The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
1. Nature of Organization and Summary of Significant Accounting
Policies
Nature of Organization and Basis of Presentation
WestMountain Company ("we", "our"
or the "Company"), was incorporated in the state of Colorado on October 18, 2007 and on this date approved its business
plan and commenced operations. The consolidated financial statements include the financial information of WestMountain Company
and its wholly owned subsidiaries, CytoBioscience, Inc., SolubleBioscience, Inc. and Cytocentrics Bioscience, GmbH. All significant
intercompany accounts and transactions have been eliminated.
On March 19,
2018, we entered into an Agreement of Merger and Plan of Reorganization, dated March 19, 2018, with WASM Acquisition Corp. (“WASM”),
a Colorado corporation and a subsidiary of WestMountain, and CytoBioscience, Inc and its subsidiaries (“CytoBioscience”).
Pursuant to the terms of the Merger Agreement, on March 19, 2018 (the "Closing Date"), WASM merged with and into CytoBioscience
(the "Merger"), with CytoBioscience surviving the Merger and becoming a wholly-owned subsidiary of WestMountain, and
the Stockholders of the CytoBioscience became Stockholders of WestMountain.
On the Closing
Date, all outstanding shares of capital stock of the CytoBioscience were cancelled and exchanged for 42,522,598 newly issued shares
of common stock of WestMountain ("Common Stock"). Also, on the Closing Date all outstanding warrants and stock options
of CytoBioscience were canceled.
Under U.S. generally accepted accounting
principles (“GAAP”), the Merger is treated as a “reverse merger” under the acquisition method of accounting.
For accounting purposes, CytoBioscience is considered to have acquired the Company. Consequently, the historical financial statements
reflect the operations and financial condition of CytoBioscience and operations of the Company beginning on the closing date of
the Merger.
As a result of the merger, the Company is
now a manufacturer of medical research instrumentation and related consumables (cells, microchips, reagents, etc.). In addition,
the Company now provides contract research (CRO) to the drug research and pharmaceutical market, with an emphasis on drug safety
and analysis. The Company is currently examining additional acquisitions that could possible expand its product portfolio.
Unaudited Financial Information
The accompanying financial information as of
September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 is unaudited. In the opinion of management,
all normal and recurring adjustments, which are necessary to provide a fair presentation of the Company's financial position
at September 30, 2018 and its operating results for the three and nine months ended September 30, 2018 and 2017, have been
made. Certain information and footnote data necessary for a fair presentation of financial position and results of operations in
conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. It is
therefore suggested that these financial statements be read in conjunction with the summary of significant accounting policies
and notes to financial statements included in: (i) the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") for the year ended December 31, 2017 on March 16, 2018; as well as in (ii) the Amendment Number
1 to the Current Report on Form 8-K/A filed with the SEC on August 24, 2018. The results of operations for the three and nine months
ended September 30, 2018 are not necessarily an indication of operating results to be expected for the year.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
Use of Estimates
The preparation of the condensed consolidated
financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Concentrations
During the three months ended September 30,
2018, two customers accounted for 71% of total revenue. During the three months ended September 30, 2017, two related party customers
accounted for 100% of total revenue. During the nine months ended September 30, 2018, one customer accounted for 48% of revenue.
During the nine months ended September 30, 2017, two related party customers represented 98% of revenue. At September 30, 2018,
one customer accounted for 88% of accounts receivable. At September 30, 2017, two related party customers accounted for 94% of
accounts receivable.
Foreign Currency Translation
For subsidiaries whose functional currencies
are not the U.S. dollar, the Company uses the average exchange rate for the year and the exchange rate at the balance sheet date,
to translate the operating results and financial position to U.S. dollar, the reporting currency, respectively. Translation differences
are recorded in accumulated other comprehensive income, a component of stockholders' equity. The foreign currency translation (loss)
included in comprehensive loss was $48 and $- for the three months ended September 30, 2018 and 2017, respectively. The foreign
currency translation income (loss) included in comprehensive income was $7 and $- for the nine months ended September 30, 2018
and 2017, respectively.
