ClearPoint Neuro, Inc. Quarterly report pursuant to sections 13 or 15(d)

Quarterly report pursuant to sections 13 or 15(d)

Note 7 - Restatements

Note 7 - Restatements

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

7.	Restatements

In connection with the preparation of the Company’s financial statements as of June 30, 2013, and for the three and six months then ended, management, with the concurrence of the Company’s Audit Committee, determined that the Company should have used derivative liability accounting to account for the fair value of the warrants issued in the Company’s July 2012 Financing Transaction in recording the net proceeds received, due to the down round provision associated with the exercise price of the warrants. The Company previously recorded all of the net proceeds from the July 2012 Financing Transaction as equity. In addition, in accounting for the warrants issued in the January 2012 Financing Transaction, the Company did apply derivative liability accounting; however, the valuation model used by the Company to determine the fair value of the warrants only considered the net cash settlement feature which gives the warrant holder the right to net cash settlement in the event certain transactions occur. The Company also should have included other scenarios that did not result in application of the net cash settlement feature and should have considered the down round provision in determining the fair value of the warrants.

The Company has calculated the fair value of the warrants issued in both the July 2012 Financing Transaction and the January 2013 Financing Transaction for each relevant reporting period using the Monte Carlo simulation valuation method. The Company plans to file a Form 10-K/A for the year ended December 31, 2012 and a Form 10-Q/A for the quarterly period ended March 31, 2013, in which it will restate its financial statements to correct the non-cash errors related to derivative liability accounting for warrants issued in both the July 2012 Financing Transaction and the January 2013 Financing Transaction.

The impact of the restatements is reflected below for the periods indicated:

	As of December 31, 2012									As of March 31, 2013
	As previously									As previously
	reported			Adjustment			As restated			reported			Adjustment			As restated
Balance sheet:
Total assets	$	5,551,746		$	-		$	5,551,746		$	13,023,682		$	-		$	13,023,682

Current liabilities:
Derivative liabilities	$	789		$	2,128,302		$	2,129,091		$	3,771,310		$	39,328		$	3,810,638
All other current liabilities		4,179,186			-			4,179,186			2,518,349			-			2,518,349
Total current liabilities		4,179,975			2,128,302			6,308,277			6,289,659			39,328			6,328,987
All other liabilities		7,108,872			-			7,108,872			8,565,829			-			8,565,829
Total liabilities		11,288,847			2,128,302			13,417,149			14,855,488			39,328			14,894,816
Additional paid-in capital		60,953,692			(1,957,720	)		58,995,972			65,716,715			4,999			65,721,714
Accumulated deficit		(65,495,746	)		(170,582	)		(65,666,328	)		(66,445,749	)		(44,327	)		(66,490,076	)
Other stockholders' equity		(1,195,047	)		-			(1,195,047	)		(1,102,772	)		-			(1,102,772	)
Total deficit		(5,737,101	)		(2,128,302	)		(7,865,403	)		(1,831,806	)		(39,328	)		(1,871,134	)
Total liabilities and stockholders' deficit	$	5,551,746		$	-		$	5,551,746		$	13,023,682		$	-		$	13,023,682

	Year Ended December 31, 2012									Three Months Ended March 31, 2013
	As previously									As previously
	reported			Adjustment			As restated			reported			Adjustment		As restated
Statements of operations:
Operating loss	$	(3,129,278	)	$	-		$	(3,129,278	)	$	(1,367,032	)	$	-	$	(1,367,032	)
Gain (loss) on change in fair value of derivative liabilities		(789	)		(170,582	)		(171,371	)		1,497,443			126,255		1,623,698
All other income (expense)		(2,577,069	)		-			(2,577,069	)		(1,080,414	)		-		(1,080,414	)
Net Loss	$	(5,707,136	)	$	(170,582	)	$	(5,877,718	)	$	(950,003	)	$	126,255	$	(823,748	)
Net loss per share (basic and diluted)	$	(0.14	)	$	(0.01	)	$	(0.15	)	$	(0.02	)	$	0.00	$	(0.02	)

- Definition

The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period.

+ References + Details