Attached files

file filename
EX-31.1 - EXHIBIT 31.1 - WESTMOUNTAIN GOLD, INC.exhibit31_1.htm
EX-32.2 - EXHIBIT 32.2 - WESTMOUNTAIN GOLD, INC.exhibit32_2.htm
EX-32.1 - EXHIBIT 32.1 - WESTMOUNTAIN GOLD, INC.exhibit32_1.htm
EX-31.2 - EXHIBIT 31.2 - WESTMOUNTAIN GOLD, INC.exhibit31_2.htm
XML - IDEA: XBRL DOCUMENT - WESTMOUNTAIN GOLD, INC.R9999.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the three month period ended July 31, 2015

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

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)

 

Indicate by check mark whether the registrant (1) has filed all Reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: þ  No: o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes: þ  No: o

 

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting Company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting Company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  

o

Non accelerated filer

o

Accelerated filer 

o

Smaller reporting company

þ

 

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act):  Yes: o No: þ

 

The number of shares of common stock, $.001 par value, issued and outstanding as of September 17, 2015: 61,650,537 shares.

 

1

 


 
 

 

 

FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (unaudited except as noted)

3

 

 

 

 

Consolidated Balance Sheets as of July 31, 2015 (unaudited) and October 31, 2014

3

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended July 31, 2015 and 2014 (unaudited)

4

 

 

 

 

Consolidated Statement of Cash Flows for the nine months ended July 31, 2015 and 2014 (unaudited)

5

 

 

 

 

Notes to Consolidated Financial Statements

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

 

 

 

Item 4.

Controls and Procedures

40

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

40

 

 

 

Item 1A.

Risk Factors

40

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

54

 

 

 

Item 3.

Defaults Upon Senior Securities

54

 

 

 

Item 4.

Mine Safety Disclosure

54

Item 5.

Other Information

54

Item 6.

Exhibits

55

 

 

 

Signatures

56

 

2

 


 
 

 PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

WestMountain Gold, Inc.

An Exploration Stage Company

Consolidated Balance Sheets

 

 

 

 

 

 

 

July 31,

2015

 

October 31,

2014

 

 

ASSETS

(unaudited)

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

79,143

 

$

22,766

Prepaid expenses

 

23,017

 

 

8,932

Inventory

 

249,972

 

 

459,461

Total current assets

 

352,132

 

 

491,159

 

 

 

 

 

 

Equipment, net

 

353,242

 

 

440,562

 

 

 

 

 

 

Other Assets

 

 

 

 

 

Prepaid royalties

 

910,529

 

 

900,000

Mining claims

 

1,946,458

 

 

1,946,458

Security deposits

 

10,618

 

 

5,225

Asset retirement cost

 

34,118

 

 

-

Total Assets

$

3,607,097

 

$

3,783,404

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable

$

1,125,014

 

$

1,444,060

Accounts payable - related parties

 

-

 

 

670,106

Accrued expenses

 

212,056

 

 

263,354

Accrued interest

 

231,584

 

 

1,538,176

Forward contract

 

250,612

 

 

300,659

Derivative liability

 

503,210

 

 

1,092,597

Line of credit - related parties ($150,000 facility)

 

58,380

 

 

-

Promissory notes

 

1,000,000

 

 

5,583,248

Total current liabilities

 

3,380,856

 

 

10,892,200

 

 

 

 

 

Long-Term Liabilities

 

 

 

 

Promissory notes, net of discounts of $516,495

 

3,835,620

 

 

-

Asset retirement obligation

 

34,118

 

 

-

Total liabilities

 

7,250,594

 

 

10,892,200

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

Preferred stock, $0.10 par value; 987,900 shares authorized, 0 shares issued and outstanding at July 31, 2015 and October 31, 2014, respectively

 

-

 

 

-

Preferred Series A Convertible Stock, $0.10 par value; 12,100 shares authorized, issued and outstanding at July 31, 2015 and October 31, 2014

 

1,210

 

 

1,210

Common stock, $0.001 par value; 200,000,000 shares authorized, 61,650,537 and 27,296,403 shares issued and outstanding at July 31, 2015 and October 31, 2014, respectively

 

61,651

 

 

27,296

Additional paid in capital

 

17,799,410

 

 

13,163,655

Accumulated deficit - stock dividends

 

(127,440)

 

 

(60,500)

Accumulated deficit

 

(21,378,328)

 

 

(20,240,457)

Total stockholders' deficit

  

(3,643,497)

 

 

(7,108,796)

Total Liabilities and Stockholders' Deficit

$

3,607,097

$

3,783,404

 

See notes to consolidated financial statements.

 

3


 

 

WestMountain Gold, Inc.

An Exploration Stage Company

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

July 31,

2015

 

July 31,

2014

 

July 31,

2015

 

July 31,

2014

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Sales, net

$

277,959

 

$

157,726

 

$

1,009,504

 

$

361,975

Total revenue

 

277,959

 

 

157,726

 

 

1,009,504

 

 

361,975

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

163,555

 

 

88,392

 

 

765,375

 

 

171,703

Total cost of sales

 

163,555

 

 

88,392

 

 

765,375

 

 

171,703

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

114,404

 

 

69,334

 

 

244,129

 

 

190,272

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

326,078

 

 

350,998

 

 

770,986

 

 

1,204,653

Total operating expenses

 

326,078

 

 

350,998

 

 

770,986

 

 

1,204,653

 

 

 

 

 

 

 

Loss from operations

 

(211,674)

 

 

(281,664)

 

 

(526,857)

 

 

(1,014,381)

 

 

 

 

 

 

 

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

-

 

 

3

 

 

-

 

 

14

Interest expense

 

(196,755)

 

 

(148,265)

 

 

(966,901)

 

 

(814,541)

Financing fee

 

-

 

 

-

 

 

-

 

 

(228,238)

Gain(Loss) on change - derivative liability

 

(407,460)

 

 

446,319

 

 

355,887

 

 

700,569

Gain(Loss) on settlement of forward contract

 

-

 

 

-

 

 

-

 

 

(349,779)

Total other income/(expense)

 

(604,215)

 

 

298,057

 

 

(611,014)

 

 

(691,975)

 

 

 

 

 

 

 

Net loss before income taxes

 

(815,889)

 

 

16,393

 

 

(1,137,871)

 

 

(1,706,356)

Income tax expense (benefit)

 

-

 

 

-

 

 

-

 

 

-

Net loss

$

(815,889)

 

$

16,393

 

$

(1,137,871)

 

$

(1,706,356)

   

   

   

 

    

   

Basic net loss per share

$

(0.01)

 

$

0.00

 

$

(0.03)

 

$

(0.07)

Diluted net loss per share

$

(0.01)

 

$

0.00

 

$

(0.03)

 

$

(0.07)

Basic weighted average common shares outstanding

 

55,943,003

 

 

25,936,997

 

 

37,110,275

 

 

25,565,504

Diluted weighted average common shares outstanding

 

55,943,003

 

 

27,381,818

 

 

37,110,275

 

 

25,565,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

  

4

 


 

 

WestMountain Gold, Inc.

An Exploration Stage Company

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

Nine months ended

July 31,

 

 

2015

 

2014

 

 

 

 

 

Cash flows from operating activities

 

Net loss

$

(1,137,871)

 

$

(1,706,356)

Adjustments to reconcile net loss to net cash provided by(used in) operating activities:

 

 

 

Depreciation and amortization

 

135,566

 

 

117,997

Amortization of debt discount

 

45,568

 

 

-

Stock option expense

 

218,970

 

 

-

Issuance of common stock for fees

 

-

 

 

227,977

Issuance of common stock and warrants for services and expenses

 

-

 

 

347,275

(Gain) Loss on forward contract

 

(47)

 

 

93,944

Loss on settlement of forward contract

 

-

 

 

348,721

(Gain) Loss on derivative liability

 

(355,887)

 

 

(700,569)

Changes in operating assets and operating liabilities:

 

 

 

 

Prepaid expenses and other current assets

 

(14,085)

 

 

(16,250)

Inventory

 

209,489

 

 

(186,471)

Other assets

 

84,078 

 

 

25

Accrued interest

 

921,380 

 

 

685,995

Accounts payable and accrued liabilities

 

(370,343)

 

 

(231,631)

Accounts payable and accrued liabilities - related parties

 

95,094

 

 

380,512

Net cash provided by (used in) operating activities

 

(166,088)

 

 

(638,831)

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(48,246)

 

 

-

Cash used in merger

 

-

 

 

(1,800,000)

Prepaid royalties

 

(100,000)

 

 

(100,000)

Net cash (used in) investing activities

 

(148,246)

 

 

(1,900,000)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from promissory notes

 

100,000

 

 

2,500,000

Forward contract

 

(50,000)

 

 

-

Proceeds from warrants exercised

 

264,331

 

 

-

Repayment of debenture notes

 

-

 

 

(100,000)

Proceeds from line of credit

 

58,380

 

 

-

Proceeds from the issuance of common stock

 

-

 

 

 100,153

Net cash provided by financing activities

 

372,711 

 

 

2,500,153

 

 

 

Net increase (decrease) in cash and cash equivalents

 

56,377

 

 

(38,678)

Cash and cash equivalents, beginning of period

 

22,766

 

 

82,376

Cash and cash equivalents, end of period

$

79,143

 

$

43,698

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Interest paid

$

-

 

$

-

Taxes paid

$

-

 

$

-

Non-cash investing and financing activities:

 

 

 

 

 

Common stock issued in exchange for account payable

$

765,201

 

$

233,841

Common stock and warrants issued for mining claims

$

-

 

$

136,000

Common stock and warrants issued for settlement of forward contract

$

-

 

$

264,920

Preferred stock dividend

$

66,940

 

$

-

Issuance of common stock for convertible debentures and interest

$

2,559,105

 

$

-

Issuance of common stock related to the exercise of warrants

$

233,500

 

$

-

Asset retirement obligation

 $

34,118

 $

-

 

See notes to consolidated financial statements.

