Annual Statements Open main menu
  1. Annual Statements
  2. » Companies
  3. » C-Bond Systems, Inc
  4. » Quarter Report: 2017 June (Form 10-Q)

C-Bond Systems, Inc - Quarter Report: 2017 June (Form 10-Q)


 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly period ended  June 30, 2017
 
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-53029

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

Colorado
26-1315585
(State or other jurisdiction
(IRS Employer File Number)
of incorporation)
  
   
1001-A E. Harmony Road, #366
  
Fort Collins, Colorado
80525
(Address of principal executive offices)
(zip code)

(970) 212-4770
(Registrant's telephone number, including area code)
 
 
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes þ  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company", in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐
 
Accelerated filer ☐
Non-accelerated filer ☐ 
 
Smaller reporting company þ
(Do not check if smaller reporting company)
  
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes o    No þ
  
The number of shares outstanding of the Registrant's common stock, as of the latest practicable date, July 28, 2017 was 9,106,250.
 
 
- 1 -
 

 
FORM 10-Q
WestMountain Alternative Energy, Inc.

TABLE OF CONTENTS
 
PART I  FINANCIAL INFORMATION
 
 
Item 1.  Condensed Financial Statements
 
 
 
Condensed Balance Sheets at June 30, 2017 (Unaudited) and December 31, 2016
3
      
 
Condensed Statements of Operations (Unaudited) for the three and six months
ended June 30, 2017 and 2016
                  4
 
 
Condensed Statements of Cash Flows (Unaudited) for the six months ended
June 30, 2017 and 2016
5
 
 
 Notes to the Condensed Financial Statements (Unaudited)
6
 
 
Item 2. Management's Discussion and Analysis and Plan of Operation
8
 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
10
 
 
Item 4. Controls and Procedures
10
 
 
 
 
PART II  OTHER INFORMATION
 
 
 
Item 1. Legal Proceedings
10
 
 
Item 1A. Risk Factors
10
 
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
17
 
 
Item 3. Defaults Upon Senior Securities
17
 
 
Item 4. Submission of Matters to a Vote of Security Holders
17
 
 
Item 5. Other Information
17
 
 
Item 6. Exhibits
17
 
 
Signatures
18
 
 
 
 
- 2 -
 

PART I  FINANCIAL INFORMATION

References in this document to "us," "we," or "Company" refer to WestMountain Alternative Energy, Inc.

ITEM 1.  CONDENSED FINANCIAL STATEMENTS
 
 
WestMountain Alternative Energy, Inc.   
Condensed Balance Sheets    
 
 
  
June 30,
    
December 31,
  
 
  
2017
    
2016
  
                    Assets
  
(Unaudited)
        
 
            
Cash
  
$
101,695
    
$
138,812
  
Certificates of deposit
    
155,924
      
155,854
  
Accounts receivable, related party
    
1,000
      
1,000
  
Income tax receivable
    
2,140
      
2,140
  
Prepaid expenses and other assets
    
5,333
      
1,667
  
      Total assets
  
$
266,092
    
$
299,473
  
 
                
   Liabilities and Shareholders' Equity
                
Liabilities:
                
   Indebtedness to related parties
    
500
      
800
  
   Accounts payable and accrued liabilities
    
7,405
      
16,500
  
      Total liabilities
    
7,905
      
17,300
  
 
                
Commitments and contingencies
                
 
                
Shareholders' equity:
                
   Preferred stock, $0.10 par value; 1,000,000 shares authorized,
    
-
      
-
  
      -0- shares issued and outstanding for 2017 and 2016
                
   Common stock, $0.001 par value; 100,000,000 shares authorized,
    
9,106
      
9,106
  
      9,106,250 shares issued and outstanding 2017 and 2016
                
   Additional paid-in-capital
    
366,659
      
366,659
  
   Accumulated deficit
    
(117,578
)
    
(93,592
)
      Total shareholders' equity
    
258,187
      
282,173
  
Total liabilities and shareholders' equity
  
$
266,092
    
$
299,473
  
 
 

The accompanying notes are an integral part of these unaudited condensed financial statements.
 
