FOR THE PURCHASE OF PREFERRED STOCK - WESTMOUNTAIN GOLD, INC.wmtn_ex1018.htm


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

FORM 10-K
 
þ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
 
For the fiscal year ended October 31, 2013
 
o TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
 
For the transaction period from ________ to ________
 
Commission File No. 0-53028

WESTMOUNTAIN GOLD, INC.
(Exact Name of Issuer as specified in its charter)

Colorado
 
26-1315498
(State or other jurisdiction  of incorporation)
 
(IRS Employer File Number)

120 E Lake St. Ste. 401 Sandpoint, ID
 
83864
(Address of principal executive offices)
 
(zip code)

(208)265-1717
 (Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12 (b) of the Exchange Act:
 
 Common
 
 OTCBB
(Title of each class)
 
(Name of each exchange on which registered)
 
Securities registered pursuant to Section 12 (g) of the Exchange Act:
None
(Title of Class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes    þ No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. o Yes    þ No

Indicate by check mark whether the registrant (1) has 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.   þYes    o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes   o No
 
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K  (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
 
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. (Check one):
 
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).     o Yes    þ No

As of April 30, 2013 (the last business day of our most recently completed second fiscal quarter), based upon the last reported trade on that date, the aggregate market value of the voting and non-voting common equity held by non-affiliates (for this purpose, all outstanding and issued common stock minus stock held by the officers, directors and known holders of 10% or more of the Company’s common stock) was $10,767,879.

As of February 12, 2014, the Company had 25,484,997 shares of common stock issued.
 
 
 

 
 
TABLE OF CONTENTS
 
 
     
Page
 
PART 1
 
         
ITEM 1.
Description of Business
   
  3
 
           
ITEM 1A.
Risk Factors
   
5
 
           
ITEM 1B
Unresolved Staff Comments
   
  15
 
           
ITEM 2.
Properties
   
  15
 
           
ITEM 3.
Legal Proceedings
   
  18
 
           
ITEM 4.
Mine Safety Disclosure
   
  18
 
           
PART II
 
           
ITEM 5.
Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
   
 19
 
           
ITEM 6.
Selected Financial Data
   
22
 
           
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
22
 
           
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
   
26
 
           
ITEM 8.
Financial Statements and Supplementary Data
   
27
 
           
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   
27
 
           
ITEM 9A.
Controls and Procedures
   
29
 
           
ITEM 9B.
Other Information
   
29
 
           
PART III
 
           
ITEM 10.
Directors, Executive Officers and Corporate Governance
   
  29
 
           
ITEM 11.
Executive Compensation
   
  34
 
           
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
   
 42
 
           
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
   
 44
 
           
ITEM 14.
Principal Accounting Fees and Services
   
  44
 
           
PART IV
 
           
ITEM 15.
Exhibits, Financial Statement Schedules
   
46
 
           
 
SIGNATURES
   
F-26
 
 
 
 
2

 

PART I
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

The following discussion, in addition to the other information contained in this report, should be considered carefully in evaluating us and our prospects. This report (including without limitation the following factors that may affect operating results) contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act") regarding us and our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as revenue projections, projected profitability, growth strategies, development of new products, enhancements or technologies, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.

Forward-looking statements in this report reflect the good faith judgment of our management and the statements are based on facts and factors as we currently know them. Forward-looking statements are subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, those discussed below and in "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as those discussed elsewhere in this report. Readers are urged not to place undue reliance on these forward-looking statements which speak only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report.

ITEM 1.    DESCRIPTION OF BUSINESS

THE COMPANY AND OUR BUSINESS

WestMountain Gold, Inc. (“WMTN” or the “Company”) is an exploration stage mining company, in accordance with applicable guidelines of the SEC, which pursues gold projects that are anticipated to have low operating costs and high returns on capital.

We acquired Terra Mining Corporation (“TMC”) on February 28, 2011 and accounted for the transaction as a reverse acquisition using the purchase method of accounting, whereby TMC is deemed to be the accounting acquirer (legal acquiree) and WMTN to be the accounting acquiree (legal acquirer). Our financial statements before the date of the acquisition are those of TMC with the results of WMTN being consolidated from the date of the acquisition. The equity section and earnings per share have been retroactively restated to reflect the reverse acquisition and no goodwill has been recorded. We adopted TMC’s fiscal year, which is October 31.

TMC’s wholly owned subsidiary, Terra Gold Corporation (“TGC”), is a joint venture partner with Raven Gold Alaska, Inc. (“Raven”) on a high-grade gold system called the TMC project. We are currently focused on mineral production from mineralized material at this project in the state of Alaska. The TMC project consists of 344 Alaska state mining claims including 5 unpatented lode mining claims held under lease (subject to a 3-4% NSR royalty to the lessor, dependent upon the gold price) covering 223 square kilometers (22,300 hectares). The property is centered on an 8-km-long (800 hectares) trend of high-grade gold vein occurrences.  All government permits and reclamation plans for continued exploration through 2013 were renewed in 2010.  The $92,560 of fees to maintain the Terra claims through 2014 were paid by us on November 18, 2013.  The property lies approximately 200 km (20,000 hectares) west-northwest of Anchorage and is accessible via helicopter or fixed-wing aircraft.  The property has haul roads, a mill facility and adjoining camp infrastructure, a tailings pond and other infrastructure.  The remote camp is powered by diesel powered generators and water is supplied to the mill by spring fed sources and year round water wells.

Outcropping gold veins were first discovered at Terra in the late 1990's by Kennecott Exploration.  The claims were transferred to Mr. Ben Porterfield in 2000. AngloGold Ashanti (USA) Exploration Inc. optioned these claims in 2004 and staked additional claims in the vicinity.  Initial detailed soil and rock surveys were conducted at Terra that same year with results leading to the definition of an initial zone of high-grade gold veins over a 2.5 km (250 hectares) strike length.  AngloGold followed up with a discovery drill program of 12 holes in 2005 and drilled three additional holes in 2006.  A total of 587 rock samples were collected on the property.  The Terra project was joint-ventured to International Tower Hill Mines Ltd. (“ITH”) in August of 2006.

On September 15, 2010, TMC and its wholly owned subsidiary, TGC, and Raven signed an Exploration, Development and Mine Operating Agreement (“JV Agreement”). TMC agreed to have 250,000 shares of WMTN common stock issued to Raven, no later than one year after the closing of the acquisition of TMC by WMTN, and an additional 250,000 shares of WMTN common stock issued on or before each of December 31, 2011, 2012 and 2014. The $50,000 due with the signing of the Letter of Intent in February 2010 was paid September 17, 2010. TMC has spent $7,400,000 of project expenses through October 31, 2013 as defined by the JV Agreement. The Company filed its annual JV report on December 13, 2013. TMC is reviewing the project expenses with Raven to determine if the Company has achieved its 51% interest in the JV.

 
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The JV Agreement has a term of twenty years, which can continue longer as long as products are produced on a continuous basis and thereafter until all materials, equipment and infrastructure are salvaged and disposed of, environmental compliance is completed and accepted and the parties have completed a final accounting.

We are considered an exploration stage company under SEC criteria because it has not demonstrated the existence of proven or probable reserves at the TMC project.  Accordingly, as required under SEC guidelines and U.S. GAAP for companies in the exploration stage, substantially all of our investment in mining properties to date, including construction of the mill, mine facilities and exploration expenditures, have been expensed as incurred and therefore do not appear as assets on our balance sheet.  We expect construction expenditures and underground mine exploration and capital improvements will continue during 2014 and subsequent years. We expect to remain as an exploration stage company for the foreseeable future. We do not exit the exploration stage until such time that we demonstrate the existence of proven or probable reserves that meet SEC guidelines. Likewise, unless mineralized material is classified as proven or probable reserves, substantially all expenditures for mine exploration and construction will continue to be expensed as incurred.

As of Feburary 13, 2014, we have $2,852,115 plus accrued interest of $495,938 due to BOCO Investments LLC on three secured promissory notes that are now in default.  We are currently attempting to negotiate an extension or other modification as we do not have the ability to repay the amount due. There can be no assurance that we will be able to renegotiate the terms of these promissory notes under terms that are favorable to the Company.  We have budgeted expenditures for the TMC project for the next twelve months of approximately $2,900,000, depending on additional financing, for general and administrative expenses and exploration. We must expend an additional $2,100,000 for a total of $9,500,000 plus option payments of $450,000 by December 31, 2014 as an “earn in” on the TMC project to own rights to 80% of the project.  Even if economic reserves are found, if we are unable to raise this capital, we will not be able to complete our earn in on this project.

Our principal source of liquidity for the next several years will need to be the continued raising of capital through the issuance of equity or debt.  WMTN plans to raise funds for each step of the project and as each step is successfully completed, raise the capital for the next phase. WMTN believes this will reduce the cost of capital as compared to trying to raise all the anticipated capital at once up front.  However, since WMTN’s ability to raise additional capital will be affected by many factors, most of which are not within our control (see “Risk Factors”), no assurance can be given that WMTN will in fact be able to raise the additional capital as it is needed.

We may choose to scale back operations to operate at break-even with a smaller level of business activity, while adjusting overhead depending on the availability of additional financing. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.

Our independent registered accounting firm has expressed substantial doubt about our ability to continue as a going concern as a result of the Company’s history of net loss. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully execute the plans to pursue the TMC project as described in this Form 10-K. The outcome of these matters cannot be predicted at this time. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue our business.

CORPORATE INFORMATION
 
We were incorporated in the state of Colorado on October 18, 2007.  
 
Our principal executive office is located at 120 E. Lake St. Ste., 401, Sandpoint, ID 83864, and our telephone number is (208)265-1717.   Our principal website address is located at www.westmountaingold.com. The information on our website is not incorporated as a part of this Form 10-K.
 
THE COMPANY’S COMMON STOCK
 
Our common stock currently trades on the OTCQB market under the symbol "WMTN."

Our primary key market priority will be to proceed with the TMC project and other mining opportunities that may present themselves from time to time. We cannot guarantee that the TMC project will be successful or that any project that we embark upon will be successful. Our goal is to build our Company into a successful mineral exploration and development company.

PRIMARY RISKS AND UNCERTAINTIES 

We are exposed to various risks related to the volatility of the price of gold, our need for additional financing, our joint venture agreements, our reserve estimates, operating as a going concern, unique difficulties and uncertainties in mining exploration ventures, and a volatile market price for our common stock. These risks and uncertainties are discussed in more detail below in this item.

 
4

 
 
EMPLOYEES

As of October 31, 2013, we had ­­­­six full-time and part-time employees.  Additionally, we use employees of Minex Exploration, an Idaho partnership affiliated with our Chief Executive Officer, as contractors for exploration of our Alaska property. Most of our employees are based in Sandpoint, ID. The Chief Executive Officer and the Chief Financial Officer are based out of the Sandpoint, ID office.

WEBSITE ACCESS TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION REPORTS

We file annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). You may read and copy any document we file at the SEC's Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information concerning filers. We also maintain a web site at http://www.westmountaingold.com that provides additional information about us and links to documents we file with the SEC. Our charters for the Audit, Compensation and Nominations and Governance Committees and the Code of Conduct & Ethics are also available on our website.
 
ITEM 1A. RISK FACTORS

There are certain inherent risks which will have an effect on the Company’s exploration in the future and the most significant risks and uncertainties known and identified by our management are described below.
 
If we do not obtain additional financing, our business will fail. 

For the year ended October 31, 2013, we had revenues of $94,000. For the year ended October 31, 2012, we had no revenues. 

The net loss for the year ended October 31, 2013 and 2012 was $7,610,000 and $5,550,000, respectively. The net loss included $3,447,000 and $1,993,000 of non-cash expenses for the years ended October 31, 2013 and 2012, respectively.

Our current operating funds are less than necessary to complete all intended exploration of the property, and therefore we will need to obtain additional financing in order to complete our business plan.  As of October 31, 2013, we had approximately $82,000 in cash. 

We have budgeted expenditures for the TMC project for the next twelve months of approximately $2,900,000, depending on additional financing, for general and administrative expenses and exploration.

Our business plan calls for significant expenses in connection with the exploration of the property.  We do not currently have sufficient funds to conduct continued exploration on the property and require additional financing in order to determine whether the property contains economic mineralization.  We will also require additional financing if the costs of the exploration of the property are greater than anticipated. 

As of February 12, 2014, we have $2,852,115 plus accrued interest of $495,938 due to BOCO Investments LLC on three secured promissory notes that are now in default.    We are currently attempting to negotiate an extension or other modification of these notes, as we do not have the ability to repay the amount due.  If the Company is not successful at negotiating an extension or other modification, it may have to restructure its operations, divest all or a portion of its business, or file for bankruptcy.

On March 20, 2013, the Company entered into forward sale and loan agreements with three accredited investors for an aggregate loan of $600,000.  The Company was required to tender, in the aggregate, no less than 600 ounces of gold in bar form to the three accredited investors by September 15, 2013.  On November 1, 2013, the Company settled with one of the parties that had an agreement for 200 ounces of gold for 310,000 shares of common stock valued at $1.00 per share, plus warrants for an additional 310,000 shares at an exercise price of $1.50 per share.  As of the date of this filing, the Company is in default under the other two agreements and is still negotiating with the two investors to reach a settlement agreement with them.  Under these two agreements, the Company is obligated to tender no less than 400 ounces of gold or pay the principal sum of $600,000.

We will require additional financing to sustain our business operations if we are not successful in earning revenues once exploration is complete.  We do not currently have any arrangements for financing and we can provide no assurance to investors that we will be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including the market prices for copper, silver and gold, investor acceptance of our property and general market conditions. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. 

The most likely source of future funds presently available to us is through the sale of equity capital. Any sale of share capital will result in dilution to existing shareholders.  The only other anticipated alternative for the financing of further exploration would be our sale of a partial interest in the property to a third party in exchange for cash or exploration expenditures, which is not presently contemplated. 