Going Concern
The consolidated financial statements are prepared
on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company anticipates incurring losses for the foreseeable future until such time,
if ever, that it generates significant sales from its current products, or products currently in development.
The Company’s cash and cash equivalents
at September 30, 2018 were $116 which is not sufficient to fund the Company’s operations for the next twelve months. Accordingly,
the Company will require additional cash to fund and continue its operations. As such the Company expects to seek business combinations
which could provide a platform for raising the necessary operating as well as research and development funds required until such
point that revenue for sales and services are sufficient to fund such activities. The Company anticipates raising additional funds
through collaborative arrangements, public or private sales of debt or equity securities, or some combination thereof. There is
no assurance that any such collaborative arrangement will be entered into or that financing will be available when needed in order
to allow the Company to continue its operations, or if available, on acceptable terms.
In the event financing is not obtained, the
Company may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If required
to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of its development programs or clinical
trials, these events could have a material adverse effect on its business, results of operations, and financial condition. These
factors raise significant doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial
statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should it be unable to continue as a going concern.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
Accounts Receivable
Accounts receivable are reduced, as needed,
by an allowance for doubtful accounts. The allowance for doubtful accounts reflects its best estimate of probable losses determined
principally on the basis of historical experience and specific allowances for known troubled accounts. All accounts or portions
thereof that are deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful
accounts. The Company determined that an allowance was necessary at September 30, 2018 of $115 representing accounts greater than
90 days. The Company determined that no allowance was necessary at December 31, 2017.
Property and Equipment
Laboratory (“Lab”) and office equipment
is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis over the estimated useful
lives of the assets as indicated in the following table:
Asset Category
|
No. of Years
|
|
|
Office furniture and equipment
|
3
|
Laboratory equipment
|
3-5
|
Computers and software
|
3
|
Leasehold improvements
|
Shorter of the estimated useful life of the asset or lease term
|
Expenditures for repair and maintenance, which
do not materially extend the useful lives of property and equipment, are charged to expense. When property or equipment is sold
or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting
gain or loss reflected in operations. Management periodically reviews the carrying value of its office equipment for impairment.
Goodwill and Intangible Assets
Goodwill represents the difference between
the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase
method of accounting. Goodwill is not amortized, but reviewed for impairment on an annual basis, during the fourth quarter, or
more frequently if an event occurs or circumstances change that would more likely-than-not reduce the fair value of the Company's
reporting units below their carrying amounts.
The Company has the option to first assess
qualitative factors to determine whether it is necessary to perform the two-step impairment test. If the Company elects this option
and believes, as a result of the qualitative assessment, that it is more-likely-than-not that the carrying value of goodwill is
not recoverable, the quantitative two-step impairment test is required; otherwise, no further testing is required. Alternatively,
the Company may elect to not first assess qualitative factors and immediately perform the quantitative two-step impairment test.
In the first step, the Company compares the fair value of its reporting units to their carrying values. If the carrying values
of the net assets assigned to the reporting units exceed the fair values of the reporting units, then the second step of the impairment
test is performed in order to determine the implied fair value of the Company’s goodwill. If the carrying value of the reporting
unit’s goodwill exceeds its implied fair value, then the Company would record an impairment loss equal to the difference.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
Definite-lived intangible assets, primarily
the Company’s patented technology, are amortized over the pattern in which the economic benefits of the intangible assets
are utilized and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
or asset group may not be recoverable. These assets are currently amortized over 10 years on a straight-line basis. Determination
of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset, which requires
the use of customer attribution rates and other assumptions. In the event that such cash flows are not expected to be sufficient
to recover the carrying amount of the definite-lived intangible assets, the definite-lived intangible assets are written-down to
their fair values.