 
 
- 3 -
 

 
WestMountain Alternative Energy, Inc.
Condensed Statement of Operations (Unaudited)
For the three and six months ended June 30, 2017 and 2016
 
 
  
For the three months ended
    
For the six months ended
  
 
  
June 30,
    
June 30,
  
 
  
2017
    
2016
    
2017
    
2016
  
Operating Expenses
                        
Sales, general and administrative expense
  
$
12,490
    
$
8,047
    
$
24,056
    
$
21,953
  
  Total operating expenses
    
12,490
      
8,047
      
24,056
      
21,953
  
 
                                
Net loss from operations
    
(12,490
)
    
(8,047
)
    
(24,056
)
    
(21,953
)
 
                                
Other income
                                
  Interest income
    
35
      
35
      
70
      
70
  
Net loss before income taxes
    
(12,455
)
    
(8,012
)
    
(23,986
)
    
(21,883
)
Provision for income taxes
    
-
      
-
      
-
      
-
  
Net loss
  
$
(12,455
)
  
$
(8,012
)
  
$
(23,986
)
  
$
(21,883
)
 
                                
Basic and diluted income per share
  
$
(0.00
)
  
$
(0.00
)
  
$
(0.00
)
  
$
(0.00
)
Basic and diluted weighted average common
                                
   shares outstanding
    
9,106,250
      
9,106,250
      
9,106,250
      
9,106,250
  
 

 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
 
 
- 4 -

 

WestMountain Alternative Energy, Inc.
Condensed Statements of Cash Flows (Unaudited)
For the six months ended June 30, 2017 and 2016
 
 
  
For the six months ended
  
 
  
June 30,
  
 
  
2017
    
2016
  
 
            
Cash flows from operating activities:
            
Net loss
  
$
(23,986
)
  
$
(21,883
)
  Adjustments to reconcile net loss to net cash used in operating activities:
                
  Depreciation and write off of assets
    
-
      
2,280
  
    Changes in operating assets and operating liabilities:
                
      Interest income on certificates of deposit
    
(70
)
    
(70
)
      Accounts receivable, related party
    
-
      
(1,000
)
      Prepaid expenses and other assets
    
(3,666
)
    
569
  
      Accounts payable and accrued liabilities
    
(9,095
)
    
(11,400
)
      Accrued liabilities, related parties
    
(300
)
    
(300
)
        Net cash used in operating activities
    
(37,117
)
    
(31,804
)
 
                
        Net change in cash
    
(37,117
)
    
(31,804
)
 
                
Cash, beginning of period
    
138,812
      
186,462
  
 
                
Cash, end of period
  
$
101,695
    
$
154,658
  
 
 

The accompanying notes are an integral part of these unaudited condensed financial statements.
 
 
 
- 5 -
 
 
 
WestMountain Alternative Energy, Inc.
Notes to the Condensed Financial Statements
(Unaudited)
 
 
(1) Nature of Organization and Summary of Significant Accounting Policies
 
Nature of Organization and Basis of Presentation
 
WestMountain Alternative Energy, Inc. (the "Company") was incorporated in the state of Colorado on November 13, 2007 and on this date approved its business plan and commenced operations. 

Unaudited Interim Condensed Financial Statements
The accompanying interim financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the "SEC") for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These financial statements and notes herein are unaudited, but in the opinion of management, include all the adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. These financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2016 as filed with the SEC. Interim operating results are not necessarily indicative of operating results for any future interim period or for the full year.

Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. At June 30, 2017 and December 31, 2016, the Company held no such securities.
 
Income Taxes
Deferred income tax assets and liabilities are recognized for the expected future income tax consequences of events that have been included in the consolidated financial statements or income tax returns. Deferred income tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities using tax rates in effect for the years in which the differences are expected to reverse.

In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carry forwards. As of June 30, 2017 and December 31, 2016, the Company has provided a full valuation allowance on its deferred tax assets.