 
5

 
 
The volatility of the price of gold could adversely affect our future operations and our ability to develop our properties.   

The potential for profitability of our operations, the value of our properties and our ability to raise funding to conduct continued exploration, if warranted, are directly related to the market price of gold and other precious metals.  The price of gold may also have a significant influence on the market price of our common stock and the value of our properties.  Our decision to put a mine into production and to commit the funds necessary for that purpose must be made long before the first revenue from production would be received.  A decrease in the price of gold may prevent our property from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold prices. 

As of February 12, 2014, the price of gold was $1,289.50 per ounce, based on the daily London PM fix on that date.  The volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate.  In the event gold prices decline or remain low for prolonged periods of time, we might be unable to develop our properties, which may adversely affect our results of operations, financial performance and cash flows.
 
Our Joint Venture Agreement and Amended Claim Agreement are critical to our operations and are subject to cancellation.

On September 15, 2010, we signed an Exploration, Development and Mine Operating Agreement (“JV Agreement”) with Raven.

TMC has spent $7,400,000 of project expenses through October 31, 2013 as defined by the JV Agreement. The Company filed its annual JV report on December 13, 2013. TMC is reviewing the project expenses with Raven to determine if the Company has achieved its 51% interest in the JV.
 
The failure to operate in accordance with the JV Agreement could result in our interest in the JV Agreement being terminated. See Note 3 to the Consolidated Financial Statements for a discussion of this critical agreement.

On January 7, 2011, TMC entered into an Amended Claims Agreement with Ben Porterfield related to five mining claims known as Fish Creek 1-5 (ADL-648383 through ADL-648387), which claims have been assigned to the TMC project. As part of this Amended Claims Agreement, Ben Porterfield consented to certain conveyances, assignments, contributions and transfers related to the above five mining claims.

The failure to operate in accordance with the Amended Claims Lease or Agreement could result in the lease pertaining to the mining claims that are the subject of the Amended Claims Agreement being terminated. See Note 3 to the Consolidated Financial Statements for a discussion of this critical agreement.
 
Our management and a major shareholder and creditor have substantial influence over our company.  

As of February 12, 2014, Greg Schifrin, our CEO, and Mr. James Baughman together, either directly or indirectly, own or control 6.7 million shares as of the filing date or approximately 26.4% of our issued and outstanding common stock including shares beneficially owned within sixty days.

BOCO owns or controls 11.2 million shares as of the filing date or approximately 34.3% of our issued and outstanding common stock including shares beneficially owned within sixty days, and (i) including the potential conversion of $1,852,115 of debt that is due and payable by the Company on October 31, 2013, that as of February 11, 2014, is convertible along with accrued interest into Company common stock at a rate of $0.75 per share (ii) the potential conversion of $250,000 of Series A Convertible Preferred Stock; (iii) Promissory Notes totaling $500,000 that were due on October 31, 2013 and December 31, 2013; (iv) and various warrants. See Note 7 and 8 to the Company’s Financial Statements for a more detailed description of this Secured Promissory and Promissory Notes, Series A Convertible Preferred Stock and various warrants.   We are currently attempting to negotiate an extension or other modification of these notes as we do not have the ability to repay the amount due.  If the Company is not successful in negotiating an extension or other modification, it may have to restructure its operations, divest all or a portion of its business, or file for bankruptcy.
 
 
6

 
 
As a major creditor and shareholder of the Company, BOCO has additional influence and control over the Company.

Mr. Schifrin, Mr. Baughman and BOCO, in combination with other large shareholders, could cause a change of control of our board of directors, approve or disapprove any matter requiring stockholder approval, cause, delay or prevent a change in control or sale of the Company, which in turn could adversely affect the market price of our common stock.

We have no proven or probable reserves and our decision to continue further exploration is not based on a study demonstrating economic recovery of any mineral reserves and is therefore inherently risky.

Any funds spent by us on exploration could be lost. We have not established the presence of any proven or probable mineral reserves, as defined by the SEC, at any of our properties. Under Industry Guide 7, the SEC has defined a “reserve” as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Any mineralized material discovered or produced by us should not be considered proven or probable reserves.

In order to demonstrate the existence of proven or probable reserves, it would be necessary for us to perform additional exploration to demonstrate the existence of sufficient mineralized material with satisfactory continuity and obtain a positive feasibility study which demonstrates with reasonable certainty that the deposit can be economically and legally extracted and produced. We have not completed a feasibility study with regard to all or a portion of any of our properties to date. The absence of proven or probable reserves makes it more likely that our properties may cease to be profitable and that the money we spend on exploration may never be recovered.

Since we have no proven or probable reserves, our investment in mineral properties is not reported as an asset in our financial statements which may cause volatility in our net earnings and have a negative impact on the price of our stock.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America and report substantially all exploration and construction expenditures as expenses until such time, if ever, we are able to establish proven or probable reserves. Since it is uncertain when, if ever, we will establish proven or probable reserves, it is uncertain whether we will ever report these types of future capital expenditures as an asset. Accordingly, our financial statements report fewer assets and greater expenses than would be the case if we had proven or probable reserves, which could produce volatility in our earnings and have a negative impact on our stock price.

There are differences in U.S. and Canadian practices for reporting reserves and resources.

Our reserve and resource estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally calculate reserves and resources in accordance with Canadian practices. The Geologic Report, upon which we have based our mineralization estimates, was prepared in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) National Instrument 43-101 (NI 43-101) and Form 43-101F1 (43-101F1). These practices are different from the practices used to report reserve and resource estimates in reports and other materials filed with the SEC. It is Canadian practice to report measured, indicated and inferred mineral resources, which are generally not permitted in disclosure filed with the SEC by United States issuers. In the United States, 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 at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into reserves.

Further, “inferred mineral resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report “resources” as in place, tonnage and grade without reference to unit measures.

Accordingly, information concerning descriptions of mineralization, reserves and resources contained in this report, or in the documents incorporated herein by reference, may not be comparable to information made public by other United States companies subject to the reporting and disclosure requirements of the SEC.

Estimates of mineralized material are based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.   

Unless otherwise indicated, estimates of mineralized material presented in our press releases and regulatory filings are based upon estimates made by us and our consultants.  When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineralized material on our properties.  Until mineralized material is actually mined and processed, it must be considered an estimate only.  These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable.  We cannot assure you that these mineralized material estimates will be accurate or that this mineralized material can be mined or processed profitably.  Any material changes in estimates of mineralized material will affect the economic viability of placing a property into production and such property’s return on capital.  There can be no assurance that minerals recovered in small scale metallurgical tests will be recovered at production scale.  

 
7

 
 
The mineralized material estimates have been determined and valued based on assumed future prices, cut-off grades and operating costs that may prove inaccurate.  Extended declines in market prices for gold and silver may render portions of our mineralized material uneconomic and adversely affect the commercial viability of one or more of our properties and could have a material adverse effect on our results of operations or financial condition.
 
There is substantial doubt about our ability to continue as a going concern. 

Our audited financial statements for the period from inception (March 25, 2010) to October 31, 2013 indicate that there are a number of factors that raise substantial doubt about our ability to continue as a going concern.   Such factors identified in the report result from our limited history of operations, limited assets, and operating losses since inception.  In addition, among other factors, as of October 31, 2013, we reported a net operating loss of over $17.7 million.  If we are not able to continue as a going concern, it is likely investors will lose their investments.

Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure. 

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claim and acquire new claims for new exploration. The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations. 

Because we have limited business operations, we face a high risk of business failure.

We started exploring our properties in the summer of 2011.  Accordingly, we have no way to evaluate the likelihood that our business will be successful.  Although we were incorporated in the state of Colorado on October 18, 2007, the Company just acquired our mineral properties with our acquisition of TMC on February 28, 2011.  We have reported revenues of $94,000 as of the date of this Form 10-K.  TMC itself has only been in existence since March 25, 2010.
 
Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any significant revenues.  We therefore expect to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate significant revenues from exploration of the mineral claims and the production of minerals from the claims, we will not be able to earn profits or continue operations. 

There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

We are dependent on key personnel.

Our success depends to a significant degree upon the continued contributions of key management and other personnel, some of whom could be difficult to replace. We do not maintain key man life insurance covering certain of our officers. Our success will depend on the performance of our officers, our ability to retain and motivate our officers, our ability to integrate new officers into our operations and the ability of all personnel to work together effectively as a team. Our failure to retain and recruit officers and other key personnel could have a material adverse effect on our business, financial condition and results of operations.

 
8

 
 
We lack an operating history and we expect to have losses in the future.
 
Except for our initial exploration efforts as described above, we have not started our proposed business operations or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon the following: 

 
Our ability to locate a profitable mineral property;
  
Our ability to generate revenues; and
  
Our ability to reduce exploration costs.
 
Based upon current plans, we expect to incur operating losses in foreseeable future periods. This will happen because there are expenses associated with the research and exploration of our mineral properties. We cannot guarantee that we will be successful in generating significant revenues in the future. Failure to generate significant revenues will cause us to go out of business.

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards.  As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. Although we conducted a due diligence investigation prior to entering into the acquisition of TMC, risk remains regarding any undisclosed or unknown liabilities associated with this project. The payment of such liabilities may have a material adverse effect on our financial position.

Because we are small and do not have sufficient capital, we may have to cease operation even if we have found mineralized material.

Because we are small and do not have sufficient capital, we must limit our exploration. Because we may have to limit our exploration, we may be unable to mine mineralized material, even if our mineral claims contain mineralized material. If we cannot mine mineralized material, we may have to cease operations.

If we become subject to onerous government regulation or other legal uncertainties as we move to production, our business will be negatively affected.  Governmental regulations impose material restrictions on mineral property exploration. Under Alaska mining law, to engage in exploration will require permits, the posting of bonds, and the performance of remediation work for any physical disturbance to the land. If we proceed to commence drilling operations on the mineral claims, we will incur additional regulatory compliance costs.
 
In addition, the legal and regulatory environment that pertains to mineral exploration is uncertain and may change. Uncertainty and new regulations could increase our costs of doing business and prevent us from exploring for ore deposits. The growth of demand for ore may also be significantly slowed. This could delay growth in potential demand for and limit our ability to generate revenues.  In addition to new laws and regulations being adopted, existing laws may be applied to limit or restrict mining that have not as yet been applied.  These new laws may increase our cost of doing business with the result that our financial condition and operating results may be harmed. 

We are subject to governmental regulations, which affect our operations and costs of conducting our business.

Our current and future operations are and will be governed by laws and regulations, including:
 
-           laws and regulations governing mineral concession acquisition, prospecting, exploration, mining and production;
-           laws and regulations related to exports, taxes and fees;
-           labor standards and regulations related to occupational health and mine safety;
-           environmental standards and regulations related to clean water, waste disposal, toxic substances, land use and environmental protection; and other matters.

 
9

 
 
Companies engaged in mining exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Failure to comply with applicable laws, regulations and permits may result in enforcement actions, including the forfeiture of claims, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions. We may be required to compensate those suffering loss or damage by reason of our mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.

Existing and possible future laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in exploration.

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

All phases of our operations are subject to environmental regulation. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws or regulations could have a significant adverse impact on our properties or some portion of our business, causing us to re-evaluate those activities at that time.

U.S. Federal Laws. The Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (RCRA), and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.

We may also be subject to compliance with other federal environmental laws, including the Clean Air Act, National Environmental Policy Act (NEPA) and other environmental laws and regulations.

The State of Alaska Department of Natural Resources requires a pool of funds from all permittees with exploration and mining projects to cover reclamation. There is a $750 per acre disturbance reclamation bond that is required for disturbance of 5 acres or more and/or removal of more the 50,000 cubic yards of material. We exceeded the minimum requirements in 2013 and posted a reclamation bond of approximately $23,000 on December 23, 2013.

We may not have access to all of the supplies and materials we need to begin exploration that could cause us to delay or suspend operations. 

Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials after we raise additional funding. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need. 

 
10

 
 
Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of minerals

We plan to continue to source exploration mineral claims. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on our properties will establish that additional commercially exploitable reserves of gold exist on our properties.  Problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and often result in exploration efforts being unsuccessful. The additional potential problems include, but are not limited to, unanticipated problems relating to exploration and attendant additional costs and expenses that may exceed current estimates. These risks may result in us being unable to establish the presence of additional commercial quantities of ore on our mineral claims with the result that our ability to fund future exploration activities may be impeded. 

Weather and location challenges may restrict and delay our work on our property.   

We plan to conduct our exploration on a seasonal basis. Because of the severe Alaska winters and lack of sunlight and with current operations, we are only able to perform exploration operations for approximately five months per year. It is possible that snow or rain could restrict and delay work on the properties to a significant degree. Our property is located in a relatively remote location, which creates additional transportation and energy costs and challenges. Currently, we have drilled our test sites with helicopter-supported drill rigs, which are expensive to operate.  While are constructing an underground portal to process gold in 2014, we may not have sufficient funds to complete these improvements, which would further increase the cost of exploration.

As we face intense competition in the mining industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees. 

The mining industry is intensely competitive in all of its phases. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended.
 
Our stock is categorized as a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a shareholder's ability to buy and sell our stock.
 
Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

The sale of a significant number of our shares of common stock could depress the price of our common stock. 

Sales or issuances of a large number of shares of common stock in the public market or the perception that sales may occur could cause the market price of our common stock to decline. As of February 12, 2014 there were 25.5 million shares of common stock and warrants issued and outstanding. Therefore, the amount of shares that have been registered by the Company for resale by certain investors (up to 6,707,715 shares of common stock) constitutes a significant percentage of the issued and outstanding shares and the sale of all or a portion of these shares could have a negative effect on the market price of our common stock. Significant shares of common stock are held by our principal shareholders, other Company insiders and other large shareholders. As “affiliates” (as defined under Rule 144 of the Securities Act (“Rule 144”)) of the Company, our principal shareholders, other Company insiders and other large shareholders may only sell their shares of common stock in the public market pursuant to an effective registration statement or in compliance with Rule 144. 
 
