Explorer

The firm did not identify and appropriately address departures from GAAP related to the financial statement presentation and disclosures associated with the issuer's intangible assets. The issuer included an inaccurate disclosure in the notes to the financial statements that an impairment loss related to the intangibles had been recorded when in fact the issuer had not recorded an impairment. Further the issuer did not disclose the estimated aggregate amortization expense for each of the five succeeding fiscal years as required by FASB ASC Topic 350 Intangibles — Goodwill and Other and did not reflect the related amortization expense as part of the reconciliation of net income and net cash flow from operating activities in its statement of cash flows as required by FASB ASC Topic 230 Statement of Cash Flows. (AS 2810.30 and .31)

Apart from recalculating amortization expense the firm did not perform any procedures to test intangible assets. (AS 2301.08)

The issuer completed an asset acquisition including the purchase of certain intangible assets. The issuer engaged an external specialist to estimate the fair value of the acquired intangible assets. The firm did not determine the likely sources of potential misstatements associated with these acquired intangible assets to identify and test controls that addressed the risks of misstatement for the relevant assertions including controls over the accuracy and completeness of issuer-prepared information provided to the external specialist. (AS 2201.30 and .39)

The issuer completed an asset acquisition including the purchase of certain intangible assets. The issuer engaged an external specialist to estimate the fair value of the acquired intangible assets. The firm did not identify and test any controls over the subsequent valuation of these intangible assets. (AS 2201.39)

The firm's approach for testing the fair value of the intangible assets acquired in the asset acquisition was to review and test management's process. The following deficiencies were identified: · The firm did not evaluate the reasonableness of cash flow projections the issuer provided to the external specialist. Further the firm did not evaluate contrary evidence related to these projections. (AS 1210.12; AS 2810.03)

The firm's approach for testing the fair value of the intangible assets acquired in the asset acquisition was to review and test management's process. The following deficiencies were identified: · The firm did not test the relevance and reliability of data the external specialist used to develop an assumption. (AS 2502.26 .28 and .31)

The firm's approach for testing the fair value of the intangible assets acquired in the asset acquisition was to review and test management's process. The following deficiencies were identified: · The firm did not evaluate the reasonableness of an assumption developed by the external specialist. (AS 2502.26 and .28)

The firm's approach for testing the fair value of the intangible assets acquired in the asset acquisition was to review and test management's process. The following deficiencies were identified: · The firm did not perform any substantive procedures to test or in the alternative test any controls over the accuracy and completeness of issuer-prepared information provided to the external specialist. (AS 1210.12)

The issuer performed a qualitative assessment to determine whether any of the acquired intangible assets were impaired. The firm did not sufficiently evaluate whether the issuer considered certain relevant events or changes in circumstances in conformity with FASB ASC Topic 350 Intangibles —Goodwill and Other including the issuer's recurring operating losses net losses negative cash flows from operations and substantial doubt about the issuer's ability to continue as a going concern when evaluating the issuer's qualitative assessment. (AS 2810.03 and .30)

During the year the issuer acquired certain intangible assets and used an external specialist to determine their fair value. The firm's approach for testing the fair value of these assets was to review and test management's process. The firm did not evaluate the reasonableness of the forecasts the issuer provided to the external specialist. (AS 1210.12)

During the year the issuer acquired certain intangible assets and used an external specialist to determine their fair value. The firm's approach for testing the fair value of these assets was to review and test management's process. The firm did not evaluate the reasonableness of assumptions the external specialist developed. (AS 2502.26 and .28)

The firm selected for testing a control that included a review of the forecasted cash flows and related assumptions that the issuer used in its assessment of its intangible assets for impairment. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the cash flows and related assumptions. (AS 2201.42 and .44)

The firm's approach for substantively testing these intangible assets for possible impairment was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of the issuer's forecasted cash flows beyond reading an issuer-prepared memorandum. (AS 2501.16)

The issuer performed a qualitative assessment of possible impairment for one intangible asset and a quantitative assessment of possible impairment for another intangible asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the issuer's quantitative assessment beyond reading an issuer-prepared memorandum and inquiring of issuer personnel. (AS 2501.07)

The issuer performed a qualitative assessment of possible impairment for one intangible asset and a quantitative assessment of possible impairment for another intangible asset. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the issuer's quantitative assessment beyond reading an issuer-prepared memorandum and inquiring of issuer personnel. (AS 2501.07)

The issuer evaluated certain of its intangible assets for possible impairment using forecasted cash flows that it developed using various assumptions including when and at what amounts the issuer would be able to begin recognizing revenue. The firm did not evaluate beyond inquiry of management whether the issuer had a reasonable basis for the significant assumptions the issuer used including taking into account the issuer's ability to carry out its planned course of action for certain of these assumptions. (AS 2501.16 and .17)

The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 820 Fair Value Measurement. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures related to these intangible assets and determined that certain disclosures were omitted. The issuer corrected these omissions in the amended filing discussed below.