 

 
 
- 6 -

 
 
 
WestMountain Alternative Energy, Inc.
Notes to the Condensed Financial Statements
(Unaudited)
 
 
Recently Issued Accounting Pronouncements
 
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes previous revenue recognition guidance. This standard introduces a new five-step revenue recognition model in which an entity should recognize revenue. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. Companies will need to use more judgment and estimates than under the guidance currently in effect, including estimating the amount of variable revenue to recognize over each identified performance obligation. Additional disclosures will be required to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts. This standard will become effective for WestMountain Alternative Energy, Inc. beginning with the first quarter 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. Currently the Company has not recorded any revenue. As such, we do not expect this ASU to impact our financial reporting. Should we have revenue, we will review and disclose the expected impact at that time.
 

(2) Related Parties
 
The Company entered into an agreement with SP Business Solutions ("SP") to provide accounting and related services for the Company. The owner, Joni Troska, was appointed Secretary of WestMountain Alternative Energy, Inc. on March 19, 2010, and is considered to be a related party. Total expenses incurred with SP were $500 and $500 for the three months ended June 30, 2017 and 2016, respectively. Total expenses incurred with SP were $1,000 and $1,000 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017 and December 31, 2016, an accrual of $500 and $800, has been recorded for unpaid services, respectively.

 
 
- 7 -
 
 
 
 
 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
 
The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q.  This item contains forward-looking statements that involve risks and uncertainties.  Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements
 
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management.  Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements.  These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements.  Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.   However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly Annual Reports on Form 10-K, Quarterly reports on Form 10-Q and any Current Reports on Form 8-K.
 
General
 
We plan to make early stage investments that will bring alternative energy technologies to commercialization, and then actively manage these investments. Historically we have acted as a consultant with respect to client investments in alternative energy projects. We performed due diligence and ongoing research and evaluation with respect to projects on a fee basis. We are not currently generating revenues as a consultant.

EastMountain Alternative Energy, LLC, a related party, gave notice that, effective December 31, 2013 it would terminate the asset management services contract it had with us.  With the termination of the asset management services contract between us and EastMountain Alternative Energy, LLC, we no longer provide asset management services to any clients and have no current revenue source going forward. While we lost our only current source of revenue, we are pursuing new clients to replace the lost revenue stream and also are exploring the possibility of merging with an existing company who has revenues and, potentially, earnings. At this time, we have no definitive arrangements for either replacing our lost revenue or identifying a merger candidate.

As to our investments, we will not limit ourselves to any single area of alternative energy. We will look at any and all forms of alternative energy. We actively screen investments with emphasis towards finding opportunities with potential for long term success.

Our principal executive offices are located at 1001-A E. Harmony Road, #366, Fort Collins, Colorado 80525.

We have no specific plans at this point for additional offices.  

We have not been subject to any bankruptcy, receivership or similar proceeding.

 
 
- 8 -
 

Results of Operations
 
The following discussion involves our results of operations for the three and six months ended June 30, 2017 and 2016.

We had revenues of $-0- for the three and six months ended June 30, 2017 and 2016, respectively.

Operating expenses, consisting primarily of selling, general and administrative costs were $12,490 for the three months ended June 30, 2017, compared to $8,047 for the three months ended June 30, 2016. Operating expenses were $24,056 for the six months ended June 30, 2017, compared to $21,953 for the six months ended June 30, 2016. Most of the costs were attributable to professional and contract services. We do not anticipate these professional fees or contract services to increase significantly in the near future.

We had a net loss of $12,455 for the three months ended June 30, 2017, compared to a net loss of $8,012 for the three months ended June 30, 2016. We had a net loss of $23,986 for the six months ended June 30, 2017, compared to a net loss of $21,883 for the six months ended June 30, 2016.

Liquidity and Capital Resources

Our cash on June 30, 2017 was $101,695.  We had an additional amount of $155,924 in Certificates of Deposit. We anticipate that operating costs will range between $50,000 and $60,000, for the fiscal year ending December 31, 2017. These operating costs include contract services and all other costs of operations. We will use contract employees who will be paid on an hourly basis as each investment transaction is evaluated. However, the operating costs and expected revenue generation are difficult to predict.