 
11

 

The market price of our common stock may be volatile.  

The market price of our common stock has been and is likely in the future to be volatile. Our common stock price may fluctuate in response to factors such as:  

 
Announcements by us regarding resources, liquidity, significant acquisitions, equity investments and divestitures, strategic relationships, addition or loss of significant customers and contracts, capital expenditure commitments, loan, note payable and agreement defaults, loss of our subsidiaries and impairment of assets,
 
Issuance or repayment of debt, accounts payable or convertible debt for general or merger and acquisition purposes,
 
Sale of a significant number of shares of our common stock by shareholders,
 
General market and economic conditions,
 
Quarterly variations in our operating results,
 
Investor relation activities,
 
Announcements of technological innovations,
 
New product introductions by us or our competitors,
 
Competitive activities, and
 
Additions or departures of key personnel.
 
These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition and results of operations. 

We may engage in acquisitions, mergers, strategic alliances, joint ventures and divestitures that could result in financial results that are different than expected. 
 
In the normal course of business, we may engage in discussions relating to possible acquisitions, equity investments, mergers, strategic alliances, joint ventures and divestitures. All such transactions are accompanied by a number of risks, including:

  
Use of significant amounts of cash,
  
Potentially dilutive issuances of equity securities on potentially unfavorable terms,
  
Incurrence of debt on potentially unfavorable terms as well as impairment expenses related to goodwill and amortization expenses related to other intangible assets,
  
The possibility that we may pay too much cash or issue too many of our shares as the purchase price for an acquisition relative to the economic benefits that we ultimately derive from such acquisition.
  
The process of integrating any acquisition may create unforeseen operating difficulties and expenditures. The areas where we may face difficulties in the foreseeable include:
  
Diversion of management time, during the period of negotiation through closing and after closing, from its focus on operating the businesses to issues of integration,
  
The need to integrate each company's accounting, management information, human resource and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented,
  
The need to implement controls, procedures and policies appropriate for a public company that may not have been in place in private companies, prior to acquisition,
  
The need to incorporate acquired technology, content or rights into our products and any expenses related to such integration, and
  
The need to successfully develop any acquired in-process technology to realize any value capitalized as intangible assets.
 
From time to time, we may engage in discussions with candidates regarding potential divestures. If a divestiture does occur, we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected. A successful divestiture depends on various factors, including our ability to:

  
Effectively transfer liabilities, contracts, facilities and employees to any purchaser,
  
Identify and separate the intellectual property to be divested from the intellectual property that we wish to retain,
  
Reduce fixed costs previously associated with the divested assets or business, and
  
Collect the proceeds from any divestitures.
 
In addition, if customers of the divested business do not receive the same level of service from the new owners, this may adversely affect our other businesses to the extent that these customers also purchase other products offered by us. All of these efforts require varying levels of management resources, which may divert our attention from other business operations.

If we do not realize the expected benefits or synergies of any divestiture transaction, our consolidated financial position, results of operations, cash flows and stock price could be negatively impacted.

 
12

 
 
Our directors and officers may have conflicts of interest with the Company as a result of their relationships with other companies.
 
Some of our officers and directors are also directors and officers of other companies, and conflicts of interest may arise between their duties as our officers and directors and as directors and officers of other companies. In addition, the Company has entered into supplier, financing and consulting arrangements with entities controlled by directors of the Company.  These factors could have a material adverse effect on our business, financial condition and results of operations.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws.

Without any anti-takeover provisions, there are limited deterrents for a take-over of our Company, which may result in a change in our management and directors. 

The laws of the State of Colorado and our Articles of Incorporation and Bylaws may protect our directors from certain types of lawsuits.

The laws of the State of Colorado provide that our directors will not be liable to us or our shareholders for monetary damages for all but certain types of conduct as directors of the company. Our Articles of Incorporation and Bylaws permit 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 shareholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Because our executive officers and directors have other business interests, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.
 
Our officers have other business interests. While each officer spends more than 40 hours per week on our business, if the demands on our executive officers from their other obligations increase, they may no longer be able to devote sufficient time to the management of our business. This could negatively impact our business exploration and could cause our business to fail.

Transfer of our securities may be restricted by virtue of state securities “blue sky” laws which prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

Transfers of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as "blue sky" laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities held by many of our stockholders have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions may prohibit the secondary trading of our common stock. Investors should consider the secondary market for our securities to be a limited one.
 
We are subject to corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.
 
We must comply with corporate governance requirements under the Sarbanes-Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, as well as additional rules and regulations currently in place and that may be subsequently adopted by the SEC and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. We are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act. We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial.
 
Our management has concluded that our disclosure controls and procedures were not effective due to the presence of the following material weaknesses in internal control over financial reporting:
 
We currently lack appropriate segregation of duties over treasury management. We expect to revise our procedures before the end of 2014.

We formed an audit committee on October 26, 2012 which consists of two independent directors with significant financial expertise.  An audit committee is expected to improve oversight in the establishment and monitoring of required internal controls and procedures. We expect to expand the audit committee during 2014.

Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.

 
13

 
 
GLOSSARY OF TECHNICAL TERMS

“Base Metal” means a classification of metals usually considered to be of low value and higher chemical activity when compared with the precious metals (gold, silver, platinum, etc.).  This nonspecific term generally refers to the high-volume, low-value metals copper, lead, tin, and zinc.

“Claim” means a mining interest giving its holder the right to prospect, explore for and exploit minerals within a defined area.

“Diamond Core” means a rotary type of rock drill that cuts a core of rock and is recovered in long cylindrical sections, two centimeters or more in diameter.

“Deposit” means an informal term for an accumulation of mineral ores.

“Exploration Stage” means a prospect that is not yet in either the development or production stage

“Feasibility Study” means an engineering study designed to define the technical, economic, and legal viability of a mining project with a high degree of reliability.

“Grade” means the metal content of ore, usually expressed in troy ounces per ton (2,000 pounds) or in grams per ton or metric tons which contain 2,204.6 pounds or 1,000 kilograms.

“Mineralization” means the concentration of metals within a body of rock.

“Mining” means the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.  Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.

 “Underground” means a mine working or excavation closed to the surface.

“Ore” means material containing minerals that can be economically extracted.

“Precious Metals” means any of several relatively scarce and valuable metals, such as gold, silver, and the platinum-group metals.

“Probable Reserves” means reserves for which quantity and grade and/or quality are computed from information similar to that used for Proven Reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced.  The degree of assurance, although lower than that for Proven Reserves, is high enough to assume continuity between points of observation.

“Proven Reserves” means reserves for which quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of the reserves are well-established.

“Production Stage” means a project that is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.

“Reclamation” means the process of returning land to another use after mining is completed.

“Recovery” means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage.

“Reserves” means that part of a mineral deposit that could be economically and legally extracted or produced at the time of reserve determination.

“Sampling” means selecting a fractional, but representative, pare of a mineral deposit for analysis.

“Vein” means a fissure, faults or crack in the rock filled by minerals that have traveled upward from some deep source.

 
14

 
 
ITEM 1B.     UNRESOLVED STAFF COMMENTS

We have no unresolved Staff comments.

ITEM 2.     PROPERTIES

The WMTN principal executive offices are located at 120 E. Lake St. Ste. 401, Sandpoint, ID 83864, and our telephone number is (208)265-1717.   On September 1, 2012, we leased our corporate office at the rate of $400 per month to August 31, 2013.   We currently lease the office on a month to month basis. On April 1, 2011, we entered into a lease at 120 Lake Street, Suite 401, Sandpoint, ID 83864.  This office is leased at the net of $1,000 per month and expired March 31, 2013. On June 4, 2013, we entered into Commercial Lease Amendment II. The office is shared with an entity affiliated with our Chief Executive Officer.

Other than our mining claims, leases, and other real property interests specifically related to mining, WMTN does not own real estate nor have plans to acquire any real estate.

Alaska Property - The TMC Project

The TMC project consists of 344 Alaska state mining claims including 5 unpatented lode mining claims held under lease (subject to a 3-4% net smelter return (“NSR”) royalty to the lessor, dependent upon the gold price) covering 223 square kilometers (22,300 hectares). The property is centered on an 8-km-long (800 hectares) trend of high-grade gold vein occurrences.  All government permits and reclamation plans for continued exploration through 2013 were renewed in 2010.  The $92,560 of fees to maintain the Terra claims through 2014 were paid by the Company on November 18, 2013.  The property lies approximately 200 km west-northwest of Anchorage between the Revelation and Terra Cotta mountains of the Alaska Range in southwestern Alaska at 61° 41’ 52.17”N latitude by 153° 41’ 05.59W longitude and is accessible via helicopter or fixed-wing aircraft. The property has haul roads, a mill facility and adjoining camp infrastructure, a tailings pond and other infrastructure.  The remote camp is powered by diesel powered generators and water is supplied to the mill by spring fed sources and wells.

Outcropping gold veins were first discovered at Terra in the late 1990's by Kennecott Exploration.  The claims were transferred to Mr. Ben Porterfield in 2000. AngloGold Ashanti (USA) Exploration Inc. optioned these claims in 2004 and staked additional claims in the vicinity.  Initial detailed soil and rock surveys were conducted at Terra that same year with results leading to the definition of an initial zone of high-grade gold veins over a 2.5 km (250 hectares) strike length.  AngloGold followed up with a discovery drill program of 12 holes in 2005 and drilled three additional holes in 2006.  A total of 587 rock samples were collected on the property.  The Terra project was joint-ventured to International Tower Hill Mines Ltd. (“ITH”) in August of 2006.

TMC received geological reports in June 2010 and February 2010 from the State of Alaska Division of Mines and Geology that represented a 400m spacing aerial magnetic and resistivity survey that included the area of the TMC Project.

A total of 44 drill holes have been completed on the TMC property.  The TMC mineralization has been characterized as deep epithermal or mesothermal and could have significant extent down dip and along strike.  Furthermore, there is potential to develop a number of continuous high-grade veins forming a highly attractive mining target.  Gold characterization work on Bens Vein indicates a large percentage of the gold and silver reports to a gravity concentrate.
 
 
15

 
 
Terra Property Location (from Puchner and Meyers, 2007)
 
 
16

 
 
State Claim Groups held by the TMC Project in 2012
 
 
 
17

 
 
TMC property illustrating target vein locations
 
 
In the Bens Vein zone the main vein system has a core high grade zone of around 29,893 tonnes with 29.48 g/t gold at a 10 g/t cutoff which expands significantly when the cutoff is lowered to 1 g/t.  Drilling on Bens Vein zone has outlined an open-ended mineralized zone over 350m long and 250m down dip with an average true width of ~1.3m that has around 852,942 tonnes with 15.3 g/t gold at a 5 g/t cutoff.  Drilling on the project has identified numerous veins, Environmental baseline studies were started in 2010 on the Terra property in anticipation of future development. The 2005-2013 drill results for the Ben Vein Zone are encouraging not only because they outlined a consistent and well mineralized main vein structure but also because a large number of well-mineralized hanging wall and foot wall subsidiary veins were encountered. These subsidiary veins offer significant potential for expansion of the system with intercepts such as holes TR-07-20 with new footwall zone of 0.6m @ 43.2 g/t gold and TR-07-22 with new hanging wall zone 0.8m @ 14.5 g/t gold.  From the data currently available it appears that a higher grade shoot is developing within the overall Bens Vein system which could form the nucleus for an initial mining target on the project.  
 
ITEM 3.    LEGAL PROCEEDINGS
 
There are no pending legal proceedings against us that are expected to have a material adverse effect on our cash flows, financial condition or results of operations. 
 
ITEM 4.    MINE SAFETY DISCLOSURE
 
Not applicable.  
 
 
18

 
 
PART II
 
ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Our common stock is $.001 par value, 200,000,000 shares authorized and as of February 12, 2014, we had 25,174,997 issued and outstanding, held by 170 shareholders of record. The number of stockholders, including beneficial owners holding shares through nominee names is approximately 350. Each share of Common Stock entitles its holder to one vote on each matter submitted to the shareholders for a vote, and no cumulative voting for directors is permitted.  Stockholders do not have any preemptive rights to acquire additional securities issued by the Company.  As of February 12, 2014, we had 16,815,308 shares of common stock reserved for issuance upon exercise of outstanding warrants.

Corporate Stock Transfer, Inc. is the transfer agent and registrar for our Common Stock.

Preferred Stock

Our preferred stock is $0.10 par value, 1,000,000 shares authorized and as of February 12, we had 12,100 shares issued and outstanding. On November 29, 2013, our Board of Directors of the Company approved a Certificate of Designation of Rights and Preferences of Series A Convertible Preferred Stock. The Certificate of Designation was filed with the state of Colorado on December 2, 2013. Each holder of outstanding shares of Series A Preferred shall be entitled to the number of votes equal to the number of whole shares of common stock of the Corporation into which the shares of Series A Preferred held by such holder are then convertible as of the applicable record date. We cannot amend, alter or repeal any preferences, rights, or other terms of the Series A Preferred so as to adversely affect the Series A Preferred , without the written consent or affirmative vote of the holders of at least sixty-six and two-thirds percent (66.66%) of the then outstanding shares of Series A Preferred, voting as a separate voting group, given by written consent or by vote at a meeting called for such purpose for which notice shall have been duly given to the holders of the Series A Preferred.
 
Stock Incentive Plan
 
On February 28, 2013, the 2012 Stock Incentive Plan was approved at the Annual Stockholder Meeting. We were authorized to issue options for, and have reserved for issuance, up to 4,000,000 shares of common stock under the 2012 Stock Incentive Plan. As of February 12, 2014, all 4,000,000 shares of common stock remain available for grant under the 2012 Stock Incentive Plan.

Change in Control Provisions
 
Our articles of incorporation provide for a maximum of five directors. There is no provision for classification or staggered terms for the members of the Board of Directors.
 