Impairment of Long-Lived Assets
The Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount
may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment
or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level
for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset
group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount
of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds
its fair value based on discounted cash flow analysis or appraisals. As a result of these reviews, no impairment charge has been
recorded for the nine months ended September 30, 2018 and 2017, respectively.
Revenue Recognition
The Company recognizes revenue when each of
the following four criteria is met: 1) a contract or sales arrangement exists; 2) delivery has occurred or services have been rendered;
3) the price of the products or services is fixed or determinable; and 4) collectability is reasonably assured.
Equipment Sales
Revenue from the sale of instrumentation is
recognized at the time of shipment to the customer, provided no significant vendor obligations remain and collectability is probable.
Revenue from warranties are recognized ratably over the contractual term of the warranty agreement. Revenue from the sale of equipment
was $175 and $- during the three and nine months ended, September 30, 2018 and 2017, respectively. The Company received a 12-month
warranty from a customer for a previous equipment sale, for which $7 and $13 was recognized as revenue for the three and nine months
ended September 30, 2018, respectively. There was no warranty revenue for the same periods in 2017.
Contract Research
Revenue from contract research services is
recognized based on a fee per data point at the time services are performed and the final report is issued to the customer. Revenue
from contract research was $400 and $-, for the three months ended September 30, 2018 and 2017, respectively. Revenue from contract
research was $562 and $-, for the nine months ended September 30, 2018 and 2017, respectively.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
Consumables
Revenue from the sale of consumables is recognized
at the time of shipment to the customer, provided no significant vendor obligations remain and collectability is probable. Revenue
from sales of consumables was $13 and $- for the three months ended September 30, 2018 and 2017, respectively. Revenue from the
sale of consumables was $29 and
$-, for the nine months ended September 30,
2018 and 2017, respectively.
Grants
Revenue from grants is recognized at the time
of funding or over time based on the specific terms of the individual grants. The Company recognized $51 of income from grants
during the three months ended, September 30, 2018. The Company generated $182 for the nine months ended September 30, 2018. The
Company did not generate any grant income for the three and nine months ended September 30, 2017.
Shipping and Handling Charges
The Company includes the cost of shipping and
handling incurred in the importation of goods in cost of sales.
Product Warranty
The Company provides a 6 month limited warranty
to the end consumer on all products. The Company does not believe a product warranty reserve is required as of September 30, 2018
or September 30, 2017.
Research and Development
Research and development costs are charged
to expense as incurred. Research and development expenses consist primarily of expenditures related to the development of medical
research equipment, compensation and consulting costs. The Company incurred research and development expenses of $1,396 and $-
for the three months ended September 30, 2018 and 2017, respectively. The Company incurred research and development expenses of
$3,184 and $- for the nine months ended September 30, 2018 and 2017, respectively.
Fair Value of Financial Instruments
Short-term financial instruments, including
cash, accounts receivable, accounts payable and other liabilities, consist primarily of instruments with maturities of three months
or less when acquired. Management has estimated that the fair values of current assets and current liabilities approximate their
reported carrying amounts.
Income Taxes
Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal
of deferred tax liabilities during the period in which the related temporary difference becomes deductible.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
The Company is subject to U.S. federal, state,
or local income tax examinations by tax authorities for all tax filings since inception.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards
Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, which requires entities to recognize
revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March
2016, the FASB issued ASU 2016-08, Revenue Recognition - Principal versus Agent (reporting revenue gross versus net). Also, in
April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers Identifying Performance Obligations and Licensing,
and in May 2016 the FASB issued ASU 2016-12, Revenue Recognition – New Scope Improvements and Practical Expedients. These
standards are effective for interim and annual periods beginning after December 15, 2017, and may be adopted earlier. The revenue
standards are required to be adopted by taking either a full retrospective or a modified retrospective approach. The Company has
adopted the new standard as of January 1, 2018.
In February 2016, the FASB issued ASU No. 2016-02,
Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees
to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective
for interim and annual periods beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. The new standard
requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application,
with an option to use certain transition relief. The Company is currently evaluating the impact of adopting ASU 2016-02 on the
condensed consolidated financial statements.