Cash flows used in operating activities were $37,117 for the six months ended June 30, 2017, compared to cash flows used in operating activities of $31,804 for the six months ended June 30, 2016. We had revenues of $-0- for the three and six months ended June 30, 2017 and 2016. In March 2017, the Company paid annual fees of $8,000 to OTC Markets that was posted to the existing prepaid balance and was offset by $4,333 amortization expense to contract services on the income statement.
 
Cash flows provided by investing activities were $-0- for the six months ended June 30, 2017 and 2016, respectively.

Cash flows provided by financing activities were $-0- for the six months ended June 30, 2017 and 2016, respectively.

Over the next twelve months we do not expect any material capital costs in our operations.

Currently, we believe that we have sufficient capital in the next twelve months for our current level of operations. While we lost our only source of revenue, effective December 31, 2013, we continue to seek replacement clients, although we have no definite arrangements at this point. In the alternative, we may seek a merger candidate, although we have not identified any definitive acquisitions at this time. We do not anticipate needing to raise additional capital resources in the next twelve months.

Our principal source of liquidity historically was our cash flow generated from our operations. Our business activity is closely tied to the U.S. economy. Our ability to maintain profitability and positive cash flow is dependent upon our ability to successfully develop alternative energy investments, provide consulting to related parties with respect to their investments in alternative energy projects and our ability to generate revenues.

In any case, we try to operate with minimal overhead. Our primary activity will be to seek to develop alternative energy investments and, consequently, increase our revenues. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful.
 
 
 
- 9 -
 
 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
None.
 
 
ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures 
As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting 
There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.


 PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.

 
ITEM 1A. RISK FACTORS
 
 You should carefully consider the risks and uncertainties described below; and all of the other information included in this document. Any of the following risks could materially adversely affect our business, financial condition or operating results and could negatively impact the value of your investment.
 
 The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating result. In this case, the trading price of our common stock could decline and you might lose all or part of your investment.

 We have a limited operating history. While we have been profitable in the past, we were not profitable in our most recent fiscal year and recent fiscal quarter.  We may never be profitable again, and, as a result, we could go out of business.
 
We were formed as a Colorado business entity in November, 2007. While we have been profitable in the past, we were not profitable in our most recent fiscal year and recent fiscal quarter. We have lost our only current client and have not been able to replace the revenue. We cannot guarantee that we will be profitable again. If we do not return to profitability, we could go out of business.
 
We have relied upon one client for all of our revenues, which means that the loss of this client has severely impacted our operations. If we cannot replace the lost revenue or merge with a company, we could go out of business.

In the past, one client accounted for 100% of our revenues. This client was a related party, EastMountain Alternative Energy, LLC. EastMountain Alternative Energy, LLC gave notice to us that, effective December 31, 2013, it planned to terminate the asset management services contract it had with us.  We have been and could continue to be materially impacted by the loss of this client. The loss of this one client makes us subject to uncertain revenue results. With the termination of the asset management services contract between us and EastMountain Alternative Energy, LLC, we no longer provide asset management services to any clients and have no current revenue source going forward. While we have lost our only source of revenue, we have been seeking additional clients to replace our lost revenue, although we have no definite arrangements at this point. In the alternative, we may seek a merger candidate, although we have not identified any definitive acquisitions at this time. We cannot guarantee that we will be able to replace our lost revenue or to identify a merger candidate. If we cannot either replace our lost revenue or identify a merger candidate, we may eventually cease business. An investor could lose his entire investment.
 
 

 
- 10 -
 

 

Our lack of operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance. An investor could lose his entire investment.

We have a limited operating history. An investor has no frame of reference to evaluate our future business prospects.  This makes it difficult, if not impossible, to evaluate us as an investment. An investor could lose his entire investment if our future business prospects do not result in profitability.

If we do not generate adequate revenues to finance our operations, our business may fail.

