SOMNUS Healthcare, Inc. signed a non-binding term sheet to acquire WestMountain Distressed Debt, Inc. from Westmountain Red, LLC and other shareholders in a reverse merger transaction on May 7, 2014. Post acquisition, WestMountain Distressed's shareholders will own approximately 25% of the combined company, SOMNUS shareholders would own approximately 59.1% of the company, and new investors would own approximately 9.8% of the combined company. SOMNUS would be liable to pay termination fees to affiliate to Westmountain Red, LLC if the transaction is not closed by September 30, 2014.

The name of WestMountain Distressed will be changed after the closing of the transaction which will be selected by SOMNUS. The new Board of Directors would consist of five members; three appointed by SOMNUS and two mutually selected by SOMNUS and affiliate of Westmountain Red, LLC.

The remaining 6.1% would be owned by an affiliate of Westmountain Red, LLC. The transaction requires that WestMountain Distressed should have minimum cash of $0.25 million on the balance sheet with no unpaid liabilities, SOMNUS completing a $0.5 million private placement and SOMNUS shareholders owning in excess of 1% after the closing of the acquisition sign a two year share lock up agreement, which permits sales after one year of up to 5% of each shareholder's position. The transaction is subject to satisfactory due diligence by both, SOMNUS and WestMountain Distressed and approval of SOMNUS shareholders.