2. Acquisitions
On March 19, 2018, the Company completed the
Merger with CytoBioscience, pursuant to which WASM Acquisition Corp. the Company’s former wholly owned subsidiary, merged
with and into CytoBioscience with CytoBioscience surviving as a wholly owned subsidiary of the Company.
The Company is finalizing the original valuation
and as a result there may be possible future adjustments to the purchase price allocation. The purchase was completed by converting
common stock, warrants, and preferred stock for equity of approximately $30,362.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
3. Property and Equipment
The following table provides the components
of property and equipment:
|
|
September 30,
|
|
December 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Lab equipment
|
|
$
|
514
|
|
|
$
|
-
|
|
Office and computer equipment
|
|
|
56
|
|
|
|
-
|
|
Leasehold improvements
|
|
|
22
|
|
|
|
-
|
|
|
|
|
592
|
|
|
|
-
|
|
Less: accumulated depreciation and amortization
|
|
|
(222
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment, net
|
|
$
|
371
|
|
|
$
|
-
|
|
Depreciation expense was approximately $116
and $- for the three months ended, September 30, 2018 and 2017, respectively.
Depreciation expense was approximately $222 and $2
for the nine months ended, September 30, 2018 and 2017, respectively.
4. Goodwill and Intangible Assets
The following table provides a rollforward
of the Company’s goodwill:
|
|
|
|
Adjustments to Goodwill
|
|
|
|
|
December 31, 2017
|
|
Acquisitions
|
|
September 30, 2018
|
|
|
|
|
|
|
|
Medical research instrumentation and CRO
|
|
$
|
-
|
|
|
$
|
6,490
|
|
|
$
|
6,490
|
|
Gross carrying amount
|
|
|
-
|
|
|
|
6,490
|
|
|
|
6,490
|
|
Accumulated Impairment Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Goodwill
|
|
$
|
-
|
|
|
$
|
6,490
|
|
|
$
|
6,490
|
|
The following table displays intangible assets:
|
September 30, 2018
|
|
|
December 31, 2017
|
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents
|
$
|
26,194
|
$
|
(1,967)
|
$
|
25,139
|
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense was approximately $917
and $- for the three months ended, September 30, 2018 and 2017, respectively.
Amortization expense was approximately $1,967 and
$- for the nine months ended, September 30, 2018 and 2017, respectively.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
5. Notes
Payable
In connection with the transaction described
in Note 1 and Note 2, the Company assumed the following notes payable.
Promissory Note
The Company has a note payable to Skyline Medical,
Inc. (“Skyline”) with a principal balance at September 30, 2018 of $1,113 bearing interest at 8% per annum. Interest
only payments are due monthly with a balloon payment due on February 28, 2020. The Company is currently in default with this note.
Past due interest was $15 as of September 30, 2018.
The Company has a note payable to Maynard Cooper
& Gale, LLP with a principal balance at September 30, 2018 of $125 bearing interest at 8% per annum. Interest and principal
are due monthly with the final payment due August 15, 2018. The Company is currently in default with this note as $20 of accrued
interest as of September 30, 2018 is past due.
Notes Payable – Related Party
Related Party 1
The Company has a note with a related party
with a principal balance at September 30, 2018 of $787 bearing interest at 5% per annum. Interest is payable quarterly commencing
on May 1, 2018 with a balloon payment due for the principal outstanding on February 26, 2021. Accrued interest at September 30,
2018 was $23. The Company is currently in default with this note as $20 of accrued interest as of September 30, 2018 is past due.
The Party has agreed to extend this note so that it is no longer in default.
Related Party 2
The Company has a note with a related party
with a principal balance at September 30, 2018 of $336 bearing interest at 5% per annum. Interest and principal due on quarterly
basis commencing on May 1, 2018 with a balloon payment due for the principal outstanding on May 1, 2019. Accrued interest at September
30, 2018 was $10. The Company is currently in default with this note as $150 of principal and $8 of accrued interest as of September
30, 2018 is past due.
