Due Diligence

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					Due Diligence Checklist

                                                         Document
                                                         Received/              Doc.
Documents Required:                                        Date      Remarks   Coding

I. General

      Company annual reports and brochures

      Most recent business plan/strategic
       planning documents

      Incorporation papers, subsidiary/affiliate
       company descriptions

      Market studies/consultant reports

      Press releases and/or articles

      Resumes and biographies (include tenure
       with the Company, relevant industry and
       organizational    memberships       and
       community involvement)

      Employment      contracts      (if   any     of
       subcontractors)

      Organizational chart

      ISO certification materials, process papers,
       etc.

      Minutes of Company monthly board
       meetings    and    annual   shareholders’
       meeting (current and past year)




II. Properties and Equipment

      Description of real property owned or
       leased
             o   Location
             o   Size
             o   No. of employees by location
             o   Lease terms (if applicable)
             o   Principal activity/by location

      List of fixed assets (including cost, age,
       method of depreciation, remaining useful
       life)

      Capacity issues




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      Latest valuation / appraisal reports

III. Financial

      Five-year  historical audited   income
       statement, balance sheet and cash flow
       data

      Quarterly internal financial statements
       (budgets/variance analysis reports) for the
       previous two fiscal years

      Five-year projected income statement,
       balance sheet and cash flow data
           o     Provide assumptions and identify
                 reclassified  line    items    for
                 comparison to historical audit
           o     Detailed comments on historical
                 financial   performance       and
                 assumptions regarding projections
           o     Revenue growth
           o     Pricing and costs as they relate to
                 historical and future margins
           o     Capital    expenditures   (include
                 historical and anticipated future
                 capital expenditures)
           o     Working capital requirements
           o     Cash flow trends
           o     Nature         of        historical
                 extraordinary/excessive charges
           o     Details of all operating and SG&A
                 expenses
           o     Bad debt reserves
      Intercompany and related party issues

           o     Tax Issues
           o     Accounting policies
           o     Description of services provided
                 by corporate and associated
                 expenses
           o     Intercompany/related-party
                 revenue
           o     Intercompany/related-party       debt
                 and other obligations

      International tax issues (if applicable)

IV. Material Contracts

      Insurance policies

      Agreements with vendors, distributors,
       customers, licensors


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      List and description of all liens, security
       interests, etc.

      Leases of personal property or equipment

V. Legal

      Discussions of any past or threatened
       litigation

      Current or pending litigation

      Other relevant contracts

      Contingent liabilities

      Patents and trademarks

VI. Regulation

      List of licenses, permits, etc.          from
       provincial, city national authorities

      Regulatory compliance      of facilities or
       services

      Other industry or        company    specific
       regulatory issues




Products/Services and markets

      Description of products/services and markets
       in which they are sold

      Revenue     by     customer,            by      major
       product/service category

      Description of manufacturing process
       including the equipment/facilities required

      Sales and Marketing

      Marketing materials and product literature

      Sales infrastructure
           o Direct and indirect selling capabilities
           o Compensation/commission levels and
               structure




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     Characteristics of target market(s)

     Estimated current market            share   and
      projected market share

     Description of marketing efforts (eg. direct
      sales,           internet,       advertising
      initiatives/support) and sales cycle by
      product line

     Strategy for long-term growth/new market
      penetration (include projected growth
      organically and through acquisition, to the
      extent applicable)

     Customer retention statistics

Competition

     Principal competitors

     Differentiation vs. competitors (include
      barriers to entry, sustainable competitive
      advantages, etc.)

     Competitor market share estimates

     Other relevant competitive factors (including
      perceived intensity of competition and its
      potential impact on profitability)

Customers

     List of top customers and associated
      revenues for the last three years (please
      state in terms of % of total revenues)

     List major customers lost recently? List new
      major customers?

     Description of current customer contracts
      (include length of relationship)

     Geographic location of customers

     Total number of customers

     Domestic  vs.       international     customer
      breakdown

     Customer concentration statistics

     Customer loyalty statistics




       Page 4 of 5
Suppliers

      List of major suppliers, their locations and
       dollar amounts in terms of total purchases

      List major suppliers lost recently? List major
       new suplliers?

      List alternative sources of supply?

Employment Matters

      List of all employees by position (organized
       by functional category)

      Employee turnover experience/retention

      Description of all employee benefit plans and
       basic policies (include pensions, option
       plans, vacation, sick leave, average annual
       raise and other incentive programs and
       compensation)

      Use of external labor/contractors

MIS Systems/ Others

      Discussion of type and adequacy of MIS
       system

      Anticipated future capital investment

      Provide a discussion of service and support
       agreements




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Description: Barbarians at the Gates approach merge, acquire or leverage buyout. take your pick.