Our articles of incorporation also provide that except to the extent the provisions of Colorado General Corporation Law require a greater voting requirement, any action, including the amendment of the Company’s articles or bylaws, the approval of a plan of merger or share exchange, the sale, lease, exchange or other disposition of all or substantially all of the Company’s property other than in the usual and regular course of business, shall be authorized if approved by a simple majority of stockholders, and if a separate voting group is required or entitled to vote thereon, by a simple majority of all the votes entitled to be cast by that voting group.
 
Our bylaws provide that only the Chief Executive Officer or a majority of the Board of Directors may call a special meeting.  The bylaws do not permit the stockholders of the Company to call a special meeting of the stockholders for any purpose.
 
Amendment of Bylaws
 
Our Board of Directors has the authority to amend our bylaws; however, the stockholders, under the provisions of our articles of incorporation as well as our bylaws, have the concurrent power to amend the bylaws.
 
 
19

 
 
Market Price of and Dividends on Common Equity and Related Stockholder Matters
 
Our common stock trades on OTCQB Exchange under the symbol "WMTN". The following table sets forth the range of the high and low sale prices of the common stock for the periods indicated:
 
Quarter Ended
 
High
   
Low
 
January 31, 2013
  $ 1.01     $ 0.58  
April 30, 2013
  $ 1.00     $ 0.52  
July 31, 2013
  $ 1.50     $ 0.74  
October 31, 2013
  $ 1.35     $ 0.83  
                 
January 31, 2012
  $ 3.99     $ 1.60  
April 30, 2012
  $ 1.60     $ 1.00  
July 31, 2012
  $ 1.19     $ 0.30  
October 31, 2012
  $ 1.13     $ 0.30  
 
As of February 12, 2014, the closing price of the Company's common stock was $0.68 per share. As of February 12, 2014, there were 25,484,997 shares of common stock outstanding held by 170 stockholders of record. The number of stockholders, including the beneficial owners' shares through nominee names is approximately 350.

Holders
 
As of February 12, 2014, we had 170 stockholders of record of our common stock based upon the stockholder list provided by our transfer agent. The number of stockholders, including the beneficial owners’ shares through nominee names, is approximately 350.
 
Transfer Agent
 
The stock transfer agent for our securities is Corporate Stock Transfer of Denver, Colorado.  Their address is 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209. Their phone number is (303) 282-4800.
 
Dividends
 
We have never paid any cash dividends and intend, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.
 
 
20

 
 
 
RECENT SALES OF UNREGISTERED SECURITIES

During the three months ended October 31, 2013, there were the following sales of unregistered equity securities:

Unless otherwise indicated, all of the following sales or issuances of Company securities were conducted under the exemption from registration as provided under Section 4(2) of the Securities Act of 1933 (and also qualified for exemption under 4(5), formerly 4(6) of the Securities Act of 1933, except as noted below). All of the shares issued were issued in transactions not involving a public offering, are considered to be restricted stock as defined in Rule 144 promulgated under the Securities Act of 1933 and stock certificates issued with respect thereto bear legends to that effect. 
 
We have compensated consultants and service providers with restricted common stock during the development of our technology and when our capital resources were not adequate to provide payment in cash.
 
All of the following transactions were to accredited investors. All issuances were structured to comply with the requirements of the safe harbor afforded by Rule 506 of Regulation D.

During the twelve months ended October 31, 2013, we issued 99,489 shares of common stock that were valued at $1.00 per share or $99,489 to three individuals and GVC Capital LLC employees for services to us. A notice filing under Regulation D was filed with the SEC on November 26, 2013 with regard to these stock issuances.

On September 10, 2013, we issued 50,000 restricted shares of common stock to Silver Fox LLC pursuant to a signed agreement. The shares do not have registration rights. The shares were valued on the date of issuance and $50,000 was expensed to services. A notice filing under Regulation D was filed with the SEC on October 4, 2013 with regard to this stock issuance.

On October 30, 2013, Fifth Avenue Law Group PLLC converted $50,000 of accounts payable into 50,000 shares of restricted common stock at $1.00 per share. The stock was valued on the date of issuance. The restricted common stock does not have registration rights.   A notice filing under Regulation D was filed with the SEC on November 26, 2013 with regard to this stock issuance.
 
Performance Graph
Comparison of Cumulative Total Return

Among WestMountain Index Advisor, Inc., Market Vectors Junior Gold Mine ETF
and SPDR Gold Trust ETF
 
The above assumes that $100 was invested in the common stock and each index on October 31, 2010. Although the Company has not declared a dividend on its common stock, the total return for each index assumes the reinvestment of dividends. Stockholder returns over the periods presented should not be considered indicative of future returns. The foregoing table shall not be deemed incorporated by reference by any general statement incorporating by reference the Form 10-K  into any filing under the Securities Act or the Exchange Act, except to the extent the company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the acts.
 
 

 
 
21

 


EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of October 31, 2013 related to the equity compensation plan in effect at that time.
 
 
(a)
(b)
(c)
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)
Equity compensation plan approved by shareholders
                                        -
                                           -
                                    4,000,000
Equity compensation plan not approved by shareholders
                                        -
                                           -
                                                 -
Total
                                        -
                                           -
                                    4,000,000
 
 
ITEM 6.    SELECTED FINANCIAL DATA

In the following table, we provide you with our selected consolidated historical financial and other data. We have prepared the consolidated selected financial information using our consolidated financial statements for the years ended October 31, 2013 and 2012 and for the period from inception ( March 25, 2010) to October 31, 2013. When you read this selected consolidated historical financial and other data, it is important that you read along with it the historical financial statements and related notes in our consolidated financial statements included in this report, as well as Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
   
Years Ended
       
   
October 31, 2013
   
October 31, 2012
 
(in thousands, except for per share data)
           
STATEMENT OF OPERATIONS DATA:
           
Revenue
  $ 94,233     $ -  
Net loss
    (7,609,827 )     (5,550,190 )
Net loss applicable to WestMountain Gold, Inc. common shareholders
    (7,609,827 )     (5,550,190 )
Net loss per share
    (0.32 )     (0.28 )
                 
BALANCE SHEET DATA:
               
Total assets
    1,501,259       1,229,192  
Stockholders' deficit
    (7,056,298 )     (2,383,844 )

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Overview

We are an exploration stage mining company, in accordance with applicable guidelines of the SEC, which pursues gold projects that are expected to have low operating costs and high returns on capital.

We acquired TMC on February 28, 2011 and accounted for the transaction as a reverse acquisition using the purchase method of accounting, whereby TMC is deemed to be the accounting acquirer (legal acquiree) and WMTN to be the accounting acquiree (legal acquirer). Our financial statements before the date of the acquisition are those of TMC with the results of WMTN being consolidated from the date of the acquisition. The equity section and earnings per share have been retroactively restated to reflect the reverse acquisition and no goodwill has been recorded. We adopted TMC’s fiscal year, which is October 31.
 
 
 
22

 
 
RESULTS OF OPERATIONS

The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from year-to-year:
 
   
Years Ended October 31,
       
   
2013
   
2012
   
$ Variance
   
% Variance
 
                         
Revenue
  $ 94     $ -     $ 94       100.0 %
Cost of sales
    49       -     $ 49       -100.0 %
Gross profit
    45       -     $ 45       100.0 %
Selling, general and administrative expenses
    1,994       2,039     $ (45 )     2.2 %
Exploration expenses
    2,965       2,167     $ 798       36.8 %
Operating loss
    (4,914 )     (4,206 )   $ (708 )     16.8 %
Other income (expense):
                               
Interest expense
    (547 )     (1,344 )   $ 797       59.3 %
Financing fee
    (149 )     -     $ (149 )     -100.0 %
Loss on derivative liability
    (2,000 )     -     $ (2,000 )     -100.0 %
Total other expense
    (2,696 )     (1,344 )   $ (1,352 )     -100.6 %
Net loss
  $ (7,610 )   $ (5,550 )   $ (2,060 )     -37.1 %
 
YEAR ENDED OCTOBER 31, 2013 COMPARED TO THE YEAR ENDED OCTOBER 31, 2012

REVENUE

Revenue for the year ended October 31, 2013 increased $94,000 to $94,000 as compared to $0 for the year ended October 31, 2012. The revenue increase resulted from our first shipment of gold doré.

COST OF SALES

Cost of sales for the year ended October 31, 2013 increased $49,000 to $49,000 as compared to $0 for the year ended October 31, 2012. The cost of sales increase resulted from our first production of gold doré.

EXPENSES

Selling, general and administrative expenses for the year ended October 31, 2013 decreased $45,000 to $1,994,000 as compared to $2,039,000 for the year ended October 31, 2012. The decrease in selling, general and administrative expenses was due to reduced consulting expenses

Such expenses for the year ended October 31, 2013 and 2012 consisted primarily of employee and independent contractor expenses, expenses related to share and warrant  issuances, rent, audit, overhead, amortization and depreciation, professional and consulting fees, sales and marketing costs, investor relations, legal, and other general and administrative costs and exploration expenses.

Exploration expenses for the year ended October 31, 2013 increased $798,000 to $2,965,000 as compared to $2,167,000 for the year ended October 31, 2012. The increase in exploration expenses was due to expenditures for the 2013 mining season. These expenditures included an upgrade of the pilot mill facility, construction of a C-130 aircraft capable runway, road construction and mine portal construction.

NET LOSS

Net loss for the year ended October 31, 2013 was $7,610,000 as compared to a net loss of $5,550,000 for the year ended October 31, 2012. The net loss for the year ended October 31, 2013 included $3,447,000 of non-cash expenses, including (i) $1,094,000 in expenses related to the issuance of common stock and warrants related to services; (ii) loss on derivative liability of $2,000,000; (iii) loss on forward sale contracts and loan agreements of $194,760 (See NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES for detail on forward sale contracts and loan agreements); and (iv) other expense totaling $158,000 during the year ended October 31, 2013. The net loss for the year ended October 31, 2012 included $1,993,000 in non-cash expenses, including (i) $628,000 in expenses related to the issuance of common stock and warrants related to services; (ii) $1,266,000 in warrant amortization expense; and (iii) other expense totaling $99,000 during the year ended October 31, 2012.
 
 
 
23

 

LIQUIDITY AND CAPITAL RESOURCES
 
We had cash of 82,000, a working capital deficit of approximately $8,402,000.   We had derivative liability that included warrants of $2,000,000 and forward contract of $795,000 as of October 31, 2013.

As of February 12, 2014, we have $2,852,115 plus accrued interest of $478,357 due to BOCO Investments LLC on two secured promissory notes that are now in default.  BOCO has demanded payment in full of all amounts due under these notes.  We are currently attempting to negotiate an extension or other modification of these notes as we do not have the ability to repay the amount due.  There can be no assurance that we will be able to renegotiate these promissory notes on terms that are favorable to the Company.  If we are not successful in negotiating an extension or other modification of these notes, the Company may have to restructure its operations, divest all or a portion of its business, or file for bankruptcy.

We have budgeted expenditures for the TMC project for the next twelve months of approximately $2,900,000, depending on additional financing, for general and administrative expenses and exploration. We must expend an additional $2,100,000 for a total of $9,050,000 plus option payments of $450,000 by December 31, 2014 as an “earn in” on the TMC project to own rights to 80% of the project.  Even if economic reserves are found, if we are unable to raise this capital, we will not be able to complete our earn in on this project.

We will have to raise substantial additional capital in order to fully implement the business plan.  If economic reserves of gold and/or other minerals are proven, additional capital will be needed to actually develop and mine those reserves. We must expend an additional $2.1 million by December 31, 2014 (subject to approval by Corvus of total expenditures) to achieve 80% earn in on the TMC project. If we are unable to raise this capital, we will not be able to complete the 80% earn in interest in the JV.  

Our principal source of liquidity for the next several years will need to be the continued raising of capital through the issuance of equity or debt.  WMTN plans to raise funds for each step of the project and as each step is successfully completed, raise the capital for the next phase.  WMTN believes this will reduce the cost of capital as compared to trying to raise all the anticipated capital at once up front.  However, since WMTN’s ability to raise additional capital will be affected by many factors, most of which are not within our control (see “Risk Factors”), no assurance can be given that WMTN will in fact be able to raise the additional capital as it is needed.
 
Our primary activity will be to proceed with the TMC project and other mining opportunities that may present themselves from time to time. We cannot guarantee that the TMC project will be successful or that any project that we embark upon will be successful. Our goal is to build our Company into a successful mineral exploration and development company. 

We have budgeted the following expenditures for the next twelve months of approximately $2,900,000, depending on additional financing, for general and administrative expenses and exploration to implement the business plan as described above.
 
Expenditures
  $    
Drilling costs
  $ 250,000  
Camp and labor costs
    500,000  
Claims payments
    100,000  
Mining and milling
    500,000  
Underground portal
    475,000  
Property payments
    275,000  
Total mining
  $ 2,100,000  
 
 
 
24

 
 
 
OPERATING ACTIVITIES

Net cash used in operating activities for the year ended October 31, 2013 was $2,941,000. This amount was primarily related to a net loss of $7,610,000, offset by an increase in accounts payable of $1,291,000 by depreciation and amortization and other non-cash expenses of $3,447,000 of non-cash expenses, including (i) $1,094,000 in expenses related to the issuance of common stock and warrants related to services; (ii) loss on derivative liability of $2,000,000; (iii) loss on forward contract of $195,000; and (iv) other expense totaling $158,000 during the year ended October 31, 2013.

INVESTING ACTIVITIES
 
Net cash used in investing activities for the year ended October 31, 2013 was $354,000. This amount was primarily related to capital expenditures of $254,000 and contractual rights of $100,000.

FINANCING ACTIVITIES

Net cash provided by financing activities for the year ended October 31, 2013 was $3,289,000. This amount was primarily related to the proceeds from the issuance of common stock of $1,140,000, proceeds from the forward contract of $600,000, net proceeds from promissory notes of $944,000 and the issuance of preferred stock of $605,000.