5

 


 

 

WESTMOUNTAIN GOLD, INC.

AN EXPLORATION STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 1.  BUSINESS

 

WestMountain Gold, Inc. (“WMTN” or the “Company”) is an exploration stage mining company, determined in accordance with applicable Securities and Exchange Commission (“SEC”) guidelines, which pursues gold projects that the Company anticipates will have low operating costs and high returns on capital.

 

WMTN’s wholly owned subsidiary, Terra Gold Corporation (“TGC”), was a joint venture partner with Raven Gold Alaska, Inc. (“Raven”) through February 12, 2014 on a gold system project (“the TMC Project”). On February 12, 2014, the Company, through its wholly owned subsidiary, Terra Gold Corp, acquired 100% ownership interest in the TMC Project from Raven, which is a wholly owned subsidiary of Corvus Gold Inc. (TSX:KOR, OTCQX:CORVF) for $1.8 million in cash and 200,000 shares of WMTN. 

 

The Company is currently focused on mineral production from mineralized material at the TMC Project in the state of Alaska. The TMC Project consists of 344 Alaska state mining claims plus an additional 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 trend of gold vein occurrences.  All government permits and reclamation plans for continued exploration through 2014 were renewed and the fees to maintain the Terra claims through 2015 were paid by the Company.  The property lies approximately 200 km 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.

 

The Company is 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 expenditures in the mining properties to date, have been expensed as incurred and therefore do not appear as assets on our balance sheet.  The Company expects construction expenditures and underground mine exploration and capital improvements will continue during 2015 and subsequent years. The Company expects to remain as an exploration stage company for the foreseeable future. It will not exit the exploration stage until such time that it demonstrates 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.

 

Over the course of the last two years, the Company was in default on all of its outstanding debt, including approximately $4.3 million of debt to BOCO Investments, our largest creditor. These notes carried a default interest rate of 45%, which over the past two years has accrued to an additional $2.2 million.  In early 2015, the Company engaged BOCO and our other creditors to restructure our debt in a way that the Company expects will allow us to execute our business plan and to repay our debts over a reasonable amount of time.

6


 

 

On May 26, 2015, the Company received from BOCO the fully executed Loan and Note Modification Agreement dated as of May 15, 2015 (the “Loan Modification Agreement”) between the Company, its directors, BOCO, and two other creditors of the Company. The Loan Modification Agreement modified all outstanding Loan Agreements, Security Agreements and related Promissory Notes between the Company and BOCO  (collectively, the “Loan Documents”) that were previously in default and extended the repayment and maturity dates over the course of a three year period in addition to lowering the annual interest rate on all BOCO notes to 8%.

 

As part of the Loan Modification Agreement, BOCO agreed to convert $2,221,159 in unpaid interest, plus principal of $300,000 into shares of the Company’s common stock at a price per share of $0.12. Such conversion was effected on May 26, 2015 and the Company issued 21,009,658 shares of its common stock as a result of such conversion.

 

As of July 31, 2015, the Company had six secured promissory notes with BOCO Investments, LLC, and has recorded $4,052,115 in principal plus $68,433 in accrued interest.

The Company’s 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 TMC Project and as each step is successfully completed, raise the capital for the next phase, which the Company believes is the most cost effective way to raise the necessary capital. 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 the Company’s 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.

 

The Company 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, the Company expects that it will need to raise additional funds if the Company decides to pursue more rapid expansion, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if it must respond to unanticipated events that require it to make additional investments. The Company cannot assure that additional financing will be available when needed on favorable terms, or at all.

 

NOTE 2.  GOING CONCERN

 

The Condensed Consolidated Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because of its history of net losses and capital and liquidity deficiencies.  The Company’s ability to achieve and maintain profitability and positive cash flow is dependent upon its ability to successfully execute the plans to pursue the TMC Project as described in this Form 10-Q. 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 the Company be unable to continue its business.

 

7


 

 

UNAUDITED FINANCIAL STATEMENTS

 

The accompanying unaudited consolidated financial statements of WMTN and its subsidiaries have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements for the periods July 31, 2015 and 2014 are unaudited and include all adjustments necessary to a fair statement of the results of operations for the periods then ended. All such adjustments are of a normal, recurring nature. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for a full fiscal year. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2014 as filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2015. 

 

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

 

Principles of Consolidation

These consolidated financial statements include the Company’s consolidated financial position, results of operations, and cash flows. All material intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements.

 

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 of the relevant asset, generally 2 -5 years.

8


 

 

Metal and Other Inventory

Inventories were $249,972 and $440,562 as of July 31, 2015 and October 31, 2014, respectively. Inventories may include ore stockpiles (in process inventory), doré and gold bullion. All of the inventory at July 31, 2015 was represented by ore stockpiles and all of the inventory at October 31, 2014 was represented by doré and gold bullion.  All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Inventory costs include direct labor, materials, depreciation, as well as administrative overhead costs relating to mining activities.

 

Mineral Properties

Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Costs to maintain the mineral rights 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.

 

Long-Lived Assets

The Company reviews its long-lived assets for impairment 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 July 31, 2015, there are no impairments recognized.

Alaska Reclamation and Remediation Liabilities

The Company 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 than 50,000 cubic yards of material. The Company’s asset retirement obligation (“ARO”), consisting of estimated future mine reclamation and closure costs, may increase or decrease significantly in the future as a result of changes in regulations, mine plans, estimates, or other factors. The Company’s ARO is recognized as a liability at fair value in the period incurred. An ARO, which is initially estimated based on discounted cash flow estimates, is accreted to full value over time through charges to accretion expense. Resultant ARO cost assets are depreciated on a units-of-production method over the related long-lived asset’s useful life. The Company’s ARO is adjusted annually, or more frequently at interim periods if necessary, to reflect changes in the estimated present value resulting from revisions to the timing or amount of reclamation and closure costs. The Company recorded the asset retirement obligation in fiscal year 2015.  Management believes any prior year obligations were immaterial.

 

Fair Value Measurements

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value.  The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).  The hierarchy consists of three levels:

 

Level 1 – Quoted prices in active markets for identical assets and liabilities;

 

Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and

 

Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

9

 


 

Liabilities measured at fair value on a recurring basis are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

Carrying Amount at

July 31,

2015

 

Fair Value Measurements Using Inputs

 

Financial Instruments

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Forward contract

$

-

 

$

250,612

 

$

-

 

$

250,612

Derivative Instruments

$

-

 

$

503,210

 

$

-

 

$

503,210

Total

$

-

 

$

753,822

 

$

-

 

$

753,822

 

 

 

 

 

 

 

 

 

 

 

Carrying Amount at

October 31,

2014

 

Fair Value Measurements Using Inputs

 

Financial Instruments

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Forward contract

$

-

 

$

300,659

 

$

-

 

$

300,659

Derivative Instruments

$

-

 

$

1,092,597

 

$

-

 

$

1,092,597

Total

$

-

 

$

1,393,256

 

$

-

 

$

1,393,256

 

10

 


 

 

Market price and estimated fair value of common stock used to measure the Derivative Instruments-Warrants at May 15, 2015 and October 31, 2014:

 

 

May 15,

2015

 

October 31,

2014

 

 

Market price and estimated fair value of common stock:

$

0.12

 

$

0.48

Exercise price

$

0.05

 

$

0.38

Expected term (years)

 

2.75

 

 

3.50

Dividend yield

 

-

 

 

-

Expected volatility

 

143.01%

 

 

174.2%

Risk-free interest rate

 

1.06%

 

 

1.62%

 

The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants.  

 

The Company has entered into certain financial instruments and contracts, such as convertible note financing arrangements that contained embedded derivative features. Because the economic characteristics and risks of the equity-linked conversion options were not clearly and closely related to a debt-type host, the conversion features required classification and measurement as derivative financial instruments. The convertible note financing arrangements were carried as derivative liabilities, at fair value, in the financial statements until their conversion into common stock. The Company estimated the fair value of the embedded derivative features in the convertible notes by using probability weighted scenarios on the conversion price with a Black Scholes model.  The loss recognized for these embedded derivatives during the three months ended July 31, 2015 was $503,210.

  

The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, other current assets, and accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities at July 31, 2015 and October 31, 2014 based upon the short-term nature of the assets and liabilities. 

 

Derivative Instruments – Warrants

In May and June 2013, the Company received a total of $1.0 million and entered into Promissory Notes, Security Agreement, Loan Agreement and Warrants to Purchase Stock Agreement (collectively, the “Transaction Documents”) with BOCO Investments LLC (“BOCO”).

 

In addition, the Company issued Warrants to BOCO to purchase 2,500,000 shares of common stock at $0.75 per share or a price per share equal to eighty percent (80%) of the lowest price at which a common share in the Company has been issued in any round of financing commenced or closed after the date of the Warrants.  The Warrants expire in 2018, five years from the issuance date.  There are no registration requirements.  The Transaction Documents place certain operating restrictions on the Company.