We began generating revenues in 2008. As of June 30, 2017, we had a cash position of $101,695 and an additional $155,924 in Certificates of Deposit. We anticipate that operating costs will range between $50,000 and $60,000, for the fiscal year ending December 31, 2017. These operating costs include insurance, taxes, utilities, maintenance, contract services and all other costs of operations. We will use contract employees who will be paid on an hourly basis as each investment transaction is evaluated. However, the operating costs and expected revenue generation are difficult to predict.

However, the operating costs and expected revenue generation are difficult to predict. Since there can be no assurances that revenues will be sufficient to cover operating costs for the foreseeable future, it may be necessary to raise additional funds. Due to our lack of operating history, raising additional funds may be difficult.

Competition in the alternative energy industry is intense.
 
Our business plan involves making investments in alternative energy projects. This business is highly competitive. There are numerous similar companies seeking such investments in the United States of America. Our competitors will have greater financial resources and more expertise in this business. Our ability to develop our business will depend on our ability to successfully develop investments in this highly competitive environment. We cannot guarantee that we will be able to do so successfully.

The share control position of WestMountain Green, LLC will limit the ability of other shareholders to influence corporate actions.
 
             Our largest shareholder, WestMountain Green, LLC, of which Mr. Klemsz is a 16.8% member, owns 8,050,000 shares and thereby controls approximately 90% of our outstanding shares. Because WestMountain Green, LLC individually beneficially controls more than a majority of the outstanding shares, other shareholders, individually or as a group, will be limited in their ability to effectively influence the election or removal of our directors, the supervision and management of our business or a change in control of or sale of our company, even if they believed such changes were in the best interest of our shareholders generally.
 
Our future success depends, in large part, on the continued service of our President and Treasurer and the continued financing of WestMountain Green, LLC.
 
             We depend almost entirely on the efforts and continued employment of Mr. Klemsz, our President and Treasurer. Mr. Klemsz is our primary executive officer, and we will depend on him for nearly all aspects of our operations. In addition, WestMountain Green, LLC, is our only source of external financing. We do not have an employment contract with Mr. Klemsz, and we do not carry key person insurance on his life. The loss of the services of Mr. Klemsz through incapacity or otherwise, would have a material adverse effect on our business. It would be very difficult to find and retain qualified personnel such as Mr. Klemsz and a financing source to replace WestMountain Green, LLC. At the present time, there is no contractual commitment for WestMountain Green, LLC. to fund us.

Our revenue and profitability fluctuate, particularly inasmuch as we cannot predict the timing of realization events in developing future investments, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause volatility in the price of our shares.

We may experience significant variations in revenues and profitability during the year. The timing and receipt of income generated by bringing new alternative energy projects to market is event driven and thus highly variable, which contributes to the volatility of our revenue, and our ability to realize incentive income from our funds may be limited. We cannot predict when, or if, any realization of investments will occur. If we were to have a realization event in a particular quarter, it may have a significant impact on our revenues and profits for that particular quarter which may not be replicated in subsequent quarters. In addition, our equity investments are adjusted for accounting purposes to fair value at the end of each quarter, resulting in revenue attributable to our principal investments, even though we receive no cash distributions from our equity funds, which could increase the volatility of our quarterly earnings.
 
 
 
- 11 -

 

Difficult market conditions can adversely affect our funds in many ways, including reducing the value or performance of the investments we make in our investments and reducing the ability of our company to raise or deploy capital, which could materially reduce our revenue and results of operations.

If economic conditions are unfavorable, our projects may not perform well and we may not be able to raise money in existing or new projects. Our investments will be materially affected by conditions in the global financial markets and economic conditions throughout the world. The global market and economic climate may deteriorate because of many factors beyond our control, including rising interest rates or inflation, terrorism or political uncertainty. In the event of a market downturn, our businesses could be affected in different ways.

A general market downturn, or a specific market dislocation, may cause our revenue and results of operations to decline by causing:
 
●
The value of our investments to decrease;
●
lower investment returns, reducing incentive income; and
●
material reductions in the value of our ownership in investments.