Our unaudited contractual cash obligations as of October 31, 2013 are summarized in the table below:
 
Contractual Cash Obligations
 
Total
   
Less Than 1 Year
   
1-3 Years
   
3-5 Years
   
Greater Than 5 Years
 
Operating leases
  $ 855,000     $ 280,000     $ 200,000     $ 250,000     $ 125,000  
Capital lease obligations
    -       -       -       -       -  
Note payable
    3,083,248       3,083,248       -       -       -  
Mining expenditures
    2,100,000       2,100,000       -       -       -  
Forward contracts
    794,760       794,760       -       -       -  
    $ 6,833,008     $ 6,258,008     $ 200,000     $ 250,000     $ 125,000  
                                         
 
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates
The application of GAAP involves the exercise of varying degrees of judgment. On an ongoing basis, we evaluate our estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies (see summary of significant accounting policies more fully described in Note 2 to the financial statements set forth in this report), the following policies involve a higher degree of judgment and/or complexity:

Cash and Cash Equivalents
We classify highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. We have not experienced any losses in such accounts and believe it is not exposed to any significant risk for cash on deposit.  As of October 31, 2013, we had no uninsured cash amounts.

Equipment
Equipment consists of machinery, furniture and fixtures and software, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally 3-5 years. 
 
Mineral Properties
Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Costs to maintain the mineral rights and leases are expensed as incurred.  When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves.
 
 
 
25

 

We have access to the camp by airplane. The property has haul roads, a mill facility and adjoining camp infrastructure, a tailings pond and other infrastructure. It is approximately 1 1/2 miles from camp to the project area.  Power generation is by diesel generator at the camp. Fuel is brought in for the generators by a cargo plane to the airstrip.

Long-Lived Assets
We review our long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results.  As of October 31, 2013, there are no impairments recognized.

Alaska Reclamation and Remediation Liabilities
TMC operates in Alaska. The State of Alaska Department of Natural Resources requires a pool of funds from all permittees with exploration and mining projects to cover reclamation. There is a $750 per acre disturbance reclamation bond that is required for disturbance of 5 acres or more and/or removal of more the 50,000 cubic yards of material. We exceeded the minimum requirements in 2013 and posted a reclamation bond of approximately $22,358 on December 20, 2013.

We expect to record reclamation bond as a liability in the period in which we are required to pay a reclamation bond. A corresponding asset is also recorded and depreciated over the life of the asset. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in reclamation bond.

Mineral Exploration Costs
All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized.  If no minable ore body is discovered, previously capitalized costs are expensed in the period the property is abandoned.  Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on a unit of production basis over proven and probable reserves.

Should a property be abandoned, its capitalized costs are charged to operations.  We charge to operations the allocable portion of capitalized costs attributable to properties sold.  Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area. 

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk
 
We are not exposed to foreign currency risks. We do not trade in hedging instruments or "other than trading" instruments.
 
Interest Rate Risk
 
We are not exposed to interest rate risks. We do not trade in hedging instruments or "other than trading" instruments and is not exposed to interest rate risks. We believe that the impact of a 10% increase or decline in interest rates would not be material to our financial condition and results of operations.

Commodity Price Risk

We are exposed to commodity price risks based on our forward sale contracts and loan agreements dated March 20, 2013, that specify repayment in gold. We believe that the impact of a 10% increase or decline in interest rates would not be material to our financial condition and results of operations.
 
 
 
26

 


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to our consolidated financial statements beginning on page F-1 of this report.
 
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
Not applicable.
 
ITEM 9A. CONTROLS AND PROCEDURES
 
 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
a) Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive and principal financial officers concluded as of October 31, 2013 that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal controls over financial reporting discussed immediately below.

Identified Material Weaknesses

A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Management identified the following material weaknesses during its assessment of internal controls over financial reporting:

Lack of Segregation of Duties over Treasury Management: The Company currently lacks appropriate segregation of duties over treasury management. We expect to revise our procedures before the end of 2014.

Audit Committee: We formed an audit committee on October 26, 2012 which consists of two independent directors with significant financial experise.  An audit committee is expected to improve oversight in the establishment and monitoring of required internal controls and procedures. We expect to expand the audit committee during 2014.

b) Changes In Internal Control Over Financial Reporting

During the quarter ended October 31, 2013, there were no changes in our internal controls over financial reporting during this fiscal quarter that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.
 
 
 
27

 
 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our principal executive officer and principal financial officer concluded that our internal control over financial reporting were not effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with United States generally accepted accounting principles.
 
 
The effectiveness of our internal control over financial reporting as of October 31, 2013 has not been audited by PMB Helin Donovan, LLP, an independent registered public accounting firm.
 
         
/s/ Gregory Schifrin
   
/s/ Loni Knepper
 
Gregory Schifrin
   
Loni Knepper
 
Chief Executive Officer
   
Chief Financial Officer
 

 
 
28

 


 ITEM 9B. OTHER INFORMATION
 
There were no disclosures of any information required to be filed on Form 8-K during the three months ended October 31, 2013 that were not filed.   

PART III
 
ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth, as of February 13, 2014, the name, age, and position of each executive officer and director and the tenure in office of each director of the Company.  
 
Name
Age
Positions and Offices Held
Since
Gregory Schifrin
55
Director, President and Chief Executive Officer
February 28, 2011
       
James Baughman
57
Director, Chief Operating Officer and Senior Vice President (1)
February 28, 2011 - January 6, 2014
       
Mark Scott
60
Former Chief Financial Officer and Secretary (2)
February 28, 2011 - December 31, 2013
       
Michael Lavigne
55
Independent Director
August 24, 2011
       
Dale L. Rasmussen
62
Independent Director
October 24, 2012
       
Loni Knepper
43
Chief Financial Officer, Secretary and Treasurer
January 6, 2014
 
(1)  Mr. Baughman resigned as Director, Chief Operating Officer and Senior Vice President. The Board ratified his resignation on February 7, 2014..
(2)  Mr. Scott resigned as CFO and Secretary effective December 31, 2013.

Business Experience Descriptions

Set forth below is certain biographical information regarding each of the Company's executive officers and directors.

Our Management Directors
 
Gregory Schifrin
 
Mr. Schifrin has worked as a geologist and manager for 28 years in mining and mineral exploration industry where he has been involved in precious, base metals, and uranium exploration and development. Mr. Schifrin has provided technical services and project management for major and junior mining companies.
 
From February 2011 to the present Mr. Schifrin was the President and CEO and Director of WestMountain Gold, Inc. From March 2010 to the present Mr. Schifrin was the President and CEO of Terra Mining Corp. From December 2007 to the present Mr. Schifrin was the President and Director of Silver Verde May Mining Corporation. During his tenure Mr. Schifrin managed corporate finance, accounting, legal and regulatory requirements, exploration, geologic evaluation, project generation and land acquisition. 

From March 19, 2012 to the present Mr. Schifrin has served as Director of Fisher Watt. From February 2011 to November 2011 Mr. Schifrin has served as an officer of Colorado Rare Earths and from November 2011 to the present Mr. Schifrin has served as a director and officer of US Rare Earths. Mr. Schifrin also served as President and a Director in February and March 2010 of American Mining Corporation.
 
From 1985 to the Present, Mr. Schifrin was the co-founder and President of Minex Exploration, a mining industry known exploration consulting and service company, where Mr. Schifrin managed a staff of 15 to 20 personnel, clients and contracts, accounting, legal and regulatory requirements, as well as managing exploration projects, grassroots through drilling and development phase, throughout North America for major and junior mining companies.
 
From October 1992 to the Present, Mr. Schifrin co-founded Selkirk Environmental, Inc., an environmental consulting and service company, where he managed environmental regulatory compliance, risk analysis, pollution cleanup and environmental assessment for public and private clients. 
 
 
 
29

 
 
From November of 2006 to December 2007, Mr. Schifrin was the President and CEO of Golden Eagle Mining Corporation, where he managed corporate affairs, geological exploration, property acquisition and accounting. 
 
In August of 1983, Mr. Schifrin received a Bachelor of Science degree in Geology from the University of Idaho, Moscow. He is a registered professional geologist in the State of Washington. Mr. Schifrin resides in Sandpoint, Idaho.
 
Mr. Schifrin was appointed as a Director based on his significant experience in the mining and mineral exploration industry.
 
Our Independent Directors
 
Michael Lavigne
 
Mr. Lavigne has served as the CEO and a board member of Silver Verde May Mining Company, Inc. from December 2008 to the present. Silver Verde May, an exploration stage mining company located in Wallace, Idaho, holds a number of properties in Idaho, Utah and Wyoming. From August 2008, Mr. Lavigne served as a consultant for Golden Eagle Mining Company, which was acquired by Silver Verde May in December 2008. Mr. Lavigne also serves on the board of Mascot Mining which holds properties in Idaho and Montana.
 
Mr. Lavigne is the owner and Managing Partner of Capital Peak Partners, LLC.  Capital Peak provides consulting services in the area of corporate and business development. Capital Peak Partners was founded in September of 2010.
 
 
 
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Previously Mr. Lavigne held a number of positions in the travel and hospitality industry. From November 2006 to July 2008, Mr. Lavigne founded and served as a director and CEO of Travel Services Group. From September 2003 to October 2006, Mr. Lavigne was the COO of Glacier Bay Cruise Lines, an adventure cruise in South East Alaska.  Mr. Lavigne was a director of Coastal Hotel Group, a partner in NorthCoast Hotels and a member of Starwood Hotel’s Leisure Travel Advisory Board.  Also, Mr. Lavigne was the CEO and chairman of Global Leisure, Inc., the parent company of Maupin Tours, Sunmakers, Jet Set North America, Hawaii Leisure and Regency Pacific.
 
Prior to the travel and hospitality business Mr. Lavigne was involved in the securities and corporate finance business and served as he managing Director of Northwest Capital and Advisory Services and the CEO and chairman of RCL Northwest.  Mr. Lavigne was a board of member of the Spokane Stock Exchange, a registered national securities exchange which listed primarily mining and resources related companies.
 
Mr. Lavigne has been on a number of community and charitable boards including, The Giving Back Fund, Communities and Schools of Seattle, The Seahawk Academy and the Jacob Green Golf Classic.
 
Mr. Lavigne received his BA in Accounting from the University of Idaho and a JD from Gonzaga University School of Law.
 
Mr. Lavigne was appointed as a Director based on his significant experience in the mining and mineral exploration industry.

Dale L. Rasmussen

Dale L. Rasmussen was appointed to the Board of Director on October 24, 2012.

During his career Mr. Rasmussen has served on the Board of over a dozen private and public companies (Chairman of three) and was instrumental in raising nearly a billion dollars in equity capital.  Three of the companies, co-founded by Mr. Rasmussen, reached market capitalization of over half a billion U.S. dollars.

Mr. Rasmussen served as the Chairman of the Board of Quantum Fuel System Technologies Worldwide from 2002 to 2012, as well as being a member of the Board of Directors since 2000.  Mr. Rasmussen was a founding member of the Board of Directors of Fisker Automotive and served as the Chairman of the Board since its formation in November 2007 until February 2010.  Mr. Rasmussen was the Senior Vice President and Secretary of IMPCO Technologies (now Fuel Systems Solutions) from 1989 through 2005, joining the Company in 1984 as Vice President of Finance and Administration and Corporate Secretary.  IMPCO was the parent company of Quantum Technologies, prior to its spin-off in 2002.  While at IMPCO, Mr. Rasmussen’s areas of expertise were Mergers and Acquisitions, Strategic Planning and Investor Relations.  Prior to joining IMPCO, Mr. Rasmussen was a commercial banker for twelve years at two banks, both acquired by Key Bank and U.S. Bank, and was responsible for managing the bank's investment portfolio, branch and corporate development, and served as corporate secretary.  Mr. Rasmussen is a graduate of Western Washington University and is also a graduate of Pacific Coast Banking School, University of Washington.

Mr. Rasmussen was appointed as a Director due to his significant board experience and related finance and banking skills.

Other Executive Officers
 
Loni Knepper

Mrs. Knepper has more than twenty years of experience in accounting and finance in both publicly and privately held companies.  She held finance roles at Coeur d’Alene Mines Corporation from January, 2011 through October, 2013. Prior to that she served as Chief Executive Officer for Background Source, Intl. from April, 2009 through January, 2011. She held several senior finance roles at Coldwater Creek, a publicly traded company,  from June, 2006 through December, 2009.  In addition, she has served as the Chief Financial Officer at Mulberry Neckwear, Illuminations, and MV Transit. She has also held senior level finance roles at Ask.com, a publicly traded company.  Mrs. Knepper is a Certified Management Accountant with degrees in Accounting (BS) from the University of Nevada – Reno and a Master’s Degree in Business Administration with a concentration in Finance (MBA) from Golden Gate University.
 
 
 
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Family Relationships
 
There are no family relationships among our directors and executive.

Involvement in Certain Legal Proceedings
 
None of our directors or executive officers has, during the past ten years:
 
 
Had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or had a receiver, fiscal agent, or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
 

 
Been convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
     
 
Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
     
 
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
     
 
Engaging in any type of business practice; or
 

 
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
 
     
 
Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in (i) above, or to be associated with persons engaged in any such activity;
     
 
Been found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, where the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; or
     
 
Been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, where the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.
 
 
 
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Committees of the Board of Directors
 
The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. The committees are currently the Audit Committee, the Nominations and Governance Committee and the Compensation Committee. The Committees were formed October 26, 2012 and held their first meeting in December, 2012. The Audit and Compensation committees are comprised solely of non-employee, independent directors. The Nominations and Governance committee has one management director. We expect to add one independent director to the Audit and Compensation Committees in 2014. Charters for each committee are available on our website at www.westmountaingold.com. The table below shows current membership for each of the standing Board committees.