 

These warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  In addition, since the warrants do not have a fixed number of shares, they are accounted for outside of equity.  Therefore, the fair value of these warrants were recorded as a liability in the consolidated balance sheet and are marked to market each reporting period until they are exercised or expire or otherwise extinguished.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the Derivative Instruments – Warrants were repriced to $0.05 per share and were exercised into 2,500,000 common shares for $125,000.

 

During the quarter ended July 31, 2015, the Company recognized $95,750 of other income resulting from the decrease in the fair value of the warrant liability at May 15, 2015, as the value changed from the prior quarter and before they were exercised.

 

11


 

 

Forward Sale and Loan Agreements

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 no less than 600 ounces of gold in bar form to the three accredited investors by September 15, 2013, but defaulted on this obligation.  The Company settled with two of the three investors during the year ended October 31, 2014.

 

The Company is continuing to negotiate with the third lender, Snowmass Mining Co., LLC, who is owed $250,000 (payable in cash or gold), together with interest thereon from September 15, 2013.  The Company has paid Snowmass the sum of $50,000 during the nine months ended July 31, 2015.

 

As of July 31, 2015, the value of the gold obligation to Snowmass is $250,000.  The difference between the amount received and the fair value of the obligation will be recorded as additional interest expense or income at each reporting date based on the fair value of gold.  During the three months ended July 31, 2015, the Company recorded additional interest expense of $53 for the change in the value of gold from April 30, 2015.

 

During the twelve months ended October 31, 2014, the Company entered into a forward sales agreement for 48.563 oz. of gold bullion at $1,305 per oz. The Company has delivered 48 oz, of the gold bullion and recorded the fair value of the remaining 0.563 oz. of gold as a forward contract in the amount of $667. The spot price of gold was $1088.40 on July 31, 2015. 

 

Revenue Recognition:  Revenue is recognized net of royalties, when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collection is probable. The passing of title to the customer is based on the terms of the sales contract and the actual sale of gold bullion. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets, for example the London Bullion Market for both gold and silver, in an identical form to the product sold.

12


 

 

 

Mineral Exploration and Development 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.  The Company charges to operations the allocable portion of capitalized costs attributable to properties abandoned.  Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

 

Net Loss Per Share

Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented.  Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. As of July 31, 2015, the Company potentially dilutive securities include (i) warrants for the purchase of 3,986,497 common shares; (ii) 16,267,625 common shares related to convertible promissory notes; (iii) 605,000 common shares related to the conversion of Series A Convertible Preferred Stock; and (iv) options for the purchase of 1,000,000 common shares. All of these securities have been excluded because they would be anti-dilutive under our current financial situation.

 

Use of Estimates

The preparation of the Company’s Consolidated Financial Statements requires management to make estimates and assumptions that affect amounts reported in these financial statements and accompanying notes. The more significant areas requiring the use of management estimates and assumptions relate to estimates of mineral resources that are the basis for future cash flow estimates utilized in impairment calculations; estimates of recoverable gold in stockpiles; the useful lives of long-lived assets; environmental reclamation and closure costs; and estimates of fair value for asset impairments, financial instruments, and stock based compensation and other equity transactions. The Company bases its estimates on historical experience and various assumptions that are believed to be reasonable at the time the estimate is made. Accordingly, actual results may differ from amounts estimated in these Consolidated Financial Statements and such differences could be material.

 

Reclassifications

Certain reclassifications have been made to the prior period Consolidated Financial Statements to conform to the current period presentation. These reclassifications had no effect on previously reported assets, liabilities, net cash flows or net loss.

 

 

13


 

 

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable in accordance with FASB ASC 718.

 

Recent Accounting Pronouncements

On April 10, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. This standard was effective for the Company on January 1, 2015. The Company does not expect significant impact to the financial statements upon implementation of ASU No. 2014-08.

 

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on November 1, 2017. Early application is not permitted. The Company is currently evaluating the impact of ASU No. 2014-09.

 

On August 27, 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern and to provide related footnote disclosures. This standard will be effective for the Company for the year ending on October 31, 2016. Early application is permitted. The Company is currently evaluating the impact of ASU No. 2014-15.

 

In June 2014, the FASB issued ASU No. 2014-10, which amended Accounting Standards Codification (ASC) Topic 915 Development Stage Entities. The amendment eliminates certain financial reporting requirements surrounding development stage entities, including an amendment to the variable interest entities guidance in ASC Topic 810, Consolidation. The amendment removes the definition of a development stage entity from the ASC, thereby removing the financial reporting distinction between development stage entities and other entities from U.S. GAAP. Consequently, the amendment eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

14


 

 

This amendment is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. The Company has made the election to early adopt this amendment effective June 30, 2014 and, as a result, the Company is no longer presenting or disclosing the information previously required under Topic 915. The early adoption was made to reduce data maintenance by removing all incremental financial reporting requirements for development stage entities. The adoption of this amendment alters the disclosure requirements of the Company, but it does not have any material impact on the Company’s financial position or results of operations for the current or any prior reporting periods.

 

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to the consolidated financial statements.

 

NOTE 4. AGREEMENTS

 

Exploration, Development and Mine Operating Agreements

   

15


 

 

Amended Claims and Lease Agreements with Ben Porterfield

On January 7, 2011, Terra Mining Corporation (“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 Amended Lease Agreement, which incorporates the Lease dated March 22, 2005 and the September 27, 2010 Consent between Ben Porterfield and AngloGold Ashanti (USA) Exploration Inc., has a term of ten years, which can be extended for an additional ten years with thirty days written notice. The Amended Lease Agreement defines terms and conditions and requires the following minimum advance royalties:

 

  ●

 

Payment of $100,000 annually on March 22, 2011 (paid). 

 

 

 

  ●

 

Payment of $100,000 annually on March 22, 2012 (paid), 2013 (paid), 2014 (paid), through March 22, 2015 (paid).

 

 

 

  ●

 

2015 payment of $100,000 due on March 22, 2015 was made on May 1, 2015.

 

 

 

  ●

 

Payment of $125,000 annually beginning March 22, 2016 through the termination of the Amended Claims Agreement.

 

The Company can terminate the Amended Lease Agreement with the payment of $875,000, less $75,000 paid during the years 2006-2011  The payment may be paid over three annual payments.

 

TMC has paid in total $500,000 to Ben Porterfield and WMTN issued 500,000 shares of WMTN restricted common stock on March 23, 2011. The common stock was recorded as Contractual Rights at $250,000 or $0.50 per share. The investment in the exclusive rights to the mineral properties is accounted for at cost. As of July 31, 2015, the Company has capitalized $850,000 related to this Claims Agreement.

 

The Amended Claims Agreement, which incorporates the Lease dated March 22, 2005, provides for a production royalty of 4% of the net smelter return for all minerals produced or sold.  The amounts due under this royalty will be offset by any advance royalties that have been paid by the Company.  The Company may repurchase 1% of the production royalty right for $1,000,000 and an additional 1% for $3,000,000.

 

The failure to operate in accordance with the Amended Claims or Lease Agreements could result in the Lease being terminated.  

16


 

 

NOTE 5. EQUIPMENT, NET

Equipment, net consists of the following: 

 

 

Estimated

Useful

Lives

 

 

July 31,

2015

 

 

October 31,

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mining and other equipment

2-5 years

 

$

890,734

 

$

842,487

Less: accumulated depreciation

 

 

 

(537,492)

 

 

(401,925)

 

 

 

$

353,242

 

$

440,562

 

Depreciation expense for the nine months ended July 31, 2015 and 2014 was $135,567 and $117,997 respectively. Depreciation expense for the three months ended July 31, 2015 and 2014 was $47,501 and $39,206, respectively.

 

 

NOTE 6. CERTAIN RELATIONS AND RELATED PARTY TRANSACTIONS

 

Related Party Transactions

 

The Company has four full-time and part-time employees. The Company shares offices with Minex Exploration LLP (“Minex”), an Idaho partnership affiliated with the Company’s Chief Executive Officer. Also, the Company utilizes Minex contractors for exploration and development of the Alaska property. The Company has recorded accounts payable and accrued payable for related party of $-0- and $670,106 as of July 31, 2015 and October 31, 2014, respectively.  Cash payments of $73,409 and $102,890 were made to Minex for services for the three-months and nine-months ended July 31, 2015 respectively.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015, Minex converted the full past due payable of $665,201 due into 5,543,350 shares of the Company’s common stock.

17


 

 

Secured Promissory and Promissory Notes with BOCO

 

From time to time, the Company entered into promissory notes and other agreements with BOCO related to loans from BOCO to the Company.  The current status of BOCO loans to the Company and their terms are described in Note 7, Promissory Notes.

 

Promissory Notes with Silver Verde May Mining Company, Inc.

 

On April 30, 2012 the Company entered into Promissory Note Documents with Silver Verde May Mining Company Inc. (“SVM”), a party related to an existing shareholder and a Director of the Company. Under the Promissory Note Documents, the Company issued Convertible Promissory Notes (“SVM Notes”) in the principal amounts totaling $85,000. The Notes were due November 6, 2012 and provide for interest at 5% payable in arrears. The SVM Notes are convertible into common stock at $1.00 per share. In addition, the Company issued 42,500 shares of restricted common stock to SVM in connection with the issuance of the SVM Notes that was expensed to interest at $1.00 per share or $42,500 during the three months ended April 30, 2012. On May 29, 2013, the Company entered into an Amendment to Convertible Promissory Note extending the due date to July 31, 2013. As of October 31, 2014, the Company has repaid $53,867 to SVM. On October 31, 2013, the Company entered into the Second Amendment to Convertible Promissory Note extending the due date to October 31, 2014.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015, Silver Verde May converted the full remaining balance of $37,950 in principal and interest into 316,250 shares of the Company’s common stock.

