NOTE 10 –RESTATEMENT OF JUNE 30, 2013 AND SEPTEMBER 30, 2013 FINANCIAL RESULTS
During the fourth quarter of the year ended December 31, 2013, the Company identified certain accounting errors in the calculation of the fair value of the new terms on the HCIC seller carryback notes that were refinanced and initially reported in the Company’s periodic filing of its Form 10-Q as of June 30, 2013. Upon recalculation of the fair value of the new debt, as in accordance with ASC 470-50-40-10 and ASC 820, the fair value of the new debt was adjusted to $7,037,000, which compared to the previously calculated debt fair value of $6,164,000. The newly calculated fair value produced a one-time $873,000 loss, rather than the previously recorded gain in the quarter ended June 30, 2013 of $93,000. Management believes the impact of these items, both individually and in the aggregate, to the year ended December 31, 2013 and to prior interim periods of June 30, 2013 and September 30, 2013 previously presented was not material.
Also refer to Note 4 – Notes Payable, HCIC Seller Carry Back Notes – for further information of the effects of the debt extinguishment and refinancing and resultant $873,000loss for the year ended December 31, 2013.
Below is a summary of the restatement on our statements of operations that were previously filed as of the periods ended June 30, 2013 and September 30, 2013:
| As of June 30, 2013 | As of Sep 30, 2013 | ||||
| Profit and Loss | 3 Months | 6 Months | 9 Months | ||
| Net Loss As Reported | $(1,679,000) | $(3,859,000) | $(5,293,000) | ||
| EPS | $ (0.07) | $ (0.16) | $ (0.21) | ||
| Adjustments: | |||||
| Previously reported Gain on Debt Extinguishment | $ 94,000 | $ 94,000 | $ 94,000 | ||
| Corrected amount of Loss on Debt Extinguishment | $(873,000) | $(873,000) | $(873,000) | ||
| Amortization of Debt Discount | $ - | $ - | $ 80,000 | ||
| Total Adjustment | $(967,000) | $(967,000) | $(1,047,000) | ||
| Restated Net Loss | $(2,646,000) | $(4,826,000) | $(6,340,000) | ||
| Adjusted EPS | $(0.11) | $(0.19) | $(0.26) | ||
| Variance | $(0.04) | $(0.03) | $(0.05) | ||