WESTMOUNTAIN INDEX ADVISOR INC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Edgar Glimpses Via Acquire Media NewsEdge) 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 Index Advisor, Inc., "WMTN" or the "Company") is an exploration and development company that explores, acquires, and develops advanced stage mineral properties. The Company currently has rights to a joint venture interest in a high-grade gold system in the resource definition phase with 419,604 ounces of indicated and inferred gold based on the NI 43-101 Technical Report completed by Gustavson Associates on February 19, 2013. This high-grade gold system in total offers potential of greater than 1,000,000 ounces. WMTN's wholly owned subsidiary, Terra Gold Corporation ("TGC") is a joint venture partner with Raven Gold Alaska, Inc. ("Raven") on the high-grade gold system called the TMC project. The TMC project consists of 344 Alaska state mining claims covering 223 square kilometers. All government permits and reclamation plans for continued exploration through 2014 were renewed in 2010. On February 19, 2013, WMTN signed a Letter of Intent to acquire Raven's remaining interest in the joint venture for $6.0 million in cash and 750,000 shares of common stock, a transaction that would give WMTN 100% ownership of the TMC project at closing.

The TMC project is located in the mining friendly Tintina gold belt. Many of the top five gold producers in the World are investing billions in this region, which has estimated reserves of 180 million ounces.

We have budgeted expenditures for the next twelve months of approximately $10,300,000, depending on additional financing, for general and administrative expenses and exploration and development, including $5,000,000 to acquire the TMC project, to implement the business plan as described below. For further details see "Liquidity and Capital Resources" below. This will allow us to achieve 51% earn in under the JV Agreement, in the event we are unable to complete the acquisition of Raven's interest in the TMC project.

We will have to raise substantial additional capital in order to fully implement the business plan. If economic reserves of gold and/or other minerals are proven, additional capital will be needed to actually develop and mine those reserves. The Company must expend an additional $4.7 million over the next two years to achieve 80% earn in on the TMC project, unless we acquire the TMC project. Even if economic reserves are found, if we are unable to raise this capital, we will not be able to complete our earn in on this project.

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

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.

16 --------------------------------------------------------------------------------CORPORATE INFORMATION We were incorporated in the state of Colorado on October 18, 2007. Our principal executive office is located at 2186 S. Holly St., Suite 104, Denver, CO 80222, and our telephone number is (303) 800-0678. 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.

THE COMPANY'S COMMON STOCK Our common stock currently trades on the OTCBB Exchange ("OTCBB") 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 joint venture agreements, our reserve estimates, operating as a going concern, unique difficulties and uncertainties in mining exploration ventures, and a volatile market price for our common stock. These risks and uncertainties are discussed in more detail below in this item.

RESULTS OF OPERATIONS The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from period-to-period.

THREE MONTHS ENDED JANUARY 31, 2013 COMPARED TO THE THREE MONTHS ENDED JANUARY 31, 2012 (dollars in thousands) Three Months Ended January 31, 2013 2012 $ Variance % Variance Revenue $ - $ - $ - Cost of sales - - - Gross profit - - - Selling, general and administrative expenses 367 634 (267 ) 42.1 % Exploration expenses 551 525 26 -5.0 % Operating loss (918 ) (1,159 ) 241 20.8 % Other income (expense): Interest expense (73 ) (421 ) 348 82.7 % Total other expense (73 ) (421 ) 348 82.7 % Net loss $ (991 ) $ (1,580 ) $ 589 37.3 % EXPENSES Selling, general and administrative expenses for the three months ended January 31, 2013 decreased $267,000 to $367,000 as compared to $634,000 for the three months ended January 31, 2012. Exploration expenses for the three months ended January 31, 2013 increased $26,000 to $551,000 as compared to $525,000 for the three months ended January 31, 2012. The reduction in selling, general and administrative expenses was due to lower expenditures for consulting and contractors during the three months ended January 31, 2013.