Furthermore, while difficult market conditions may increase opportunities to make certain alternative energy investments, such conditions also increase the risk of default with respect to investments held by us with debt investments.
 
The success of our business depends, in part, upon proprietary technologies and information which may be difficult to protect and may infringe on the intellectual property rights of third parties.

We believe that the identification, acquisition and development of proprietary technologies are key drivers of our business. Our success depends, in part, on our ability to obtain patents, license the patents of others, maintain the secrecy of our proprietary technology and information, and operate without infringing on the proprietary rights of third parties. We currently do not license any patents. We cannot assure you that the patents of others will not have an adverse effect on our ability to conduct our business, that the patents that we license will provide us with competitive advantages or will not be challenged by third parties, that we will acquire additional proprietary technology that is patentable or that any patents issued to us will provide us with competitive advantages or will not be challenged by third parties. Further, we cannot assure you that others will not independently develop similar or superior technologies, duplicate elements of any technology we may own or design around it.
 
In order to successfully commercialize any proprietary technologies, it is possible that we may need to acquire licenses to, or to contest the validity of, issued or pending patents or claims of third parties. We cannot assure you that any license acquired under such patents would be made available to us on acceptable terms, if at all, or that we would prevail in any such contest. In addition, we could incur substantial costs in defending ourselves in suits brought against us for alleged infringement of another party's patents or in defending the validity or enforceability of our patents, or in bringing patent infringement suits against other parties based on our patents.

In addition to the protection afforded by patents, we may also rely on trade secrets, proprietary know-how and technology that we seek to protect, in part, by confidentiality agreements with our prospective joint venture partners, employees and consultants. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any such breach, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others.

 
- 12 -


Because we are smaller and have fewer financial and other resources than many alternative energy companies, we may not be able to successfully compete in the very competitive alternative energy industry.

Alternative energy functions as a commodity. There is significant competition among existing alternative energy producers. Our business could face competition from a number of producers that can produce significantly greater volumes of alternative energy than we can or expect to produce, producers that can produce a wider range of products than we can, and producers that have the financial and other resources that would enable them to expand their production rapidly if they chose to. These producers may be able to achieve substantial economies of scale and scope, thereby substantially reducing their fixed production costs and their marginal production costs. If these producers are able to substantially reduce their marginal production costs, the market price of alternative energy products may decline and we may not be able to produce alternative energy products at a cost that allows us to operate profitably. Even if we are able to operate profitably, these other producers may be substantially more profitable than us, which may make it more difficult for us to raise any financing necessary for us to achieve our business plan and may have a materially adverse effect on the market price of our common stock.

Increased alternative energy production in the United States could increase the demand for feedstocks and the resulting price of feedstocks, reducing our profitability.

New alternative energy projects are under construction throughout the United States. Increased production from alternative energy sources could increase feedstock demand and prices, resulting in higher production costs and lower profits.
 
Price increases or interruptions in needed energy supplies could cause loss of customers and impair our profitability.
 
Alternative energy production requires a constant and consistent supply of energy. If there is any interruption in a supply of energy for whatever reason, such as availability, delivery or mechanical problems, once we are in production, we may be required to modify our operations. If we were required to modify operations for any extended period of time, it would have a material, adverse effect on our business. Natural gas and electricity prices have historically fluctuated significantly. When we begin alternative energy production, we would expect to purchase significant amounts of these resources as part of our alternative energy production. Increases in the price of natural gas or electricity would harm our business and financial results by increasing our energy costs.
 
Risks Related to Government Regulation and Subsidization

The United States alternative energy industry is highly dependent upon federal and state legislation and regulation and any changes in that legislation or regulation could materially adversely affect our results of operations and financial condition. The elimination or significant reduction in the federal tax incentive could have a material adverse effect on our results of operations.
 
The production of alternative energy has historically been related to federal tax incentives. The elimination or significant reduction in the federal tax incentives on any or all alternative energy projects could negatively impact our proposed operations.

Lax enforcement of environmental and energy policy regulations may adversely affect the demand for alternative energy products.
 