 

NOTE 7. PROMISSORY NOTES

 

On May 26, 2015, the Company received from BOCO the fully executed Loan and Note Modification Agreement dated as of May 15, 2015 (the “Loan Modification Agreement”) between the Company, its directors, BOCO, and two other creditors of the Company. The Loan Modification Agreement modified all outstanding Loan Agreements, Security Agreements and related Promissory Notes between the Company and BOCO  (collectively, the “Loan Documents”) that were previously in default and extended the repayment and maturity dates of the debt as follows:

 

  •  $100,000 plus interest is due and payable on October 1, 2015;
  •  Approximately $700,000 plus interest shall be due and payable to BOCO on November 15, 2015;
  •  Approximately $1,500,000 plus interest shall be due and payable to BOCO on November 15, 2016;
  •  The remaining principal amount of approximately $1,852,115 plus interest shall be due and payable to BOCO on November 15, 2017.

18


 

 

As part of the Loan Modification Agreement, BOCO agreed to convert $2,221,159 in unpaid interest, plus principal of $300,000 into shares of the Company’s common stock at a price per share of $0.12. Such conversion was effected on May 26, 2015 and the Company issued 21,009,658 shares of its common stock as a result of such conversion (See Note 8).

 

As consideration for the loan modification, the Company agreed to the issuance of warrants to purchase two million shares of the Company’s common stock for $0.01 per share, and to the extension and re-pricing of additional warrants to purchase 4,886,615 shares at $0.05 per share. BOCO agreed to exercise 6,886,615 warrants as a provision of the Loan Modification Agreement; the warrants were exercised on May 27, 2015 and proceeds of $264,331 paid to the Company (See Note 8).

As part of the Loan Modification Agreement, the Company and a related party vendor, Minex Exploration, agreed to convert payables of $665,202 into shares of the Company’s common stock at a price per share of $0.12. A related party creditor, Silver Verde May Mining Company, also agreed to convert its debt of $37,950 into shares of the Company’s common stock at the same price per share. Such conversions were effected on May 26, 2015 and the Company issued 5,543,350 shares of its common stock to Minex and 316,250 to Silver Verde (See Note 8).

The Loan Modification Agreement also noted that the due date for a loan in the principal amount of $1,000,000 to Giuseppe Dessi that was previously in default had been extended to December 14, 2016.

The Loan Modification Agreement also provides for: (i) the waiver by Greg Schifrin, CEO of the Company, of all rights and benefits under his employment agreement with the Company; (ii) a seat on the board of the Company for an appointee of BOCO as well as board observation rights; (iii) lock-up agreements on the stock held by board members and BOCO; (iv) loan covenants and oversight rights; and (v) a new credit facility by BOCO of $150,000 to provide for 2015 mining camp expenses.

The Company had previously entered into loan modification agreements with BOCO in April and June of 2014 but did not meet the conditions set forth in those agreements and the loans with BOCO were therefore in default from October 2013 to May 26, 2015, the date of that the Loan Modification Agreement was executed.

 

As of July 31, 2015 and October 31, 2014, the Company has the following promissory notes outstanding:

 

 

July 31,

2015

 

October 31,

2014

 

 

BOCO September 17, 2012 Promissory Note

$

1,852,115

 

$

1,852,115

BOCO May 14, 2013 Promissory Note

 

500,000

 

 

500,000

BOCO June 27, 2013 Promissory Note

 

500,000

 

 

500,000

BOCO December 31, 2013 Promissory Note

 

1,000,000

 

 

1,000,000

BOCO May 23, 2014 Promissory Note

 

100,000

 

 

100,000

BOCO June 2, 2014 Promissory Note

 

-

 

 

200,000

BOCO June 9, 2014 Promissory Note

 

100,000

 

 

100,000

BOCO June 30, 2014 Promissory Note

 

-

 

 

100,000

BOCO May 1, 2015 Promissory Note

 

100,000

 

 

 

BOCO May 15, 2015 Promissory Note

 

58,380

 

 

 

Dessi December 17, 2013 Promissory Note

 

1,000,000

 

 

1,000,000

Andres Promissory Notes

 

200,000

 

 

200,000

Silver Verde May Promissory Notes

 

-

 

 

31,133

Total

$

5,410,495

 

$

5,583,248

 
19
 

 

 

Secured Promissory Notes dated September 17, 2012

                        

On September 17, 2012, the Company entered into an Amended and Restated Revolving Credit Loan and Security and Secured Convertible Promissory Note Agreements with BOCO, an existing lender to and shareholder in the Company. On October 1, 2012, the Company entered into a Warrant to Purchase Stock Agreement with BOCO related to this financing (such Agreements and Warrant, the “Transaction Documents”). This transaction consolidated previously issued promissory note agreements and warrants purchase agreements into one amended agreement.

 

Under the Transaction Documents, the Company issued an Amended and Restated Secured Convertible Promissory Note (the “September 2012 Note”) in the principal amount of $1,852,115. The September 2012 Note was due July 31, 2013 and provided for interest at 18% payable in arrears. The Note and accrued interest are convertible into common stock at the lesser of $3.00 or the lowest price at which common shares in the Company are issued in any round of financing commencing after the date of this Note and prior to the conversion, at the discretion of BOCO.  Although the effective conversion rate on the Note is now $0.12 due to the events of the Loan and Note Modification Agreement dated May 15, 2015, this conversion feature continues to be an embedded derivative and the Company has accounted for the derivative liability accordingly (see Note 3). The September 2012 Note is secured by a security interest in the Company’s assets to secure the Company’s performance under the Note. In addition, the Company issued a Warrant to purchase 1,852,115 shares of common stock at $1.50 unless the Company elects to do a future offering at a lower price. There are no registration requirements. The Transaction Documents place certain operating restrictions on the Company.  As of July 31, 2015, the principal and accrued interest due on the note is $1,883,373. 

The Transaction Documents also contain certain representations and warranties of the Company and BOCO, including customary investment-related representations provided by BOCO, as well as acknowledgements by BOCO that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Company’s issuance of the shares has not been registered with the SEC or qualified under any state securities laws.  The Company provided customary representations regarding, among other things, its organization, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.  The representations and warranties made to BOCO are qualified in their entirety (to the extent applicable) by the Company’s disclosures in the reports it files with the SEC.  The Company also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the Transaction Documents.

20


 

 

 

In addition to the Transaction Documents described above, on September 11, 2012, the Company entered into a Warrant to Purchase Stock Agreement with BOCO. The Company issued a Warrant to purchase 1,250,000 shares of common stock at $0.25 per share.

 

On August 29, 2013, the Company entered into the First Amendment to the Amended and Restated Secured Convertible Promissory Note with BOCO. The First Amendment was effective August 1, 2013 and extended the due date under for the September 2012 Note from July 31, 2013 to October 31, 2013. 

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2017, so it is no longer in default. The Warrant was repriced and exercised at $0.05 per share.

 

Promissory Note with BOCO dated May 14, 2013

 

In May 2013, the Company entered into a Promissory Note, a Security Agreement and warrants to Purchase Stock Agreement and a Loan Agreement (collectively the “May 2013 Transaction Documents”) with BOCO.  Under the May 2013 Transaction Documents, the Company issued a Promissory Note (the “May 2013 Note”) to BOCO in the principal amount of $500,000.  The May 2013 Note was due October 31, 2013 and provides for interest at 15%, payable in arrears.  The May 2013 Note is secured by a security interest in the Company’s assets to secure the Company’s performance.  

 

In addition, the Company issued a Warrant to purchase 1,250,000 shares of common stock at an exercise price that is the lesser of $0.75 per share or a price per share equal to eighty percent (80%) of the lowest price at which a common share in the Company has been issued in any round of financing commenced or closed after the date of this Warrant and prior to Holder’s exercise of its rights under the Warrant. The Warrant expires May 17, 2018. There are no registration requirements. The May 2013 Transaction Documents place certain operating restrictions on the Company.  

 

The May 2013 Transaction Documents also contain certain representations and warranties of the Company and BOCO, including customary investment-related representations provided by BOCO, as well as acknowledgements by BOCO that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Company’s issuance of the shares has not been registered with the SEC or qualified under any state securities laws.  The Company provided customary representations regarding, among other things, its organization, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.  The representations and warranties made to BOCO are qualified in their entirety (to the extent applicable) by the Company’s disclosures in the reports it files with the SEC.  The Company also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the May 2013 Transaction Documents.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2015 so it is no longer in default.  The Warrant was repriced and exercised at $0.05 per share.

21


 

 

Promissory Note with BOCO dated June 27, 2013

 

On June 27, 2013, the Company entered into a Promissory Note, a Security Agreement and a Loan Agreement with BOCO. On June 27, 2013, the Company entered into a Warrant to Purchase Stock Agreement with BOCO related to this financing. All Agreements and the Warrant are the (“June 2013 Transaction Documents”).

  

Under the June 2013 Transaction Documents, the Company issued a Promissory Note (“June 2013 Note”) in the principal amount of $500,000. The June 2013 Note was due December 31, 2013 and provides for interest at 15%, payable in arrears. The June 2013 Note is secured by a security interest in the Company’s assets to secure the Company’s performance under the June 2013 Note.  As of July 31, 2015, the principal and accrued interest due on the note is $508,438. 