Audit
 
Compensation
 
Nominating
         
Dale L. Rasmussen (Chairman)
 
Michael Lavigne (Chairman)
 
Michael Lavigne (Chairman)
Michael Lavigne
 
Dale L. Rasmussen
 
Dale L. Rasmussen
       
Gregory Schifrin
 
Compensation Committee Interlocks and Insider Participation
 
No member of the Compensation Committee during the fiscal year that ended on October 31, 2013 served as an officer, former officer, or employee of the Company or participated in a related party transaction that would be required to be disclosed in this proxy statement. Further, during this period, no executive officer of the Company served as:

     
 
a member of the Compensation Committee (or equivalent) of any other entity, one of whose executive officers served as one of our directors or was an immediate family member of a director, or served on our Compensation Committee; or
     
 
a director of any other entity, one of whose executive officers or their immediate family member served on our Compensation Committee.

Code of Conduct and Ethics

We have adopted conduct and ethics standards titled the Code of Conduct and Ethics (the “Code of Conduct”), which are available at www.westmountaingold.com. These standards were adopted by the Board to promote transparency and integrity. The standards apply to the Board, executives and employees. Waivers of the requirements of the Code of Conduct or associated polices with respect to members of the Board or executive officers are subject to approval of the full Board.
 
Our Code of Conduct includes the following:
 
- promotes honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; promotes the full, fair, accurate, timely and understandable disclosure of our financial results in accordance with applicable disclosure standards, including, where appropriate, standards of materiality;
 
- promotes compliance with applicable SEC and governmental laws, rules and regulations;
 
- deters wrongdoing; and
 
- requires prompt internal reporting of breaches of, and accountability for adherence to, the Code of Conduct.
 
On an annual basis, each director and executive officer is obligated to complete a Director and Officer Questionnaire which requires disclosure of any transactions with the Company in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Pursuant to the Code of Conduct, the Audit Committee and the Board are charged with resolving any conflict of interest involving management, the Board and employees on an ongoing basis.
 
 
 
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ITEM 11. EXECUTIVE COMPENSATION

Overview of Compensation Program
 
The Compensation Committee of the Board has responsibility for overseeing, reviewing and approving executive compensation and benefit programs in accordance with the Compensation Committee’s charter.  The Compensation Committee was formed October 26, 2012 and held its first meeting on December 13, 2012. The Compensation Committee members are Michael Lavigne (Chairman), and Dale L. Rasmussen. We expect to add one independent director to the Compensation Committee in 2014.

This Compensation Discussion and Analysis describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers who served during the year ended October 31, 2013. This compensation discussion primarily focuses on the information contained in the following tables and related footnotes and narrative for the last completed fiscal year. We also describe compensation actions taken after the last completed fiscal year to the extent that it enhances the understanding of our executive compensation disclosure.

Compensation Philosophy and Objectives
 
The major compensation objectives for named executive officers are as follows:

     
 
to attract and retain highly qualified individuals capable of making significant contributions to the long-term success of the Company;
     
 
to motivate and reward named executive officers whose knowledge, skills, and performance are critical to the Company’s success;
     
 
to closely align the interests of the Company’s named executive officers and other key employees with those of its shareholders; and
     
 
to utilize incentive based compensation to reinforce performance objectives and reward superior performance; and

Role of Chief Executive Officer in Compensation Decisions
 
The Board approves all compensation for the chief executive officer. The Compensation Committee makes recommendations on the compensation for the chief executive officer and approves all compensation decisions, including equity awards, for our named executive officers. Our chief executive officer makes recommendations regarding the base salary and non-equity compensation of other named executive officers that are approved by the Compensation Committee in its discretion.

Setting Executive Compensation
 
The Compensation Committee believes that compensation for named executive officers must be managed to what we can afford and in a way that allows us to meet our goals for overall performance. During 2013, the Compensation Committee and the Board compensated its Chief Executive Officer and Chief Operating Officer with a monthly salary fee of $10,000. During 2013, the Committee compensated its Chief Financial Officer with a $8,000 monthly salary. This compensation reflected the financial condition of the Company. The Compensation Committee does not use a peer group of publicly-traded and privately-held companies in structuring the compensation packages.

Executive Compensation Components for the Year Ended October 31, 2013
 
The Compensation Committee did not use a formula for allocating compensation among the elements of total compensation during the fiscal year ended October 31, 2013. The Compensation Committee believes that in order to attract and retain highly effective people it must maintain a flexible compensation structure. For fiscal 2013, the principal components of compensation for named executive officers were base salary and consulting fees.
 
 
 
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Base Salary

Base salary is intended to ensure that our employees are fairly and equitably compensated. Generally, base salary is used to appropriately recognize and reward the experience and skills that employees bring to the Company and provides motivation for career development and enhancement. Base salary ensures that all employees continue to receive a basic level of compensation that reflects any acquired skills which are competently demonstrated and are consistently used at work.

Base salaries for the Company’s named executive officers are initially established based on their prior experience, the scope of their responsibilities and the applicable competitive market compensation paid by other companies for similar positions. During 2013, the Compensation Committee and the Board compensated its Chief Executive Officer and Chief Operating Officer with a monthly salary fee of $10,000. During 2013, the Committee compensated its Chief Financial Officer with a $8,000 monthly salary. This compensation reflected our financial condition.

Performance-Based Incentive Compensation
 
The Compensation Committee believes incentive compensation reinforces performance objectives, rewards superior performance and is consistent with the enhancement of stockholder value. All of the Company’s named executive officers are eligible to receive performance-based incentive compensation. The Compensation Committee did not recommend or approve payment of any performance-based incentive compensation to the named executive officers during 2013 based on our financial condition.

Ownership Guidelines
 
We do not require our named executive officers to hold a minimum number of our shares. However, to directly align the interests of executive officers with the interests of the stockholders, we encourage each named executive officer to maintain an ownership interest in the Company.
 
Stock Option Program
 
Stock options are an integral part of our executive compensation program. They are intended to encourage ownership and retention of the Company’s common stock by named executive officers and employees, as well as non-employee members of the Board. Through stock options, the objective of aligning employees’ long-term interest with those of stockholders may be met by providing employees with the opportunity to build a meaningful stake in the Company.

The Stock Option Program should assist us by:

- enhancing the link between the creation of stockholder value and long-term executive incentive compensation;

- providing an opportunity for increased equity ownership by executive officers; and

- maintaining competitive levels of total compensation.

Stock option award levels are determined by the Compensation Committee and vary among participants’ positions within the Company. Newly hired executive officers or promoted executive officers are generally awarded stock options, at the discretion of the Compensation Committee, at the next regularly scheduled Compensation Committee meeting on or following their hire or promotion date. In addition, such executives are eligible to receive additional stock options on a discretionary basis after performance criteria are achieved.

Options are awarded at the closing price of our common stock on the date of the grant or last trading day prior to the date of the grant. The Compensation Committee’s policy is not to grant options with an exercise price that is less than the closing price of the Company's common stock on the grant date.

Generally, the majority of the options granted by the Compensation Committee are expected to vest quarterly over two to three years or annually over five years of the 5-10-year option term. Vesting and exercise rights cease upon termination of employment and/or service, except in the case of death (subject to a one year limitation), disability or retirement. Stock options vest immediately upon termination of employment without cause or an involuntary termination following a change of control. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents.

The Named Executive Officers did not receive any stock option grants during the year ended October 31, 2013.
 
 
 
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Retirement and Other Benefits
 
We have no other retirement, savings, long-term stock award or other type of plans for the named executive officers.

Perquisites and Other Personal Benefits
 
During the year ended October 31, 2013, we provided the named Chief Executive, Operating and Financial Officers with medical insurance. No other personal benefits were provided.

Tax and Accounting Implications
 
Deductibility of Executive Compensation
 
Subject to certain exceptions, Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") generally denies a deduction to any publicly held corporation for compensation paid to its chief executive officer and its three other highest paid executive officers (other than the principal financial officer) to the extent that any such individual's compensation exceeds $1 million. “performance-based compensation” (as defined for purposes of Section 162(m)) is not taken into account for purposes of calculating the $1 million compensation limit, provided certain disclosure, shareholder approval and other requirements are met. We periodically review the potential consequences of Section 162(m) and may structure the performance-based portion of our executive compensation to comply with certain exceptions to Section 162(m). However, we may authorize compensation payments that do not comply with the exceptions to Section 162(m) when we believe that such payments are appropriate and in the best interests of the stockholders, after taking into consideration changing business conditions or the officer's performance.

Section 409A is a relatively recent provision of the Code. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A of the Code, and such benefits do not comply with Section 409A of the Code, the executive would be subject to adverse tax treatment, including accelerated income recognition (in the first year that benefits are no longer subject to a substantial risk of forfeiture) and an additional income tax of 20% of the amount so recognized.

The Compensation Committee, composed entirely of independent directors in accordance with the applicable laws and regulations, sets and administers policies that govern the Company's executive compensation programs, and incentive and stock programs. The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

Michael Lavigne, Chairman
Dale L. Rasmussen

REMUNERATION OF EXECUTIVE OFFICERS
 
The following table provides information concerning remuneration of the chief executive officer, the chief financial officer and another named executive officer for the indicated periods.
 
 
 
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Summary Compensation Table
 
Name
Principal Position
   
Salary ($)
   
Bonus ($)
 
Stock Awards ($) (4)
   
Non-Equity Incentive Plan Compensation ($)
   
Option Awards ($)
 
Other Compensation ($)
   
Total ($)
 
Gregory Schifrin (1)
Chief Executive Officer, Director
10/31/2013
  $ 120,000     $ -   $ 50,000     $ -     $ -   $ -     $ 170,000  
   
10/31/2012
  $ 120,000     $ -   $ -     $ -     $ -   $ -     $ 120,000  
   
10/31/2011
  $ 120,000     $ -   $ 30,000     $ -     $ -   $ -     $ 150,000  
                                                         
James Baughman (2)
Chief Operating Officer,  Director
10/31/2013
  $ 120,000     $ -   $ 50,000     $ -     $ -   $ -     $ 170,000  
   
10/31/2012
  $ 120,000     $ -   $ -     $ -     $ -   $ -     $ 120,000  
   
10/31/2011
  $ 120,000     $ -   $ 30,000     $ -     $ -   $ -     $ 150,000  
                                                         
Mark Scott (3)
Former Chief Financial Officer, Secretary
10/31/2013
  $ 96,000     $ -   $ 50,000     $ -     $ -   $ -     $ 146,000  
   
10/31/2012
  $ 96,000     $ -   $ -     $ -     $ -   $ -     $ 96,000  
   
10/31/2011
  $ 96,000     $ -   $ 87,200     $ -     $ -   $ -     $ 183,200  

(1)  During the year ended October 31, 2013, 2012 and 2011, Mr. Schifrin was paid a monthly salary of $10,000. The 2013 stock award amount for 50,000 shares of restricted common stock issued by us on June 6, 2013 at the grant date market value of $1.00 per share.  The 2011 stock option grant amount reflects 100,000 shares issued by us on August 24, 2011 at the grant date market value of $0.30 per share.
     
(2)  During the year ended October 31, 2013, 2012 and 2011, Mr. Baughman was paid a monthly salary of $10,000 The 2013 stock award amount for 50,000 shares of restricted common stock issued by us on June 6, 2013 at the grant date market value of $1.00 per share.  The 2011 stock option grant amount reflects 100,000 shares issued by us on August 24, 2011 at the grant date market value of $0.30 per share.

(3)  During the year ended October 31, 2013 and 2012, Mr. Scott was paid a monthly salary of $8,000. The 2011 amount for Mr. Scott includes salary since the Employment Agreement was signed on April 9, 2011 and consulting fees paid from December 8, 2010 to April 8, 2011. The 2013 stock award amount for 50,000 shares of restricted common stock issued by us on June 6, 2013 at the grant date market value of $1.00 per share.  The 2011 stock option grant amount 236,000 shares of restricted common stock issued by us on during the year ended at October 31, 2011 per Mr. Scott’s Consulting and Employment Agreements and valued at $.369 per share or $87,200.      

(4) These amounts reflect the grant date market value as required by Regulation S-K Item 402(r)(2), computed in accordance with FASB ASC Topic 718.

Grants of Stock Based Awards in Fiscal Year Ended October 31, 2013

The Board approved the following performance-based incentive compensation to the Named Executive Officers during 2013.
 
     
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
   
Estimated Future Payouts Under Equity Incentive Plan Awards
   
All Other Stock Awards Number of Shares of
   
All Other Option Awards Number of Securities
   
Exercise of Base Price of
   
Grant Date Fair Value of
 
Name
Grant Date
 
Threshold ($)
   
Target ($)
   
Maximum ($)
   
Threshold ($)
   
Target ($)
   
Maximum ($)
   
Stock or Units (#) (1)
   
Underlying Option (#) (2)
   
Option Awards ($/Sh)
   
Stock and Option Awards
 
Gregory Schifrin
    $ -     $ -     $ -       -       -       -       50,000       -     $ -     $ 1.00  
                                                                                   
James Baughman
    $ -     $ -     $ -       -       -       -       50,000       -     $ -     $ 1.00  
                                                                                   
Mark Scott
    $ -     $ -     $ -       -       -       -       50,000       -     $ -     $ 1.00  
                                                                                   
Loni Knepper
    $ -     $ -     $ -       -       -       -       -       -     $ -       -  
                                                                                   
 
Pension Benefits
 
We do not provide any pension benefits. 
 
 
 
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Nonqualified Deferred Compensation

We do not have a nonqualified deferred compensation program. 

EMPLOYMENT AGREEMENTS
 
Employment Agreements

On October 1, 2010, TMC signed an Employment Agreement with Gregory Schifrin, which was acquired by WMTN as a result of the acquisition of TMC. Under the terms of the Schifrin Agreement, Mr. Schifrin was appointed Chief Executive Officer for an indefinite period at a salary of $120,000 per year. Mr. Schifrin is eligible for annual bonuses and incentive plans as determined by the Company’s Compensation Committee. Mr. Schifrin is also eligible for employee benefit programs, including 4 weeks of vacation per year, medical benefits and $500 per day spent on the Company’s project sites. Mr. Schifrin may resign with 60 days’ notice. If Mr. Schifrin is terminated without cause, including a change in control (after six months), he is to receive in a lump sum, two times his annual salary, two times his targeted annual bonus, two times his last year’s bonus, any accrued vacation and employee benefit programs for up to one year.
 
