Explorer

During the year the issuer restructured certain of its debt and recorded an extinguishment loss. The following deficiencies were identified: · The firm's approach to substantively test the fair value of the restructured debt was to develop an independent expectation of the estimate. In developing its expectation the firm did not take into account certain requirements of FASB ASC Topic 820. (AS 2501.21)

During the year the issuer restructured certain of its debt and recorded an extinguishment loss. The following deficiencies were identified: · The firm did not perform any procedures to test the issuer's fair value disclosures for debt. (AS 2501.07)

The firm did not perform any procedures to test the issuer's fair value disclosures for certain debt. (AS 2501.07)

The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • The firm did not evaluate the appropriateness of the model the issuer used to value certain of the derivative liabilities given the complexity of the conversion options associated with the related convertible notes. (AS 2501.10)

The issuer issued convertible notes during the current and prior year. For certain convertible notes the issuer recorded both a derivative liability and beneficial conversion feature associated with the same conversion option of each convertible note. The following deficiencies were identified: • For certain convertible notes the firm did not test at inception the fair value of the derivative liabilities and associated debt discounts and the allocation of the proceeds to all of the features associated with the convertible notes. (AS 2501.07)

The issuer reported convertible debt that was measured at fair value. The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of a significant assumption used by the issuer to determine the fair value of the convertible debt. (AS 2501.16)

For certain debt repurchased during the year the firm did not perform any procedures to test the number of debt holders and aggregate principal amount of the repurchased debt and the fair value of consideration paid to the debt holders upon repurchase. (AS 2301.08; AS 2501.07)

During the year the issuer issued convertible notes with warrants. The issuer engaged an external specialist to determine the standalone fair values of the convertible notes and warrants to determine the allocation of proceeds and recording of debt and equity associated with the transaction. The following deficiency was identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions developed by the company's specialist to determine the fair values of the convertible notes and warrants. (AS 1105.A8b)