 

In addition, the Company issued a Warrant to purchase 1,250,000 shares of common stock at an exercise price that is the lesser of $0.75 per share or a price per share equal to eighty percent (80%) of the lowest price at which a common share in the Company has been issued in any round of financing commenced or closed after the date of this Warrant and prior to Holder’s exercise of its rights under the Warrant. The Warrant expires June 27, 2018. There are no registration requirements. The June 2013 Transaction Documents place certain operating restrictions on the Company.  

 

The June 2013 Transaction Documents also contain certain representations and warranties of the Company and BOCO, including customary investment-related representations provided by BOCO, as well as acknowledgements by BOCO that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Company’s issuance of the shares has not been registered with the SEC or qualified under any state securities laws.  The Company provided customary representations regarding, among other things, its organization, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.  The representations and warranties made to BOCO are qualified in their entirety (to the extent applicable) by the Company’s disclosures in the reports it files with the SEC.  The Company also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the June 2013 Transaction Documents.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2016, so it is no longer in default. The Warrant was repriced and exercised at $0.05 per share.

22


 

 

Promissory Note with BOCO dated December 31, 2013

 

On December 31, 2013, the Company signed a Promissory Note with BOCO for an aggregate loan amount of $1,000,000 (the “BOCO Bridge Loan”). Repayment of the BOCO Bridge Loan was originally due December 16, 2014 by repayment in cash.  The note bears interest at 8% per annum until paid in full with a default rate of 45%.  $800,000 of the proceeds from this loan were used for the acquisition of 100% interest in the TMC project from Raven Gold Alaska, Inc.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2016, so it is no longer in default.

 

Promissory Note with BOCO dated May 23, 2014

 

On May 23, 2014, the Company entered into a Convertible Promissory Note Agreement with BOCO Investments, LLC in the amount of $100,000. The note bears interest at 15% per annum until paid in full. Repayment of the note was due August 22, 2014 and the default rate was 45% per annum.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2015, so it is no longer in default.

 

Promissory Note with BOCO dated June 2, 2014

 

On June 2, 2014, the Company entered into a Convertible Promissory Note Agreement with BOCO Investments, LLC in the amount of $200,000. The note bears interest at 15% per annum until paid in full. Repayment of the note was due August 22, 2014 with a default rate of 45% per annum.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2015, so it is no longer in default.

 

Promissory Note with BOCO dated June 9, 2014

 

On June 9, 2014, the Company entered into a Convertible Promissory Note Agreement with BOCO Investments, LLC in the amount of $100,000. The note bears interest at 15% per annum until paid in full. Repayment of the note was due August 22, 2014 with a default rate of 45% per annum.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2015, so it is no longer in default.

23


 

Promissory Note with BOCO dated June 30, 2014

 

On June 9, 2014, the Company entered into a Convertible Promissory Note Agreement with BOCO Investments, LLC in the amount of $100,000. The note bears interest at 15% per annum until paid in full. Repayment of the note was due August 22, 2014 with a default rate of 45% per annum.

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the annual interest rate on this note was reduced to 8% and the maturity was extended to November 15, 2015, so it is no longer in default.

 

Promissory Note with BOCO dated May 1, 2015

 

On May 1, 2015, the Company entered into a Convertible Promissory Note Agreement with BOCO Investments, LLC in the amount of $100,000. The note bears interest at 15% per annum until paid in full.  Repayment of the note and accrued interest is due October 1, 2015.

 

The Note and accrued interest are convertible into common stock at the lowest price at which common shares in the Company are issued in any round of financing commencing after the date of this Note and prior to the conversion, at the discretion of BOCO.  Although the effective conversion rate on the Note is now $0.12 due to the events of the Loan and Note Modification Agreement dated May 15, 2015, this conversion feature continues to be an embedded derivative and the Company has accounted for the derivative liability accordingly (see Note 3).

 

Secured Promissory Note with BOCO dated May 15, 2015

 

On May 26, 2015, as part of the Company’s Loan and Note Modification Agreement dated as of May 15, 2015 with BOCO, the Company entered into a Secured Line of Credit Promissory Note with BOCO the allows the Company to draw up to $150,000 for approved expenses related to the 2015 mining season.  The note bears interest at 8% per annum on all outstanding balances until paid in full.  Repayment of any outstanding balance on the note and accrued interest is due October 1, 2015.  On July 31, 2015 the outstanding balance on the note was $58,380.

 

Promissory Note with Giuseppe Dessi dated December 17, 2013

 

On December 17, 2013, the Company signed a Promissory Note with an accredited investor, Giuseppe Dessi, for an aggregate loan amount of $1,000,000 (the “Dessi Bridge Loan”). Repayment of the Dessi Bridge Loan was due December 16, 2014 by repayment in cash.  The note bears interest at 8% per annum until paid in full.  All of the proceeds from this loan were used to acquire 100% interest in the TMC project from Raven Gold Alaska, Inc.  On May 1, 2015 Guiseppe Dessi and the Company executed an agreement extending the Dessi Bridge Loan note which extends it to December 16, 2016. This note is no longer in default.

 

Andres Unsecured Promissory Notes

On March 21, 2012 the Company entered into Promissory Note Documents with Fabian Andres and Bill Andres, existing shareholders in the Company. Under the Promissory Note Documents, the Company issued a Convertible Promissory Note to each of Fabian Andres and Bill Andres in the principal amount of $100,000 and $100,000, respectively (“the Andres Notes”). The Andres Notes were due in twelve months and provide for interest at 5% payable in arrears. The Andres Notes are convertible into common stock as $1.00 per share. In addition, the Company issued 50,000 shares of restricted common stock to each party that was expensed to interest at $1.00 per share or $100,000 during the three months ended April 30, 2012. On May 29, 2013, the Company entered into an Amendment to Convertible Promissory Note extending the due date to October 31, 2013. On October 31, 2013, the Company entered into the Second Amendment to Convertible Promissory Notes extending the due date to October 31, 2014 and subsequently entered into the Third Amendment to Convertible Promissory Note extending the note to October 31, 2015.  These notes are no longer in default.  As of July 31, 2015 the principal and accrued interest due on the Notes is $233,616.  

 

The table below summarizes the Company’s future note maturities as of July 31, 2015:

 

Year Ended
October 31,

 

Notes Maturing

2015

 

358,380

2016

 

700,000

2017

 

2,500,000

2018

 

1,852,115

 

 

5,410,495

 

24

 


 

NOTE 8. EQUITY TRANSACTIONS

 

On May 26, 2015, the Company received from BOCO the fully executed Loan and Note Modification Agreement dated as of May 15, 2015 (the “Loan Modification Agreement”) between the Company, its directors, BOCO, and two other creditors of the Company. The Loan Modification Agreement modified all outstanding Loan Agreements, Security Agreements and related Promissory Notes between the Company and BOCO  (collectively, the “Loan Documents”) that were previously in default and extended the repayment and maturity dates through November 2017 (See Note 7).

 

As part of the Loan Modification Agreement, BOCO agreed to convert $2,221,159 in unpaid interest, plus principal of $300,000 into shares of the Company’s common stock at a price per share of $0.12. Such conversion was effected on May 26, 2015 and the Company issued 21,009,658 shares of its common stock as a result of such conversion. The Company determined that the estimated fair value of the stock issued approximated the value of the liabilities extinguished and no gain or loss was recorded.

 

As consideration for the loan modification, the Company agreed to the issuance of warrants to purchase two million shares of the Company’s common stock for $0.01 per share, and to the extension and re-pricing of additional warrants to purchase 4,886,615 shares at $0.05 per share. BOCO agreed to exercise 6,886,615 warrants as a provision of the Loan Modification Agreement; the warrants were exercised on May 27, 2015 and proceeds of $264,331 paid to the Company. The difference between the value of the warrants exercised and the fair value of $0.12 per share for the stock issued was calculated and booked as a discount to the corresponding notes and is being amortized over the life of the notes.

As part of the Loan Modification Agreement, the Company and a related party vendor, Minex Exploration, agreed to convert payables of $665,202 into shares of the Company’s common stock at a price per share of $0.12. A related party creditor, Silver Verde May Mining Company, also agreed to convert its debt of $37,950 into shares of the Company’s common stock at the same price per share. Such conversions were effected on May 26, 2015 and the Company issued 5,543,350 shares of its common stock to Minex and 316,250 to Silver Verde.

Series A Convertible Preferred Stock:

In August 2013, to Company issued 12,100 shares of Series A Convertible Preferred Stock to three accredited investors at $50.00 per share.  The shares have a 10% annual dividend, payable semi-annually in cash or common stock at the Company’s option, and each share is convertible into common stock at $1.00 per share.

To date, the Company has opted to issue common stock for the preferred dividends and issued 302,500 shares and 398,261 common shares for the three months and nine months ended July 31, 2015 respectively for these dividends.