On October 1, 2010, TMC signed an Employment Agreement with James Baughman, which was acquired by WMTN as a result of the acquisition of TMC. Under the terms of the Baughman Agreement, Mr. Baughman was appointed Chief Operating Officer for an indefinite period at a salary of $120,000 per year. Mr. Baughman is eligible for annual bonuses and incentive plans as determined by the Company’s Compensation Committee. Mr. Baughman is also eligible for employee benefit programs, including 4 weeks of vacation per year, medical benefits and $500 per day spent on the Company’s project sites. Mr. Baughman may resign with 60 days’ notice. If Mr. Baughman is terminated without cause, including a change in control (after six months), he is to receive in a lump sum, two times his annual salary, two times his last year’s bonus, any accrued vacation and employee benefit programs for up to one year.

On April 18, 2011, we entered into an Employment Agreement with Mark Scott as the Company’s Chief Financial Officer, which was effective April 9, 2011. The Scott Employment Agreement replaced the Scott Consulting Agreement dated February 18, 2011 and which expired on April 8, 2011.
 
Under the terms of the Scott Employment Agreement, Mr. Scott was appointed Chief Financial Officer for an indefinite period at a salary of $96,000 per year plus incentive compensation of $3,000 per month. Mr. Scott is eligible for annual bonuses and incentive plans as determined by the Company’s Compensation Committee. Mr. Scott is eligible for employee benefit programs, including 4 weeks of vacation per year, medical benefits, life and disability insurance. Mr. Scott may resign with 60 days’ notice. If Mr. Scott is terminated without cause, including a change in control (after six months), he is to receive in a lump sum, one times his annual salary, one times his targeted annual bonus, two times his last year’s bonus, any accrued vacation and two times his last year’s bonus, any accrued vacation and employee benefit programs for up to two years. If Mr. Scott resigns for good cause, he is to receive in a lump sum, two times his annual salary and employee benefit programs for up to two years.

On November 15, 2013, Mark Scott and the Company entered into Separation Agreement and Full Release of Claims (the “Separation Agreement”), wherein Mr. Scott will stay with the Company until December 31, 2013 as Chief Financial Officer, primarily to complete the Company’s filing of its 2013 Form 10-K. Mr. Scott did not resign due to any disagreement with the Company relating to the Company’s operations, policies or practices.  Pursuant to the Separation Agreement, the Company agreed to provide the following consideration to Mr. Scott:

     
 
o
The Company agrees to pay $48,000 in accrued and unpaid salary and unpaid expenses of approximately $4,500 by December 31, 2013 or when financing complete out of funds (but no later than March 31, 2014) received from gold sales or other equity and debt financing, in full satisfaction of any and all accrued but unpaid salary and expenses.
     
 
o
Issuance of 63,000 shares of Company common stock within eight days of the effective date of the Separation Agreement (issued).
     
 
o
Salary remains at $96,000 per year up through December 31, 2013 and health benefits continue through that same time period.  No future bonuses will be accrued after December 31, 2013.
     
 
o
Issuance of 96,000 restricted shares of West Mountain Gold, Inc. stock within thirty days of the effective date of the Separation Agreement (issued).
 
 
 
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Definitions Used in Employment Agreements

For purposes of the each of the Employment Agreements described above, the following definitions apply:

As used herein, “Cause” is defined as any of the following events which occur during the term of this agreement: Good Cause” means the occurrence of one of the following events without the Executive’s express written consent:
 
(a)  
the assignment by the Company of any substantial new or different duties inconsistent with the Executive’s positions, duties, responsibilities and status with the Company immediately prior to such change in assigned duties;
 
(b)  
a material reduction in the Executive’s responsibilities, except as a result of the Executive’s death, disability or retirement;
 
(c)  
a reduction by the Company in the Executive’s Annual Salary;
 
(d)  
a change in the principal executive office of the Company to a location more than 50 kilometers from the then-current location of the principal executive office of the Company;
 
(e)  
the requirement by the Company that the Executive be based anywhere other than within a 100 kilometer radius of the Executive’s then current location;
 
(f)  
the failure by the Company to continue in effect, or a material change in the terms of the Executive’s participation in benefits under any Incentive Plan or Benefits plan (collectively, the “Existing Plans”), the effect of which would be to materially reduce the total value, in the aggregate, of the benefit to the Executive of the Existing Plans;
 
(g)  
any reduction by the Company of the number of paid vacation days to which the Executive is entitled; or
 
(h)  
any other events or circumstances which would constitute a constructive dismissal at common law.
 
As used herein, “Change of Control” is defined as any one of the following occurrences:
 
(a)        the acquisition, directly or indirectly, by any person or group of persons acting jointly or in concert, as such terms are defined in the Securities Act, British Columbia, of common shares of the Company which, when added to all other common shares of the Company at the time held directly or indirectly by such person or persons acting jointly or in concert, constitutes for the first time in the aggregate 30% or more of the outstanding common shares of the Company and such shareholding exceeds the collective shareholding of the current directors of the Company, excluding any directors acting in concert with the acquiring party; or
 
(b)        the removal, by extraordinary resolution of the shareholders of the Company, of more than 51% of the then incumbent Board of the Company, or the election of a majority of Board members to the Company’s board who were not nominees of the Company’s incumbent board at the time immediately preceding such election; or
 
(c)          consummation of a sale of all or substantially all of the assets of the Company; or
 
(d)          the consummation of a reorganization, plan of arrangement, merger or other transaction which has substantially the same effect as (a) to (c) above.
 
 
 
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As used herein, “Constructive Termination” is defined as any of the following, without your express written consent:

 
(a)         engages in conduct which is detrimental to the reputation of the Company or any of its Affiliates in any material respect;
 
 
(b)        has committed an act of fraud or material dishonesty in connection with or related in any way to his employment with the Company;
 
 
(c)         is the subject of any enforcement proceeding by a securities regulatory authority or agency; or
 
 
(d)         breaches his duties under this Agreement; or willfully neglects his duties to a material degree.
 
As used herein, “Good Cause” means the occurrence of one of the following events without the Executive’s express written consent:
 
(a)  
the assignment by the Company of any substantial new or different duties inconsistent with the Executive’s positions, duties, responsibilities and status with the Company immediately prior to such change in assigned duties;
 
(b)  
a material reduction in the Executive’s responsibilities, except as a result of the Executive’s death, disability or retirement;
 
(c)  
a reduction by the Company in the Executive’s Annual Salary;
 
(d)  
a change in the principal executive office of the Company to a location more than 50 kilometres from the then-current location of the principal executive office of the Company;
 
(e)  
the requirement by the Company that the Executive be based anywhere other than within a 100 kilometre radius of the Executive’s then current location;
 
(f)  
the failure by the Company to continue in effect, or a material change in the terms of the Executive’s participation in benefits under any Incentive Plan or Benefits plan (collectively, the “Existing Plans”), the effect of which would be to materially reduce the total value, in the aggregate, of the benefit to the Executive of the Existing Plans;
 
(g)  
any reduction by the Company of the number of paid vacation days to which the Executive is entitled; or
 
(h)  
any other events or circumstances which would constitute a constructive dismissal at common law.
 
Potential Payments upon Termination or Change in Control

Our Employment Agreements with the named executive officers have provisions providing for severance payments as discussed below.

Gregory Schifrin Termination Payments

The following table shows the potential payments upon termination for Gregory Schifrin:

(1)         Reflects twenty four month’s severance to be paid upon termination without cause and twenty four months upon termination within six months of a change of control within or any good cause termination.
(2)         Twelve months of benefit plan coverage unless insured elsewhere.
(3)         Reflects the value of vacation pay accrued as of October 31, 2013.
 
DIRECTOR COMPENSATION

We use stock grants to incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, we consider the significant amount of time that Directors expend in fulfilling their duties to the Company as well as the skill-level required by us for members of the Board. During the year ended October 31, 2013, Gregory Schifrin and James Baughman did not receive any compensation for their services as a director.  The compensation disclosed in the Summary Compensation Table on page 44 represents the total compensation.
 
 
 
 
40

 

Director Summary Compensation Table

The table below summarizes the compensation paid by us to non-employee directors during the year ended October 31, 2013.
 
Name
 
Stock Awards (1)
   
Option Awards
   
Total
 
Michael Lavigne
  $ 50,000     $ -     $ 50,000  
                         
Dale L. Rasmussen
  $ 25,000     $ -     $ 25,000  
                         
Kevin Cassidy
  $ 50,000     $ -     $ 50,000  
                         
Total
  $ 125,000     $ -     $ 125,000  
 
(1) These amounts reflect the grant date fair value as required by Regulation S-K Item 402, computed in accordance with FASB ASC Topic 718.  The stock awards (Michael Lavigne- 50,000 shares, Dale Rasmussen- 25,000 shares and Kevin Cassidy- 50,000 shares) were issued at the fair value of $1.00 per share date grant market value on June 6, 2013.

(2) Mr. Cassidy was not nominated for re-election for 2013 and as a result his tenure as a director ended on February 28, 2013.

Compensation Paid to Board Members

Our independent non-employee directors are not compensated in cash. Capital Peak Partners LLC, an entity affiliated with Michael Lavigne, was paid $97,500 and $90,000 during the years ended October 31, 2013 and 2012, respectively. The fees were paid to consultants consulting services and Mr. Lavigne did not receive any of the payments.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the ownership of our common stock as of February 12, 2014:
     
 
each director and nominee for director;
     
 
each person known by us to own beneficially 5% or more of our common stock;
     
 
each officer named in the summary compensation table elsewhere in this report; and
     
 
all directors and executive officers as a group.
 
The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days. Under these rules more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
 
Unless otherwise indicated below, each beneficial owner named in the table has sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.
 
 
 
42

 
 
 
   
Shares Beneficially Owned
 
   
Amount
   
%
 
Directors and Officers
           
Gregory L. Schifrin/Mining Minerals LLC (1)
    3,968,750       15.6 %
James G. Baughman/Mining Minerals LLC (2)
    2,752,500       10.8 %
Mark Scott (5)
    531,000       2.1 %
Michael Lavigne/Capital Peak Partners LLC/Silver Verde May Mining Company, Inc. (4)
    2,003,133       7.7 %
Dale Rasmussen
    50,000       *  
Total Directors and Officers as a Group (5 total)
    9,305,383       36.5 %
                 
 
 
   
Shares Beneficially Owned
 
   
Amount
   
%
 
Greater than 5% Ownership
           
             
Gregory Schifrin/ Mining Minerals LLC (1)
    3,968,750       15.6 %
WestMountain Gold, Inc.
               
120 Lake Street, Suite 401
               
Sandpoint, ID 83864
               
                 
James Baughman/ Mining Minerals LLC (2)
    2,752,500       10.8 %
WestMountain Gold, Inc.
               
2186 S. Holly St., Suite 104
               
Denver, CO 80222
               
                 
BOCO Investments LLC/ Joseph Zimlich (3)
    11,247,615       34.3 %
262 East Mountain Avenue
               
Fort Collins, CO 80524
               
                 
Michael Lavigne (Capital Peak Partners LLC and Silver Verde May Mining (4)
    2,003,133       7.7 %
Company, Inc.)
               
602 Cedar St, Suite 205
               
Wallace, ID 83873
               
 
 
(1) Reflects the shares beneficially owned by Gregory Schifrin and affiliated entities.

(2) Reflects the shares beneficially owned by James Baughman and affiliated entities.  Mr. Baughman resigned as a Director and Officer and the Board accepted his resignation on February 7, 2014.

(3) Reflects shares beneficially owned by BOCO and affiliated entities, (i) including the potential conversion of $1,852,115 of debt that is due and payable by the Company on October 31, 2013, that as of February 12, 2014, is convertible along with accrued interest into Company common stock at a rate of $0.75 per share (ii) the potential conversion of $250,000 of Series A Convertible Preferred Stock; (iii) Promissory Notes totaling $500,000 that is due on October 31, 2013 and December 31, 2013; (iv) and various warrants  that Mr. Schifrin has the right to exercise in sixty days.

(4) Reflects the shares beneficially owned by Michael Lavigne and affiliated entities, including warrants for 531,133 shares that Mr. Lavigne has the right to acquire in sixty days.

(5) Mr. Scott resigned effective December 31, 2013.
 
 
 
43

 
 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

Related party transactions for the year ended October 31, 2013 are detailed in Note 3 to the Company’s  Financial Statements filed with this Form 10-K.

Our independent non-employee directors are not compensated in cash. Capital Peak Partners LLC, an entity affiliated with Michael Lavigne, was paid $97,500 and $90,000 during the years ended October 31, 2013 and 2012, respectively. The fees were paid to consultants consulting services and Mr. Lavigne did not receive any of the payments.

Review and Approval of Related Person Transactions
 
We have operated under a Code of Conduct since inception. Our Code of Conduct requires all employees, officers and directors, without exception, to avoid the engagement in activities or relationships that conflict, or would be perceived to conflict, with the Company’s interests or adversely affect its reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review and approval to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to the Company than could be obtained from an unrelated person.
 
The Audit Committee is responsible for reviewing and approving all transactions with related persons. In 2013, The Board reviewed all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed.

Director Independence
 
The Board has affirmatively determined that each of Messrs. Lavigne and Rasmussen is an independent director.  For purposes of making that determination, the Board used NASDAQ’s Listing Rules even though the Company is not currently listed on NASDAQ.
 
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

We formed an Audit Committee on October 26, 2012. The Audit Committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Board subject to certain restrictions. The policy sets out the specific services pre-approved by the Audit Committee and the applicable limitations, while ensuring the independence of the independent auditors to audit our financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Board responsibilities under the Exchange Act. During fiscal year ended October 31, 2013, the Audit Committee pre-approved all audit and permissible non-audit services provided by our independent auditors.

