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The firm did not perform any substantive procedures to evaluate whether the issuer's accounting for and presentation of convertible notes payable including warrants were in conformity with relevant GAAP. (AS 2301.08)

The issuer settled certain debt by issuing shares. The firm did not perform any substantive procedures to test this transaction. (AS 2301.08) Unrelated to our review the issuer reevaluated its (1) accounting for and presentation of convertible notes payable including warrants and (2) accounting for the settlement of debt and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements.

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

The firm did not perform any substantive procedures to test the issuer's compliance with these covenants. (AS 2301.08)

The firm did not perform procedures to evaluate the issuer's presentation and disclosure of the current and non-current portions of debt beyond obtaining and reviewing a checklist prepared by management. (AS 2301.08)

The firm selected for testing a control that consisted of the review of certain debt issuances and modifications. The firm did not perform any substantive procedures to test or in the alternative test any controls over the completeness of the population of debt issuances and modifications that the firm used to make its selections to test this control. (AS 1105.10)

For a certain loan payable the firm did not perform sufficient procedures to test the existence valuation rights and obligations classification and related disclosures as the firm's procedures were limited to (1) preparing a roll forward noting no change in the balance (2) agreeing the loan balance at the beginning of the year to prior year financial statements audited by the predecessor auditor and (3) agreeing the ending balance to the trial balance. (AS 2301.08)

The firm did not perform any substantive procedures to test the issuer's presentation and disclosure of its unused financing arrangements. (AS 2301.08)

To test certain debt the firm selected transactions exceeding a monetary threshold. The firm did not perform procedures to test the remaining population of transactions. (AS 1105.27; AS 2301.08 and .11)

The firm did not perform procedures to test or identify and test any controls over the accuracy of certain issuer-produced data it used in its substantive procedures. (AS 1105.10)

Certain of these notes contained default clauses related to the issuer's obligation to reserve a sufficient number of shares from its authorized and unissued common stock. The firm did not evaluate whether these notes were in default at the time of issuance and therefore the derivative liability should have been recorded at the time of issuance. (AS 2301.08; AS 2810.03)

The issuer reported certain convertible notes that included embedded conversion features that were effective after a certain period of time. The issuer recorded a derivative liability associated with these features after that period of time expired. The firm did not sufficiently evaluate whether the derivative liability should have been initially recorded on the issuance date of the convertible notes because it did not perform procedures to determine whether the feature met the definition of a derivative and whether the issuer had sufficient authorized and unissued shares to convert any of the notes at each note's issuance date and at year end. (AS 2301.08)

The firm did not perform any substantive procedures to test the issuer's compliance with certain financial debt covenants. (AS 2301.08)

The firm did not perform substantive procedures to test the debt beyond recalculating the balance based on an agreement that specified that the balance was past due. (AS 2301.08)

Subsequent to the issuance of the convertible notes with warrants the issuer also issued shares of common stock to the noteholder. The following deficiency was identified: · The firm did not perform substantive procedures beyond obtaining a copy of the securities purchase agreement to test the issuance of the shares to the noteholder. (AS 2301.08)

Subsequent to the issuance of the convertible notes with warrants the issuer also issued shares of common stock to the noteholder. The following deficiency was identified: · The firm did not evaluate an apparent discrepancy between the statement of stockholders' equity and the issuer's footnote disclosures regarding the issuance of these shares. (AS 2301.08)

During the year the issuer entered into certain transactions related to convertible debt and warrants. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate whether the issuer's accounting for and presentation of convertible debt including warrants were in conformity with relevant GAAP because for certain transactions its procedures were limited to reading an issuer-prepared memorandum without evaluating certain terms within the debt and warrant agreements. (AS 2301.08 and .11) In connection with our review the issuer reevaluated its accounting for these convertible debt and warrant transactions and concluded that misstatements existed that had not been previously identified. The issuer subsequently restated its financial statements to correct these misstatements and the firm revised and reissued its report on the financial statements.

The firm did not perform any procedures to test debt and a related transaction beyond obtaining agreements and performing recalculations of certain amounts. (AS 2301.08)