 


 

 

 

 

 

July 31, 2015

 

 

Weighted

Average

Remaining

Life

 

Weighted

Average

Exercise

Price

 

 

 

 

 

 

 

Number of

Warrants

 

 

 

Shares

Exercisable

 

 

 

230,000

 

3.67

 

$

0.25

 

230,000

200,000

 

3.61

 

$

0.50

 

200,000

78,000

 

5.73

 

$

0.75

 

78,000

10,000

 

1.58

 

$

0.88

 

10,000

406,746

 

1.44

 

$

1.00

 

406,746

3,061,751

 

0.49

 

$

1.50

 

3,061,751

3,986,497

 

1.03

 

$

1.310

 

3,986,497


Options:

On September 8, 2014 the Company issued 1,000,000 options to an employee to purchase shares of our common stock at $0.50 per share for a period of seven years.  250,000 of the options vested immediately and 250,000 options vest each subsequent year. On the date of the grant, the Company valued the options at $490,714 using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 7 years, expected volatility of 175.8%, risk-free rate of 2.16% and no dividend yield, and the value of the options are being expensed over the vesting period. 

 

Under the terms the employment contract, the change of control that occurred on May 26, 2015 would have caused these options to vest immediately, but the Company negotiated an agreement with the employee to cancel the existing options and reissue new options to purchase shares under new terms.

 

On July 6, 2015, the Company cancelled the existing options and issued 1,000,000 options to an employee to purchase shares of our common stock at $0.12 per share for a period of approximately 6.25 years.  500,000 of the options vested immediately and 250,000 options vest on each of September 8, 2015 and September 8, 2016. The transaction was treated as a modification of the terms to the initial grant. In accordance with ASC 718 the incremental fair value of the new options was calculated and compared to the current fair value of the original grant using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 6.25 years, expected volatility of 148.3%, risk-free rate of 2.00% and no dividend yield. The incremental value of $6,849 is being expensed over the remaining vesting period of the options in addition to the expense schedule of the existing options, which was adjusted for the new vesting schedule.  The company recognized $157,629 in option expense for the quarter ended July 31, 2015.

 

26

 


 

 

NOTE 9. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

 

Except as disclosed, 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.

 

EMPLOYMENT AGREEMENTS

 

On October 1, 2010, TMC signed an Employment Agreement with Gregory Schifrin, which was assumed by WMTN as a result of the acquisition of TMC in February 2011. Under the terms of the 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 and any accrued vacation. 

27


 

 

The Loan Modification Agreement with BOCO dated as of May 15, 2015 provides for the waiver by Greg Schifrin, CEO of the Company, of all rights and benefits under his employment agreement with the Company

 

On November 1, 2013, the Company signed an Employment Agreement with Loni Knepper, and on January 6, 2014, she was appointed Chief Financial Officer.  Under the terms of the agreement, Ms. Knepper’s salary was $105,000 per year and was eligible for annual bonuses and incentive plans determined by the Company’s Compensation Committee.  In addition, Ms. Knepper was granted 50,000 shares of common stock on November 14, 2013 which was valued at $1.00 per shares and was expensed as stock compensation.  On May 23, 2014 Ms. Knepper tendered notice of her resignation to the Company, effective May 26, 2014.

 

On September 15, 2014, the Company signed an Employment Agreement with James W. Creamer III and appointed him as Chief Financial Officer.  Under the terms of the agreement, Mr. Creamer’s salary will be $96,000 per year and he is eligible for annual bonuses and incentive plans determined by the Company’s Compensation Committee.  Mr. Creamer was also granted 1,000,000 options to purchase the Company’s common stock for $0.50 per share for a period of seven years.  250,000 of the options vested immediately and 250,000 options shall vest on each of the first, second and third anniversaries of employment.  However, the terms of the options were subsequently modified by the Company on July 6, 2015 (See Note 8).  

 

LEASES

 

The Company is obligated under various non-cancelable operating leases for their various facilities.

 

The aggregate unaudited future minimum lease payments, to the extent the leases have early cancellation options and excluding escalation charges, are as follows:

 

 

 


 

 

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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 as well as those discussed elsewhere in this report (including in Part II, Item 1A (Risk Factors)). Readers are urged not to place undue reliance on these forward-looking statements because they 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.

 

GENERAL DEVELOPMENT 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.

 

The wholly owned subsidiary of Terra Mining Corporation (“TMC”), Terra Gold Corporation (“TGC”), was a joint venture partner with Raven Gold Alaska, Inc. (“Raven”) on a gold system called the TMC Project until February 12, 2014. On February 12, 2014, the Company, through its wholly owned subsidiary, Terra Gold Corp, acquired 100% ownership interest in the TMC Project from Raven, which is a wholly owned subsidiary of Corvus Gold Inc. (TSX:KOR, OTCQX:CORVF) for $1.8 million in cash and 200,000 shares of WMTN valued at $136,000. We are currently focused on mineral production from mineralized material at the TMC 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 gold vein occurrences. All government permits and reclamation plans for continued exploration through 2015 were renewed and the fees to maintain the Terra claims through 2015 were paid by the Company. The property lies approximately 200 km 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.

29


 

 

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 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”) pertaining to the TMC Project. 

 

On February 14, 2014, the Company, through TGC, acquired 100% ownership interest in the TMC Project from Raven for $1.8 million cash and 200,000 shares of WMTN. No further payments are due to Raven from TGC under the JV Agreement (including but not limited to any royalty or residual payments), and each party is fully released from its obligations to the otheunder the JV Agreement. 

 

We have budgeted the following expenditures for the next twelve months of approximately $2,200,000, depending on additional financing, for general and administrative expenses, mining and exploration to implement the business plan as described above.  Approximately $1.1 million of these budgeted expenditures are for mining and exploration expenses and the other $1.1 million are for corporate general and administrative expenses.

 

We are considered an exploration stage company under SEC criteria because we have 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 2015 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.

 

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-Q.

30


 

 

THE COMPANY’S COMMON STOCK


Our common stock currently trades on the OTCQB Exchange ("OTCQB") under the symbol "WMTN."

KEY MARKET PRIORITIES

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 resource estimates, operating as a going concern, unique difficulties and uncertainties in mining exploration ventures, and a volatile market price for our common stock.

 

In addition, our debt to BOCO Investments LLC is secured by a security interest in all of the Company’s assets. Should the Company return to a default situation on its notes in the future, BOCO would have a number of remedies it could utilize under the loan and security agreements with the Company, including the ability to foreclose on all of our assets, including our primary asset, the TMC project.

 

These risks and uncertainties are discussed in more detail below in this item.

 

RESULTS OF OPERATIONS

 

FOR THE THREE MONTHS ENDED JULY 31, 2015 AND JULY 31, 2014 

 

 

31


 

 

 

REVENUE

Revenue for the quarter ended July 31, 2015 increased $120,233 to $277,959 as compared to $157,726 for the quarter ended July 31, 2014. Revenues reflect the processing and sale of residual gold during the two quarters represented.  For the quarter ended July 31, 2015 we recorded revenue net of royalties due, which had been prepaid but not yet recognized. The Company was able to start milling operations and production earlier in the season than the prior year in an effort to substantially increase production and revenue through our pilot mill activities in the 2015 season.  While we were able to produce and sell gold in the third quarter, the vast majority of our gold production and gold sales through our pilot mill for the 2015 season will be recognized in the fourth quarter.

 

COST OF SALES AND EXPENSES

 

The Cost of Sales and Expenses, for three month periods presented, have been reclassified to better reflect the operations of the Company. The mining operations for all periods reported were determined to be a direct result of mining ore and not exploration in nature.

 

Cost of sales for the quarter ended July 31, 2015 increased $75,163 to $163,555 as compared to $88,392 for the quarter ended July 31, 2014.  This increase is directly attributable to the growth in revenues from increased production for the current period.

 

Selling, general and administrative expenses for the quarter ended July 31, 2015 decreased $24,920 to $326,078 as compared to $350,998 for the quarter ended July 31, 2014.  Management has been very active in controlling expenses and has been able to slightly decrease selling, general and administrative expenses despite increase in production and sales. 

 

NET INCOME (LOSS)

 

Net loss for the three months ended July 31, 2015 was $815,889 as compared to net income of $16,393 for the three months ended July 31, 2014. This difference was largely due to a significant swing in the non-cash expense related to the valuation of the Company’s derivative liability along with slightly higher interest expense for the quarter.  Management anticipates that interest expense will likely be dramatically reduced going forward because of the significantly lower interest rate on the majority of the Company’s debt due to the new terms under the Loan and Note Modification Agreement dated May 15, 2015.

 

FOR THE NINE MONTHS ENDED JULY 31, 2015 AND JULY 31, 2014

 

 

32


 

 

REVENUE 

Revenue for the nine months ended July 31, 2015 increased $647,529 to $1,009,504 as compared to $361,975 for the nine months ended July 31, 2014. The revenue increase was a result of carried over sales in the first quarter from the 2014 season and increased production and gold sales during the third quarter from production through our pilot mill during the 2015 season. 

COST OF SALES AND EXPENSES

The Cost of Sales and Expenses, for the nine month periods presented, have been reclassified to better reflect the operations of the Company. The mining operations for all periods were determined to be a direct result of mining ore and not exploration in nature.

 

Cost of sales for the nine months ended July 31, 2015 increased $593,672 to $765,375 as compared to $171,703 for the nine months ended July 31, 2014.  This increase was directly attributable to the continued gold sales from the 2015 season and should remain relatively proportional to our volume of production and gold sales.   

 

Selling, general and administrative expenses for the nine months ended July 31, 2015 decreased $433,667 to $770,986 as compared to $1,204,653 for the nine months ended July 31, 2014.  Such expenses for the nine months ended July 31, 2015 and 2014 consisted primarily of employee and independent contractor expenses, expenses related to share and warrant issuances, rent, audit, professional and consulting fees, legal, and other general and administrative costs.  Management continues to actively control Company expenses and has been able to do so even while increasing revenues.