The Party has agreed to extend this note so
that it is no longer in default.
Related Party 3
The
Company has note with a related party for up to $75 bearing interest at 12% per annum. Principal balance at September 30, 2018
was $38
. Interest and
principal are due immediately upon sufficient capital received through any Company investment activities.
Related Party 4
The Company has a note with a related party
with a principal balance at September 30, 2018 of $85 bearing interest at 12% per annum. Interest and principal are due immediately
upon sufficient capital received through Company investment activities.
Related Party 5
The Company has a note with a related party
with a principal balance at September 30, 2018 of $61 bearing interest at 3.75% per annum. The note is due immediately upon sufficient
capital received through any Company investment activities.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
6. Stockholder’s Equity
Common Stock
The Company is authorized to issue up to 100
million shares designated as common stock. The common stock has a par value of $0.001 per share.
Warrants
In connection with the merger on March 19,
2018, the Company issued an aggregate of 2,042,382 common stock warrants to investors and placement agents. The warrants were issued
with an exercise price of $0.95 per share. Warrants issued and outstanding prior to the merger were canceled.
The following table summarizes warrant activity
|
|
Number of Shares
|
|
Weighted-average exercise price
|
|
Weighted-average
remaining contractual
term (in years)
|
|
Aggregate
intrinsic
value (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2017
|
|
|
|
502,113
|
|
|
$
|
0.69
|
|
|
|
5
|
|
|
$
|
-
|
|
|
Exercisable at December 31, 2017
|
|
|
|
502,113
|
|
|
$
|
0.69
|
|
|
|
5
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
2,042,382
|
|
|
|
0.95
|
|
|
|
5
|
|
|
$
|
-
|
|
|
Exercised
|
|
|
|
415,800
|
|
|
|
0.95
|
|
|
|
5
|
|
|
$
|
-
|
|
|
Canceled
|
|
|
|
502,113
|
|
|
|
0.69
|
|
|
|
5
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2018
|
|
|
|
1,626,582
|
|
|
$
|
0.95
|
|
|
|
5
|
|
|
$
|
-
|
|
|
Exercisable at September 30, 2018
|
|
|
|
1,626,582
|
|
|
$
|
0.95
|
|
|
|
5
|
|
|
$
|
-
|
|
The fair value of warrants granted were estimated
using Black-Scholes option pricing model with the following weighted average assumptions during the nine months ended September
30, 2018 when the new warrants were granted.
Expected life (in years)
|
|
5.00
|
|
Expected volatility
|
|
67.64%
|
|
Risk free interest rate
|
|
2.65%
|
|
Expected dividend yield
|
|
-%
|
|
The fair value of warrants granted are estimated
using Black-Scholes option pricing model. The expected warrant term is based on the contractual term. The stock price is based
on a valuation performed by the Company. The expected volatility was benchmarked against comparable publicly traded companies.
The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option
at the valuation date. Dividend yield is based on historical trends.
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
7. Income Taxes
The Company had, subject to limitation as a
result of the merger, $17,730 and $- of net operating loss carryforwards at September 30, 2018 and 2017, respectively, which will
expire at various dates beginning in 2035 through 2038. In addressing the reliability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
are deductible.