Our success will depend, in part, on effective enforcement of existing environmental and energy policy regulations. Many of our potential customers are unlikely to switch from the use of conventional fuels unless compliance with applicable regulatory requirements leads, directly or indirectly, to the use of alternative energy. Both additional regulation and enforcement of such regulatory provisions are likely to be vigorously opposed by the entities affected by such requirements. If existing emissions-reducing standards are weakened, or if governments are not active and effective in enforcing such standards, our business and results of operations could be adversely affected. Even if the current trend toward more stringent emissions standards continues, our future prospects will depend on the ability of alternative energy to satisfy these emissions standards more efficiently than other existing technologies. Certain standards imposed by regulatory programs may limit or preclude the use of our products to comply with environmental or energy requirements. Any decrease in the emission standards or the failure to enforce existing emission standards and other regulations could result in a reduced demand for alternative energy products. A significant decrease in the demand for alternative energy products will reduce the price of such alternative energy products, which could adversely affect the ability to be profitable with any future operations and decrease the value of your stock.

 
 

- 13 -





Costs of compliance with burdensome or changing environmental and operational safety regulations could cause our focus to be diverted away from our business and our results of operations to suffer.
 
We expect to be subject to complicated environmental regulations of the U.S. Environmental Protection Agency and regulations and permitting requirements of the various states with respect to our alternative energy projects. These regulations are subject to change and such changes may require additional capital expenditures or increased operating costs. Consequently, considerable resources may be required to comply with future environmental regulations. We do not currently expect to incur material capital expenditures for environmental controls in this or the succeeding fiscal year. In addition, our proposed projects could be subject to environmental nuisance or related claims by employees, property owners or residents near our projects arising from air or water discharges. Environmental and public nuisance claims, or tort claims based on emissions, or increased environmental compliance costs could significantly increase our operating costs.
 
Any new alternative energy plants will be subject to federal and state laws regarding occupational safety. Risks of substantial compliance costs and liabilities are inherent in alternative energy production. Possible future developments, including stricter safety laws for workers and other individuals, regulations and enforcement policies and claims for personal or property damages resulting from operation of our projects could reduce the amount of cash that would otherwise be available to further enhance our business.
 
Risks Related to an Investment in Our Common Stock
 
The lack of a broker or dealer to create or maintain a market in our stock could adversely impact the price and liquidity of our securities.
 
We have no agreement with any broker or dealer to act as a market maker for our securities and there is no assurance that we will be successful in obtaining any market makers. Thus, no broker or dealer will have an incentive to make a market for our stock. The lack of a market maker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.
 
We have limited experience as a public company.

We have only operated as a public company since January, 2009. We trade on the OTC Bulletin Board under the trading symbol WETM. Thus, we have limited experience in complying with the various rules and regulations which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of you losing your entire investment in us.
 
 
We may be required to register under the Investment Company Act of 1940, or the Investment Advisors Act, which could increase the regulatory burden on us and could negatively affect the price and trading of our securities.

Because our proposed business involves the identification, acquisition and development of alternative energy investments, we may be required to register as an investment company under the Investment Company Act of 1940 or the Investment Advisors Act and analogous state law. While we believe that we are currently either not an investment company or an investment advisor or are exempt from registration as an investment company under the Investment Company Act of 1940 or the Investment Advisors Act and analogous state law, either the SEC or state regulators, or both, may disagree and could require registration either immediately or at some point in the future. As a result, there could be an increased regulatory burden on us which could negatively affect the price and trading of our securities.
 
 
 
- 14 -


 
We may be impacted by new regulatory requirements as a result of the passage of the Dodd-Frank Act.

In July, 2010, Congress enacted the Dodd-Frank Act, which instituted major changes in the regulatory regime for public companies, particularly those in the financial sector. At the present time, we do not believe that we will be impacted in a material way by this legislation. However, the implementation of the provisions of the Dodd-Frank Act are subject to regulations which have not yet been written and its statutory provisions have not been the subject of extensive judicial review, so we cannot guarantee that we may not come under its purview at some point in the future and be affected negatively by it.