 

NET INCOME (LOSS)

 

Net loss for the nine months ended July 31, 2015 was $1,137,871 as compared to a net loss of $1,706,356 for the nine months ended July 31, 2014. The net loss for the nine months ended July 31, 2015 included a gross profit of $244,129, consulting and professional fees of $118,672, payroll and benefits of $567,942, company insurance of $37,795, interest expense of $966,901 and gain on the change in value of the derivative of $355,887. Management anticipates that interest expense will likely be dramatically reduced going forward because of the significantly lower interest rate on the majority of the Company’s debt due to the new terms under the Loan and Note Modification Agreement dated May 15, 2015.  

33


 

LIQUIDITY AND CAPITAL RESOURCES

 

We had cash of $79,143, a working capital deficit of approximately $3,028,724. We had a forward contract of $250,612, derivative liabilities of $503,210 and promissory notes, line of credit, and associated interest in the amount of $1,289,964 as of July 31, 2015.

 

Over the course of the last two years, the Company became in default on all of its outstanding debt, including approximately $4.3 million of debt to BOCO Investments, our largest creditor.  These notes carried a default interest rate of 45%, which over the past two years has accrued to an additional $2.2 million.  In early 2015, the Company engaged BOCO and our other creditors to restructure our debt in a way that allows us to execute our business plan and puts us on a path to repay our debts over a reasonable amount of time.

 

On May 26, 2015, the Company received from BOCO the fully executed Loan and Note Modification Agreement dated as of May 15, 2015 (the “Loan Modification Agreement”) between the Company, its directors, BOCO, and two other creditors of the Company. The Loan Modification Agreement modifies all outstanding Loan Agreements, Security Agreements and related Promissory Notes between the Company and BOCO (collectively, the “Loan Documents”) that were previously in default and extends the repayment and maturity dates over the course of a three year period in addition converting all outstanding accrued interest and $300,000 in notes to equity and lowering the annual interest rate on all BOCO notes to 8%.

 

This restructuring of this debt not only resolved the Company’s default situation, but it will also significantly lower our interest expense moving forward and positions the Company to be able to continue mining operations and pay these notes down over a three-year period.

 

In the third quarter 2015, the Company obtained a $150,000 line of credit facility from BOCO Investments LLC. As of July 31, 2015 we had drawn $58,380 on this facility, along with balances due on six secured promissory notes to BOCO Investments, LLC of $5,252,115 plus accrued interest of $68,433. (see Note 7 to the financial statements).

 

Under the terms of the Note and Loan Modification Agreement, the Company will be repay all outstanding balances of the $150,000 credit facility by October 1, 2015 and $700,000 of the BOCO Notes by November 15, 2015. Management believes that it will be able to meet these obligations through production and gold sales during the quarter ending October 31, 2015.

 

Although we are beginning to produce revenue which is providing capital and liquidity for the Company, we will likely need to continue raising capital through the issuance of equity or debt to fund our growth.  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 $2,200,000, depending on additional financing, for general and administrative expenses, mining and exploration to implement the business plan as described above.  Approximately $1.1 million of these budgeted expenditures are for mining and exploration expenses and the other $1.1 million are for corporate general and administrative expenses.

 

 
 
34
 

 
 

 

OPERATING ACTIVITIES

 

Net cash provided by operating activities for the nine months ended July 31, 2015 was $168,088. This amount was primarily related to change in inventory of $209,489, accrued interest of $921,380, accounts payable and accrued liabilities for related parties of $95,094, and non-cash expenses of $44,170; offset by the net loss of 1,137,871, decreases in accounts payable and accrued liabilities of $370,343and prepaid expenses of $14,085. Non-cash expenses include gain on derivative liabilities of $355,887; loss on forward contracts of $47; stock option expense of $218,970; $135,567 of depreciation and amortization and $45,568 of amortization of debt discount during the nine months ended July 31, 2015. 

 

INVESTING ACTIVITIES

 

There was $148,246 used in investing activities during the nine months ended July 31, 2015 related to $100,000 payment to Ben Porterfield for prepaid royalties and $48,246 payments related to the purchase of mining equipment. During the nine months ended July 31, 2014, $1,800,000 of cash was paid for the purchase of the balance of the interest in the TMC Project and $100,000 payment to Ben Porterfield for prepaid royalties.

 

FINANCING ACTIVITIES


Net cash provided by financing activities for the nine months ended July 31, 2015 was $372,711. There was $58,380 related to proceeds from the line of credit, $50,000 related to the pay down on the forward contract, proceeds from a promissory note of $100,000 and $264,331 related to warrants that were exercised.

 

Our unaudited contractual cash obligations as of July 31, 2015 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

 

$

115,754

 

$

45,372

 

$

58,382

 

$

12,000

 

$

-

 Porterfield lease

$

1,250,000

$

125,000

$

250,000

$

250,000

$

625,000

       Total

$

1,365,754

$

170,372

$

308,382

$

262,000

$

625,000

 
35
 

 
 

 

 

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.

 

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 July 31, 2015, there are no impairments recognized.

 

36


 

 

Alaska Reclamation and Remediation Liabilities

The Company 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 than 50,000 cubic yards of material. The Company’s asset retirement obligation (“ARO”), consisting of estimated future mine reclamation and closure costs, may increase or decrease significantly in the future as a result of changes in regulations, mine plans, estimates, or other factors. The Company’s ARO is recognized as a liability at fair value in the period incurred. An ARO, which is initially estimated based on discounted cash flow estimates, is accreted to full value over time through charges to accretion expense. Resultant ARO cost assets are depreciated on a units-of-production method over the related long-lived asset’s useful life. The Company’s ARO is adjusted annually, or more frequently at interim periods if necessary, to reflect changes in the estimated present value resulting from revisions to the timing or amount of reclamation and closure costs.  The Company recorded the asset retirement obligation in fiscal year 2015 and any prior year obligations were not material

 

Revenue Recognition:  

Revenue is recognized, net of royalties, when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collection is probable. The passing of title to the customer is based on the terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets, for example the London Bullion Market for both gold and silver, in an identical form to the product sold.

 

Metal and Other Inventory

Inventories were $249,972 and $440,562 as of July 31, 2015 and October 31, 2014, respectively. Inventories may include ore stockpiles (in process inventory), doré and gold bullion. All of the inventory at July 31, 2015 was represented by ore stockpiles and all of the inventory at October 31, 2014 was represented by doré and gold bullion.  All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Inventory costs include direct labor, materials, depreciation, as well as administrative overhead costs relating to mining activities.

 

 

37

 


 

 

 

Stock-Based Compensation

FASB ASC 718 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, but primarily focuses on transactions whereby an entity obtains employee services for share-based payments. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable in accordance with FASB ASC 718.

 

Fair Value Measurements

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value.  The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).  The hierarchy consists of three levels:

 

Level 1 – Quoted prices in active markets for identical assets and liabilities;

 

Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and

 

Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

Liabilities measured at fair value on a recurring basis are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Amount at

July 31,

2015

 

Fair Value Measurements Using Inputs

 

Financial Instruments

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Forward contract

$

-

 

$

250,612

 

$

-

 

$

250,612

Derivative Instruments

$

-

 

$

503,210

 

$

-

 

$

503,210

Total

$

-

 

$

753,822

 

$

-

 

$

753,822

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Amount at

October 31,

2014

 

Fair Value Measurements Using Inputs

 

Financial Instruments

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Forward contract

$

-

 

$

300,659

 

$

-

 

$

300,659

Derivative Instruments

$

-

 

$

1,092,597

 

$

-

 

$

1,092,597

Total

$

-

 

$

1,393,256

 

$

-

 

$

1,393,256

 

 

38

 


 

 

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for small reporting companies.

 

 

39


 

 

ITEM 4. CONTROLS AND PROCEDURES

 

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 July 31, 2015. 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 July 31, 2015 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 due to the scale of our operations.  We intend to revise our procedures as we expand the company.

 

We formed an audit committee on October 26, 2012 which consists of two independent directors.  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 as we grow the company.

 

b) Changes In Internal Control Over Financial Reporting

 

During the quarter ended July 31, 2015, 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.  

 

 

PART II - OTHER INFORMATION

ITEM 1.  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 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 are unable to pay our debt as it becomes due, we will again be in default on our debt and risk forfeiture of all of our assets.

 

Under the Loan Modification Agreement with BOCO dated as of May 15, 2015, the Company has payments of $158,380 plus interest and approximately $700,000 plus interest due on October 1, 2015 and November 15, 2015, respectively. In addition, the outstanding balance of $200,000 plus interest on the Andres Notes is due and payable on October 31, 2015.

 

The Company believes that it will be able to meet these obligations through production and gold sales during the quarter ending October 31, 2015; however, there can be no assurance that the Company will have sufficient revenues from mining to make these payments in full and on time, in which case the Company would once again be in default under its BOCO Notes, which are secured by all of the Company’s assets.

 

 

40


 

 

If we do not obtain additional financing, our business will fail. 

 

Our current operating funds are significantly 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 July 31, 2015, we had approximately $79,143 in cash.  We also have debt payments due in the next two months totaling $1,058,380 plus accrued interest.

 

We have budgeted expenditures for the TMC project for the next twelve months of approximately $2,200,000, depending on additional financing, for general and administrative, mining and exploration expenses.

 

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. 

 

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, approval of BOCO Investments under our loan covenants 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, which would be subject to the factors listed above. 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. 