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

NET LOSS Net loss for the three months ended January 31, 2013 was $991,000 as compared to a net loss of $1,580,000 for the three months ended January 31, 2012. The net loss for the three months ended January 31, 2013 included $182,000 of non-cash expenses. The reduction was due to lower expenditures during the three months ended January 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES We had cash of $353,000, a working capital deficit of approximately $3,251,000 as of January 31, 2013. In addition, we have $855,000 due under operating leases in 2013 and future years. Further, we have $10,700,000 in mining expenditures planned in 2013 and future years, including $6,000,000 to Raven for the acquisition of the TMC project.

We have budgeted expenditures for the next twelve months of approximately $10,300,000, depending on additional financing, for general and administrative expenses and exploration and development, including $5,000,000 to acquire the TMC project, to implement the business plan as described below. This will allow us to achieve 51% earn in under the JV Agreement, in the event we are unable to complete the acquisition of Raven's interest in the TMC project.

We will have to raise substantial additional capital in order to fully implement the business plan. If economic reserves of gold and/or other minerals are proven, additional capital will be needed to actually develop and mine those reserves. The Company must expend an additional $4.7 million over the next two years to achieve 80% earn in on the TMC project, in the event we are unable to complete the acquisition of Raven's interest in the TMC project. Even if economic reserves are found, if we are unable to raise this capital, we will not be able to complete our earn in on this project.

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

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 $10,300,000, depending on additional financing, for general and administrative expenses and exploration and development to implement the business plan as described above.

Expenditures $ Exploration costs $ 4,575,000 Property payments 125,000 Acquisition of TMC project 5,000,000 Total mining 9,700,000 General and administrative 600,000 Total $ 10,300,000 OPERATING ACTIVITIES Net cash used in operating activities for the three months ended January 31, 2013 was $745,000. This amount was primarily related to a net loss of $991,000, offset by depreciation and amortization and other non-cash expenses of $182,000.

18 --------------------------------------------------------------------------------INVESTING ACTIVITIES Net cash used in investing activities for the three months ended January 31, 2013 was $100,000. This amount was primarily related to capital expenditures of $100,000.

FINANCING ACTIVITIES Net cash provided by financing activities for the three months ended January 31, 2013 was $1,109,000. This amount was primarily related to the proceeds from the issuance of common stock of $1,140,000, offset by the repayment of debentures of $31,000 Our unaudited contractual cash obligations as of March 5, 2013 are summarized in the table below: Less Than Greater Than Contractual Cash Obligations Total 1 Year 1-3 Years 3-5 Years 5 Years Operating leases $ 854,800 $ 129,800 $ 350,000 $ 250,000 $ 125,000 Capital lease obligations 0 0 0 0 0 Note payable 2,108,248 2,108,248 0 0 0 Mining expenditures 4,700,000 4,700,000 0 0 0 Acquisition of TMC project 6,000,000 5,000,000 1,000,000 0 0 $ 13,663,048 $ 11,938,048 $ 1,350,000 $ 250,000 $ 125,000 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The application of GAAP involves the exercise of varying degrees of judgment. On an ongoing basis, we evaluate our estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies (see summary of significant accounting policies more fully described in Note 2 to the financial statements set forth in this report), the following policies involve a higher degree of judgment and/or complexity: Cash and Cash Equivalents We classify highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. Beginning December 31, 2010, through December 31, 2013, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. We have not experienced any losses in such accounts and believe it is not exposed to any significant risk for cash on deposit. As of January 31, 2013, we had no uninsured cash amounts.

Equipment Equipment consists of machinery, furniture and fixtures and software, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally 3-5 years.

Mineral Properties Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Costs to maintain the mineral rights and leases are expensed as incurred. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves.

We have access to the camp by airplane. There is no road access from camp to the project area where drilling and bulk sampling mining occurs. 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 January 31, 2013, there are no impairments recognized.

19-------------------------------------------------------------------------------- Alaska Reclamation and Remediation Liabilities TMC operates in Alaska. The State of Alaska Department of Natural Resources requires a pool of funds from all permittees with exploration and mining projects to cover reclamation. There is a $750 per acre disturbance reclamation bond that is required for disturbance of 5 acres or more and/or removal of more the 50,000 cubic yards of material. The Company may exceed the minimum requirements in 2013 and may to be required to file a reclamation bond.

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

Mineral Exploration 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. We charge to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

[ Back To Technology News's Homepage ]