Service Fees Paid to the Independent Registered Public Accounting Firm
 
The Board engaged PMB Helin Donovan, LLP to perform an annual audit of our financial statements for the year ended October 31, 2013, and 2012. The following is the breakdown of aggregate fees paid to the auditors for the Company for the periods indicated:
 
   
Years Ended
       
   
October 31, 2013
   
October 31, 2012
 
Audit fees
  $ 6,000     $ 12,220  
Audit related fees
  $ 13,500     $ 20,100  
Tax fees
  $ 5,250     $ 6,220  
All other fees
  $ -     $ -  
                 
    $ 24,750     $ 38,540  
                 
 
 
 
 
44

 
 
 
- “Audit Fees” are fees billed by PMB Helin Donovan, LLP for the audit of our financial statements for the years ended October 31, 2013 and 2012.

- “Audit-Related fees” are fees billed by PMB Helin Donovan, LLP to us for services not included in audit fees, specifically, SAS 100 reviews, SEC filings and consents, and accounting consultations on matters addressed during the audit or interim reviews, and review work related to quarterly filings for the years ended October 31, 2013, 2012 and 2011.

- “Tax Fees” are fees primarily for tax compliance in connection with filing US income tax returns.

SECTION16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
  
The Company’s executive officers, directors and 10% stockholders are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of these reports must also be furnished to the Company.

Based solely on a review of copies of reports furnished to the Company, or written representations that no reports were required, the Company believes that during the fiscal year ended October 31, 2013 its executive officers, directors and 10% holders complied with all filing requirements, with the following possible exceptions:

1.  
A Form 4 for Capital Peak Partners LLC dated November 26, 2012 and required to be filed on November 28, 2012 and was filed on March 11, 2013.

2.  
A Form 4 for Capital Peak Partners LLC dated May 29, 2013 and required to be filed on May 31, 2013 and was filed on June 5, 2013.

3.  
A Form 13D’s for Capital Peak Partners LLC dated November 26, 2012 and required to be filed on December 4, 2012 was filed on March 13, 2013.

4.  
A Form 4 for BOCO Investments LLC dated May 7, 2013 and required to be filed on May 9, 2013 was filed on May 30, 2013.
 
5.  
A Form 13D for BOCO Investments LLC dated May 7, 2013 and required to be filed on May 13, 2013, was filed on May 28, 2013.
 
 
45

 

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) FINANCIAL STATEMENTS:

Our financial statements, as indicated by the Index to Consolidated Financial Statements set forth below, begin on page F-1 of this Form 10-K, and are hereby incorporated by reference. Financial statement schedules have been omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
 
 
 
46

 


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
Title of Document
 
Page
 
       
Report of Independent Registered Public Accounting Firm
   
F-1
 
         
Consolidated Balance Sheets as of October 31, 2013 and 2012
   
F-2
 
         
Consolidated Statements of Operations for the year ended October 31, 2013 and 2012 and the period from inception of March 25, 2010 to October 31, 2013
   
F-3
 
         
Consolidated Statements of Changes in Stockholders' Deficit for the year ended October 31, 2013 and 2012 and the period from inception of March 25, 2010 to October 31, 2013
   
F-4
 
         
Consolidated Statements of Cash Flows for the for the year ended October 31, 2013 and 2012 and the period from inception of March 25, 2010 to October 31, 2013
   
F-5
 
         
Notes to the Financial Statements
   
F-6
 
 
 
 
47

 
 
(b) EXHIBITS:
 
 
Exhibit No.   
  Description
     
3.1  
Articles of Incorporation (1)
     
3.2 
 
Articles of Amendment dated February 28, 2013. (2)
     
3.3
 
Bylaws (1)
     
3.4
 
Certificate of Designation of Rights, Preferences and Privileges of Series A Convertible Preferred Stock (13)
     
4.1 
 
WestMountain Gold, Inc. 2012 Stock Incentive Plan. (3)
     
10.1
 
Exploration, Development and Mine Operating Agreement dated September 15, 2010 by and between Raven Gold Alaska Inc., International Tower Hills Mines, Terra Gold Corporation and Terra Mining Corporation. (4)
     
10.2
 
Amended Porterfield Lease dated February 18, 2011 by and between Terra Gold Corp and Ben Porterfield (5)
     
10.3
 
Amended and Restated Revolving Credit Loan and Security Agreement dated September 17, 2012 by and between WestMountain Index Advisor, Inc. and BOCO Investments, LLC. (6)
     
10.4
 
Amended and Restated Secured Convertible Promissory Note dated September 17, 2012 by and between WestMountain Index Advisor, Inc. and BOCO Investments, LLC. (6)
     
 10.5  
Consulting Agreement dated September 11, 2012 by and between WestMountain Index Advisor, Inc. and BOCO Investments, LLC. (6)
     
10.6
 
Warrant to Purchase Stock dated October 1, 2012 by and between WestMountain Index Advisor, Inc. and BOCO Investments, LLC. (6)
     
10.7
 
Warrant to Purchase Stock dated October 1, 2012 by and between WestMountain Index Advisor, Inc. and BOCO Investments, LLC. (6)
     
10.8
 
Letter of Intent dated February 19, 2013 by and between Terra Gold Corporation and Raven Gold Alaska, Inc. (7)
     
10.9
 
Loan Agreement dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (8)
     
10.10
 
Promissory Note dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (8)
     
10.11
 
Security Agreement dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (8)
     
 10.12  
Warrant for the Purchase of Common Stock dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (8)
     
10.13
 
Loan Agreement dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (9)
     
10.14
 
Promissory Note dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (9)
     
10.15
 
Security Agreement dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (9)
     
10.16
 
Warrant for the Purchase of Common Stock dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (9)
     
10.17
 
First Amendment to Amended and Restated Secured Convertible Promissory Note dated August 1, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (10)
     
10.18
 
Form of Warrant for the Purchase of Preferred Stock (12)
     
10.19
 
Form of Warrant for the Purchase of Common Stock (12)
     
10.20
 
Form of Subscription Agreement for the Purchase of Preferred Stock (12)
     
10.21
 
2186 S. Holly Commercial Lease Agreement signed September 3, 2012 by and between James Baughman and 2186 S. Holly LLC. (12)
     
10.22
 
Commercial Lease Amendment II signed June 5, 2013 by and between WestMountain Index Advisor, Inc. and Waterfront Property Management LLC. (12)
     
10.23
 
Commercial Lease April 1, 2011 by and between WestMountain Index Advisor, Inc. and Waterfront Property Management LLC. (12)
     
14.1
 
Code of Conduct & Ethics dated November 30, 2012. (11)
     
21.1 
 
Subsidiaries (12)
     
31.1
 
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (12)
     
31.2
 
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer (12)
     
32.1
 
Section 906 Certifications (12)
     
32.2
 
Section 906 Certifications (12)
     
99.1
 
Audit Committee Charter dated November 30, 2012. (11)
     
99.2
 
Compensation Committee Charter dated November 30, 2012. (11)
     
99.3
 
Nominations and Governance Committee Charter dated November 30, 2012. (11)
     
101
 
Interactive data files pursuant to Rule 405 of Regulation S-T. (14)
 
(1) Previously filed with Form SB-2 Registration Statement, January 2, 2008 (in the case of the Articles of Incorporation, as amended per the 8-K filed on Oct. 12, 2010).
(2) Attached as an exhibit to the Company’s Form 8-K dated March 8, 2013 and filed with the SEC on March 12, 2013.
(3) Filed as an Exhibit to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 31, 2013, and hereby incorporated by reference.
(4) Attached as an exhibit to the Company’s Form 8-K dated February 28, 2011 and filed with the SEC on March 4, 2011.
(5) Attached as an Exhibit to the Company’s Form 10-K dated October 31, 2011 and filed with the SEC on December 20, 2011.
(6) Filed as exhibits on Form 8-K/A dated September 11, 2012 and filed with the SEC on October 10, 2012. 
(7) Attached as an exhibit to the Company’s Form 8-K dated February 19, 2013 and filed with the SEC on February 26, 2013.
(8) Attached as an exhibit to the Company’s Form 8-K/A dated May 14, 2013 and filed with the SEC on June 6, 2013.
(9) Attached as an exhibit to the Company’s Form 8-K dated June 27, 2013 and filed with the SEC on July 1, 2013.
(10) Attached as an exhibit to the Company’s Form 8-K dated August 29, 2013 and filed with the SEC on August 30, 2013.
(11) Attached as an exhibit to the Company’s Form 8-K dated November 26, 2012 and filed with the SEC on November 30, 2012. 
(12) Filed herewith.
(13) Attached as an exhibit to the Company’s Form 8-K dated December 3, 2013 and filed with the SEC on December 6, 2013. 
(14) Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
 
 
 
48

 
 
 
Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
WestMountain Gold, Inc.:
 
We have audited the accompanying consolidated balance sheets of WestMountain Gold, Inc. (the “Company”) (an exploration stage company) as of October 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the period from March 25, 2010 (“Inception”) through October 31, 2013.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WestMountain Gold, Inc. as of October 31, 2013 and 2012, and the results of its operations and its cash flows for the period from Inception through October 31, 2013, in conformity with generally accepted accounting principles in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has sustained a net loss from operations and has an accumulated deficit during the exploration stage.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in this regard are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

PMB Helin Donovan, LLP
 
/s/ PMB Helin Donovan, LLP
 
February 13, 2014
Seattle, Washington
 
 
 
F-1

 
 
 
WESTMOUNTAIN GOLD, INC. AND SUBSIDIARIES
AN EXPLORATION STAGE COMPANY
CONSOLIDATED BALANCE SHEETS
 
   
October 31, 2013
   
October 31, 2012
 
ASSETS
           
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 82,376     $ 88,870  
Prepaid expenses
    6,355       7,017  
Inventory
    66,485       -  
Total current assets
    155,216       95,887  
                 
EQUIPMENT, NET
    528,973       417,802  
                 
OTHER ASSETS
               
Contractual rights
    800,000       700,000  
Mining claims
    11,820       13,453  
Security deposits
    5,250       2,050  
                 
TOTAL ASSETS
  $ 1,501,259     $ 1,229,192  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES:
               
Accounts payable
  $ 1,315,070       781,631  
Accounts payable - related parties
    697,127       511,270  
Accrued expenses
    216,078       128,559  
Accrued Interest
    394,274          
Accrued expenses - related parties
    57,000       52,611  
Forward contract
    794,760       -  
Derivative liability - warrants
    2,000,000       -  
Promissory notes
    3,083,248       2,138,965  
Total current liabilities
    8,557,557       3,613,036  
                 
COMMITMENTS AND CONTINGENCIES
    -       -  
                 
STOCKHOLDERS' DEFICIT
               
                 
Preferred stock, $.10 par value; 987,900 shares authorized, 0 shares issued and outstanding at October 31, 2013 and 2012, respectively
    -       -  
Preferred Series A Convertible Stock, $.10 par value; 12,100 shares authorized, 12,100  and -0- shares  issued and outstanding at October 31, 2013 and 2012, respectively
    1,210       -  
Common stock - $0.001 par value, 200,000,000 shares authorized, 24,659,832 and 21,382,776 shares issued and outstanding at October 31, 2013 and 2012, respectively
    24,659       21,383  
Additional paid in capital
    10,608,128       7,675,241  
Accumulated deficit
    (17,690,295 )     (10,080,468 )
Total stockholders' deficit
    (7,056,298 )     (2,383,844 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 1,501,259     $ 1,229,192  
                 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-2

 
 
 
WESTMOUNTAIN GOLD, INC. AND SUBSIDIARIES
AN EXPLORATION STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
 
               
From March 25, 2010
 
   
Years Ended
         
(Inception)
 
   
October 31, 2013
   
October 31, 2012
   
to October 31, 2013
 
REVENUE
  $ 94,233     $ -     $ 94,233  
COST OF SALES
    49,000       -       49,000  
GROSS PROFIT
    45,233       -       45,233  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    1,993,995       2,039,332       6,185,936  
EXPLORATION EXPENSE
    2,965,309       2,167,052       6,593,544  
OPERATING LOSS
    (4,914,071 )     (4,206,384 )     (12,734,247 )
                         
OTHER INCOME (EXPENSE):
                       
Interest expense, net
    (546,767 )     (1,343,806 )     (1,902,814 )
Consulting income - Terra Mining Corporation
    -       -       50,400  
Financing fee
    (148,989 )     -       (203,634 )
Merger expense
    -       -       (900,000 )
Loss on change - derivative liability warrants
    (2,000,000 )     -       (2,000,000 )
Total other expense
    (2,695,756 )     (1,343,806 )     (4,956,048 )
                         
LOSS BEFORE INCOME TAXES
    (7,609,827 )     (5,550,190 )     (17,690,295 )
                         
INCOME TAX EXPENSE
    -       -       -  
                         
NET LOSS
  $ (7,609,827 )   $ (5,550,190 )   $ (17,690,295 )
                         
Basic and diluted loss per common share attributable to WestMountain Gold, Inc. and subsidiaries common shareholders-
 
                         
Basic and diluted loss per share
  $ (0.32 )   $ (0.28 )        
                         
Weighted average shares of common stock outstanding-
                       
basic and diluted
    23,737,492       19,965,241          
                         
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-3

 
 
WESTMOUNTAIN GOLD, INC. AND SUBSIDIARIES
AN EXPLORATION STAGE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
 
                                           
                                           
                                       
Total
 
   
Preferred Stock
   
Common Stock
               
Accumulated
   
Stockholder's
 
   
Shares
   
Amount
   
Shares
   
Amount
   
APIC
   
Deficit
   
Deficit
 
Balance as of March 25, 2010
    -     $ -       -     $ -     $ -     $ -     $ -  
Effect of Reverse Merger
    -       -       8,828,313       8,828       219,174       -       228,002  
Net loss for the period of inception from March 25, 2010 to October 31, 2010
    -