 

41


 

 

 

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 July 31, 2015, the price of gold was $1,088.40 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 management and a major shareholder and creditor have substantial influence over our company.   

 

As of July 31, 2015, Greg Schifrin, our CEO, either directly or indirectly, owns or controls 9.7 million shares as of the filing date or approximately 16.0% of our issued and outstanding common stock including shares beneficially owned within sixty days.

 

As of July 31, 2015, BOCO owns or controls 30.8 million shares as of the filing date or approximately 50.2% 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 now due and payable by the Company on November 15, 2017, that as of July 31, 2015, is currently convertible along with accrued interest into Company common stock at a rate of $0.12 per share (subject to re-pricing provisions in the note); (ii) and the potential conversion of $250,000 of Series A Convertible Preferred Stock. See Notes 7 and 8 to the Company’s Financial Statements for a more detailed description of terms of the Loan Modification Agreement dated May 15, 2015 regarding these Secured Promissory and Promissory Notes in addition to the Series A Convertible Preferred Stock

 

As a major creditor and shareholder of the Company, BOCO has additional influence and control over the Company.  BOCO has imposed a number of loan covenants on the Company which restrict our ability to operate our business as well as our ability to raise additional financing.

   

Mr. Schifrin 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.

42


 

 

 

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.

43


 

 

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.  

 

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 October 31, 2014 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 July 31, 2015, we have reported a cumulative net operating loss of over $20 million.  If we are not able to continue as a going concern, it is likely investors will lose their investments.

44


 

 

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. 

 

 

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, particularly Greg Schifrin, our CEO. 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.

45


 

 

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.

46


 

 

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.

 

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.

47


 

 

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 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. 

 

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. 

48


 

 

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.  

 

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.

49


 

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 July 31, 2015 there were approximately 65 million shares of common stock and warrants issued and outstanding. 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. 

 

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.

 

50


 

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.

 

51


 

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.

 

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. 

52


 

 

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.

53


 

 

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 2015.

 

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.

 

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.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

This item is not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities from the Federal Mine Safety and Health Administration, or MSHA, under the Federal Mine Safety and Health Act of 1977, or the Mine Act. During the quarter ended July 31, 2015, the TMC project was in production and as such, we were subject to regulation by MSHA under the Mine Act.

 

The Terra project had no health and safety violations, orders or citations under the Federal Mine Safety and Health Act of 1977, during the quarter ended July 31, 2015 and the Company had no injuries or fatalities.

 

ITEM 5. OTHER INFORMATION

 

This item is not applicable.

 

54

 


 

 

 

 

Exhibit No. Description
3.1 Articles of Incorporation (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).
3.2 Articles of Amendment dated February 28, 2013 (Attached as an exhibit to the Company’s Form 8-K dated March 8, 2013 and filed with the SEC on March 12, 2013).
3.3 Bylaws (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).
3.4 Certificate of Designation of Rights, Preferences and Privileges of Series A Convertible Preferred Stock (Attached as an exhibit to the Company’s Form 8-K dated December 3, 2013 and filed with the SEC on December 6, 2013). 
4.1 WestMountain Gold, Inc. 2012 Stock Incentive Plan (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).
10.1 Amended Porterfield Lease dated February 18, 2011 by and between Terra Gold Corp and Ben Porterfield (Attached as an Exhibit to the Company’s Form 10-K dated October 31, 2011 and filed with the SEC on December 20, 2011).
10.2 Amended and Restated Revolving Credit Loan and Security Agreement dated September 17, 2012 by and between WestMountain Index Advisor, Inc. and BOCO  (Filed as exhibits on Form 8-K/A dated September 11, 2012 and filed with the SEC on October 10, 2012. Investments, LLC). 
10.3 Amended and Restated Secured Convertible Promissory Note dated September 17, 2012 by and between WestMountain Index Advisor, Inc. and BOCO (Filed as exhibits on Form 8-K/A dated September 11, 2012 and filed with the SEC on October 10, 2012. Investments, LLC).
10.4 Loan Agreement dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (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).
10.5 Promissory Note dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (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).
10.6 Security Agreement dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (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).
10.7 Warrant for the Purchase of Common Stock dated May 7, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (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).
10.8 Loan Agreement dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (Attached as an exhibit to the Company’s Form 8-K dated June 27, 2013 and filed with the SEC on July 1, 2013).
10.9 Promissory Note dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (Attached as an exhibit to the Company’s Form 8-K dated June 27, 2013 and filed with the SEC on July 1, 2013).
10.10 Security Agreement dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (Attached as an exhibit to the Company’s Form 8-K dated June 27, 2013 and filed with the SEC on July 1, 2013).
10.11 Warrant for the Purchase of Common Stock dated June 27, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. (Attached as an exhibit to the Company’s Form 8-K dated June 27, 2013 and filed with the SEC on July 1, 2013).
10.12 First Amendment to Amended and Restated Secured Convertible Promissory Note dated August 1, 2013 by and between WestMountain Gold, Inc. and BOCO Investments, LLC. Attached as an exhibit to the Company’s Form 8-K dated August 29, 2013 and filed with the SEC on August 30, 2013.
10.13 Form of Warrant for the Purchase of Preferred Stock. (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.14 Form of Warrant for the Purchase of Common Stock  (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.15 Form of Subscription Agreement for the Purchase of Preferred Stock (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.16 2186 S. Holly Commercial Lease Agreement signed September 3, 2012 by and between James Baughman and 2186 S. Holly LLC. (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.17 Commercial Lease Amendment II signed June 5, 2013 by and between WestMountain Index Advisor, Inc. and Waterfront Property Management LLC.  (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.18 Commercial Lease April 1, 2011 by and between WestMountain Index Advisor, Inc. and Waterfront Property Management LLC. (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
10.19 Secured Promissory Note between WestMountain Gold, Inc. and BOCO dated February 14, 2014 (Attached as an exhibit to the Company's Form 10-Q/A dated
January 31, 2014 and filed with the SEC on March 26, 2014)
10.20 Letter Agreement between Raven Gold Alaska, Inc. and Terra Gold Corporation dated February 12, 2014 (Attached as an exhibit to the Company's Form 10-Q/A dated January 31, 2014 and filed with the SEC on March 26, 2014)
10.21 Convertible Promissory Note between WestMountain Gold, Inc. and Dessi dated December 17, 2013 (Attached as an exhibit to the Company's Form 10-Q/A dated January 31, 2014 and filed with the SEC on March 26, 2014)
10.22 Purchase Agreement between WestMountain Gold, Inc. and Lincoln Park Capital, LLC dated November 20, 2013 (Attached as an exhibit to the Company's Form 10-Q/A dated January 31, 2014 and filed with the SEC on March 26, 2014)
10.23 Registration Rights Agreement between WestMountain Gold, Inc. and Lincoln Park Capital, LLC dated November 20,2013 (Attached as an exhibit to the Company's Form 10-Q/A datedJanuary 31, 2014 and filed with the SEC on March 26, 2014)
10.24 Separation and Full Release of Claims Agreement between WestMountain Gold, Inc. and Mark Scott dated November 15, 2013 (Attached as an exhibit to the Company's Form 10-Q/A datedJanuary 31, 2014 and filed with the SEC on March 26, 2014)
10.25 Loan and Note Modification Agreement beween WestMountain Gold, Inc and BOCO Investments, LLC dated April 15, 2014 (Attached as an exhibit to the Company's Form 8-K dated April 23, 2014 and file with the SEC on April 24, 2014)
10.26 Amendment to Loan and Note Modification Agreement dated May 27, 2014 between WestMountain Gold, Inc. and BOCO Investments, LLC (Attached as an exhibit to the Company's Form 8-K dated June 2, 2014 and filed with the SEC on June 6, 2014)
10.27 Employment Agreement between WestMountain Gold, Inc. and James W. Creamer III effective September 8, 2014, executed and formally excepted on
September 15, 2014 (Attached as an exhibit to the Company's Form 8-K dated September 15, 2014 and filed with the SEC on September 19, 2014) 
10.28 Loan and Note Modification Agreement by and among WestMountain Gold, Inc, BOCO Investments, LLC, Minex Exploration, Slver Verde May Mining Co.,
Dale L. Rasmussen and Michael Lavigne (Attached as an exhibit to the Company's Form 8-K dated May 26, 2015 and filed with the SEC on June 1, 2015)
14.1 Code of Conduct & Ethics dated November 30, 2012. (Attached as an exhibit to the Company’s Form 8-K dated November 26, 2012 and filed with the SEC on November 30, 2012). 
21.1 Subsidiaries  (Attached as an exhibit to the Company’s Form 10-K dated October 31, 2013 and filed with the SEC on February 12, 2014).
31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer. 
31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. 
32.1 and 32.2 Section 906 Certifications. 
99.1 Audit Committee Charter dated November 30, 2012. (Attached as an exhibit to the Company’s Form 8-K dated November 26, 2012 and filed with the SEC on November 30, 2012).
99.2 Compensation Committee Charter dated November 30, 2012.  (Attached as an exhibit to the Company’s Form 8-K dated November 26, 2012 and filed with the SEC on November 30, 2012).
99.3 Nominations and Governance Committee Charter dated November 30, 2012. (Attached as an exhibit to the Company’s Form 8-K dated November 26, 2012 and filed with the SEC on November 30, 2012).
101 Interactive data files pursuant to Rule 405 of Regulation S-T. (1)

 

 

55