Offering Costs and Formation Transaction Expenses

6 Months Ended

Jun. 30, 2013

Offering Costs and Formation Transaction Expenses

Note H Offering Costs and Formation Transaction Expenses

In connection with the Consolidation and IPO the Registrant has incurred or will incur incremental accounting fees, legal fees and other professional fees. Such costs will be deferred and recorded as a reduction of proceeds of the Consolidation and IPO, or expensed if the Consolidation and IPO is not consummated. Certain costs associated with the Consolidation and IPO not directly attributable to the solicitation of consents and the IPO, but rather related to structuring the formation transaction, are expensed as incurred.

Through June 30, 2013, Registrant has incurred external offering costs of $3,669,736, of which the Registrant has incurred $359,051 and $830,055 for the six months ended June 30, 2013 and 2012, respectively. A total of $296,499 and $451,082 of these costs are in Due to Supervisor at June 30, 2013 and December 31, 2012, respectively. Additional offering costs for work done by employees of the Supervisor of $91,729 and $80,188 for the six months ended June 30, 2013 and 2012, respectively, were incurred and advanced by the Supervisor and have been or will be reimbursed to the Supervisor by the Registrant.

Correction of an Immaterial Error in the Financial Statements

The Registrant’s prior period financial results have been adjusted to reflect an immaterial correction which has no impact to the net change in cash reported on the statement of cash flows. During fiscal year 2012, the Registrant determined that certain costs related to the structuring of the consolidation transaction that were previously included in deferred offering costs should have been expensed in the periods incurred. The correction impacted the 2012, 2011 and 2010 periods and had accumulated to an amount of $538,123 as of June 30, 2012. Adhering to applicable guidance for accounting changes and error corrections, the Registrant concluded that the error was not material to any of the prior period financial statements. The correction resulted in immaterial changes to deferred costs and formation transaction expenses for the years ended December 31, 2011 and 2010, and for interim periods within those years and within 2012.

The Registrant applied the guidance for accounting changes and error corrections and revised the prior period financial statements presented.

The following table presents the effect this correction had on our prior period reported financial statements. Additionally, financial information included elsewhere in this Form 10-Q that is impacted by the adjustment have been revised, as applicable.


	For the six months ended June 30, 2012
	As reported			Adjustment			As adjusted
Formation transaction expenses	$	—		$	82,822		$	82,822
Net loss		(419,862	)		(82,822	)		(502,684	)
Net cash provided by operating activities		1,130,409			(82,822	)		1,047,587
Net cash used in financing activities		(3,773,392	)		82,822			(3,690,570	)
Net change in cash and cash equivalents		(3,590,915	)		—			(3,590,915	)

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