The following table provides the components
of income (loss) from continuing operations before provision for taxes on income:
|
|
Three Months Ended
September 30,
|
|
Nine months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2018
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
(1,703
|
)
|
|
$
|
(58
|
)
|
|
$
|
(4,394
|
)
|
|
$
|
(150
|
)
|
Non-U.S.
|
|
|
3
|
|
|
|
-
|
|
|
|
(118
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,700
|
)
|
|
|
(58
|
)
|
|
|
(4,512
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
168
|
|
|
|
7
|
|
|
|
453
|
|
|
|
30
|
|
State
|
|
|
4
|
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit
|
|
$
|
172
|
|
|
$
|
7
|
|
|
$
|
465
|
|
|
|
30
|
|
Significant components of deferred tax assets
and liabilities are as follows:
|
|
September 30,
|
|
December 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
3,724
|
|
|
$
|
-
|
|
Allowance for doubtful accounts
|
|
|
24
|
|
|
|
-
|
|
Deferred revenue
|
|
|
2
|
|
|
|
|
|
Other
|
|
|
3
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
3,753
|
|
|
|
-
|
|
Less: valuation allowance
|
|
|
-3,723
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
$
|
30
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible asset amortization
|
|
$
|
932
|
|
|
$
|
-
|
|
Equipment depreciation
|
|
|
57
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
989
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
959
|
|
|
$
|
-
|
|
WestMountain Company
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
(expressed in thousands of U.S. dollars)
The Company had an income tax receivable of
$31 at September 30, 2018 and December 31, 2017, respectively.
8. Related Party
The Company is carrying notes payable with
five related parties. See Note 4. The Company also earned consulting fees of $- and $38 from related parties for the three months
ended September 30, 2018 and 2017, respectively. The Company also earned consulting fees of $19 and $120 for the nine months ended
September 30, 2018 and 2017, respectively.
9. Commitment and Contingencies
Operating leases
As a result of the merger agreement, the Company
entered into leases for office space in Birmingham, AL, Cologne, Germany, and San Antonio, TX. The Company’s monthly payments
under the lease agreements are approximately $22. Total rent expense for the three months ended September 30, 2018 was approximately
$65. Total rent expense for the nine months ended September 30, 2018 was $112. There was no rent expense for the three and nine
months ended September 30, 2017.
Economic Development Grant from the City
of San Antonio
On September 11, 2015, the Company entered
into an economic development agreement with the City of San Antonio (“City”) for $1,000 subject to the Company’s
commitment to invest significantly in San Antonio with respect to facilities and employment. Accordingly, the City made the first
installment of $500 on August 13, 2015. On March 29, 2016, the Company returned $100 of the $500 leaving a remaining balance of
$400.
On April 9, 2018, the Company and the City
terminated by mutual consent, the economic development agreement. The Company, as part of the termination, agreed to return the
$400 over a twenty-four-month period with first payment due within 60 days or September 8, 2018. The amount has been accrued and
is a component of accounts payable (short-term portion) and other long-term liability (long-term portion) as of September 30, 2018.
The Company is currently in default with this agreement, and accordingly, is in negotiation with the City to extend the first repayment
installment. However, the City is working with the Company to extend and renegotiate the payment agreement.
Legal Dispute with Dr. William Crumb,
Director of CRO Services
During January 2018, a legal dispute arose
between the Company and Dr. William Crumb, the Company’s Director of CRO services. The Company and Dr. Crumb disagreed on
whether there was proper authorization, to conduct research services using company resources for existing company customers for
the benefit of a company not affiliated with CytoBioscience, Inc. It was agreed that Dr. Crumb would become an independent consultant
and an agreement was reached, signed on May 1, 2018 whereby Dr. Crumb agreed to compensate the Company in the amount of $468 as
follows in order to settle the dispute:
|
·
|
$300 – to be paid over time from
Dr. Crumb’s on-going, but new CRO work
|
|
·
|
$168 – paid from current CRO studies
contracted for which one hundred percent (100%) is payable to the Company. This research is expected to be completed by the end
of the first quarter, 2019
|
|
·
|
To date, Dr. Crumb has paid $192 towards
the total balance, and accounts receivable includes $276 receivable from Dr. Crumb.
|
10. Subsequent Events
On November 5, 2018, Henry Bourg, the Company’s
CFO, resigned and the Company appointed Brian Zucker, CPA, as CFO, effective immediately. See the Company’s Current Report
on Form 8-K filed with the SEC on November 5, 2018 for further discussion.