Our stock has a limited public trading market and there is no guarantee a trading market will ever develop for our securities.

There has been, and continues to be, a limited public market for our common stock. An active trading market for our shares has not, and may never develop or be sustained. If you purchase shares of common stock, you may not be able to resell those shares at or above the initial price you paid. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following:

 *    actual or anticipated fluctuations in our operating results;

 *    changes in financial estimates by securities analysts or our failure to perform in line with such estimates;

 *    changes in market valuations of other companies, particularly those that market services such as ours;

*   announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

 *    introduction of product enhancements that reduce the need for the products our projects may develop;

 *    departures of key personnel.

Of our total outstanding shares as of June 30, 2017, a total of 8,325,000, or approximately 91.4%, will be restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.
 
As restrictions on resale end, the market price of our stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them.

Applicable SEC rules governing the trading of "Penny Stocks" limit the liquidity of our common stock, which may affect the trading price of our common stock.
 
Our common stock currently trades from time to time and is always below $5.00 per share. As a result, our common stock is considered a "penny stock" and is subject to SEC rules and regulations that impose limitations upon the manner in which our shares can be publicly traded.  These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock and the associated risks.  Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination for the purchaser and receive the written purchaser's agreement to a transaction prior to purchase.  These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.
 

 

- 15 -



The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations.

The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock.

Buying low-priced penny stocks is very risky and speculative.

Our common shares are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000, exclusive of the value of principal residence, or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.
 
Issuances of our stock could dilute current shareholders and adversely affect the market price of our common stock, if an active public trading market develops.
 
We have the authority to issue up to 100,000,000 shares of common stock, 1,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our common stock without stockholder approval. Although no financing is planned currently, we may need to raise additional capital to fund operating losses. If we raise funds by issuing equity securities, our existing stockholders may experience substantial dilution. In addition, we could issue large blocks of our common stock to fend off unwanted tender offers or hostile takeovers without further stockholder approval.

               The issuance of preferred stock by our board of directors could adversely affect the rights of the holders of our common stock. An issuance of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over the common stock and could, upon conversion or otherwise, have all of the rights of our common stock. Our board of directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve.
 
Colorado law and our Articles of Incorporation protect our directors from certain types of lawsuits, which could make it difficult for us to recover damages from them in the event of a lawsuit.
 
Colorado law provides that our directors will not be liable to our company or to our stockholders for monetary damages for all but certain types of conduct as directors. Our Articles of Incorporation require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require our company to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

We do not expect to pay dividends on common stock.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock in the foreseeable future. Earnings, if any, that we may realize will be retained in the business for further development and expansion.
 
 
     
- 16 -
 
 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.
 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
None.
 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
None.
 

ITEM 5.  OTHER INFORMATION
 
None.
 
 
ITEM 6.  EXHIBITS
 
Exhibit
Number
 
 
 
Description
 
 
 
3.1*
 
Articles of Incorporation
3.2*
 
Bylaws
    3.3***
  
Amendment to Articles of Incorporation
10.1**
 
Service Agreement With Bohemian Companies, LLC
31.1
 
Certification of CEO/CFO pursuant to Section 302
32.1
 
Certification of CEO/CFO pursuant to Section 906
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document*
101.INS
 
XBRL Instance Document
101SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
* Previously filed with Form SB-2 Registration Statement, January 2, 2008.
** Previously filed with Form 10-KSB Registration Statement, February 29, 2008
*** Previously filed with Form 10-Q, August 11, 2014

Reports on Form 8-K

No report was filed under cover of Form 8-K for the fiscal quarter ended June 30, 2017.

 
 
- 17 -
 
 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized August 10, 2017.


 
WESTMOUNTAIN ALTERNATIVE ENERGY, INC.,
a  Colorado corporation
 
 
 
 
 
 
By:
/s/ Brian L. Klemsz
 
 
 
Brian L. Klemsz, President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive, Accounting and Financial Officer)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 18 -