Angel Knowledge Series

Early Stage Tech Company Streamlined Due Diligence Checklist.
A. Corporate Materials.
_ 1. Articles of Incorporation/Formation & Bylaws (and all amendments).
_ 2. Minutes book (with all resolutions of shareholders, directors, committees).
_ 3. Organizational chart.
_ 4. List of shareholders (and number/type of shares held by each).
_ 5. Options, voting trusts, warrants, puts, calls, subscriptions, and convertible securities.
_ 6. Certificate of Good Standing from the Secretary of State of the state where founded.

B. Intellectual Property Assets/Liabilities.
_ 1. Source code location, condition, platform, code quality/comments.
_ 2. Schedule of patents, patent apps, provisional apps, trademark and copyrights.
_ 3. Any patent clearance or rejection documents.
_ 4. Any claims or threatened claims by or against the company regarding intellectual property.
_ 5. All consulting agreements, "work for hire" agreements, or agreements regarding inventions.
_ 6. All licenses or assignments of intellectual property to or from the company.
_ 7. Important technical know-how & methods used to protect trade secrets and know-how.

C. Product or Service Assets/Liabilities.
_ 1. Existing products or services and products or services that are under development.
_ 2. Any regulatory related correspondence regarding its products or services.
_ 3. Summary of material or frequent complaints or warranty claims.
_ 4. Results of all studies and data on products or services existing or under development.
_ 5. Top 10 largest customers by sales and sales descriptions for last three years.
_ 6. Any material ununfilled orders for the last three years.
_ 7. Material supply and service agreements.
_ 8. Summary of purchasing and credit policies.
_ 9. Material major competitors and any correspondence related to competitiveness or threats.
_ 10. Schedule and explanation for any major customers lost over the last two years.
_ 11. Current marketing plans, budgets, and marketing materials.

D. Financial Assets/Liabilities.
_ 1. Most recent financial statements.
_ 2. Schedule of all indebtedness.
_ 3. Schedule of any contingent liabilities.
_ 4. Which are fixed and variable expenses.
_ 5. Inventory, physical assets, and locations.
_ 6. Accounts Receivable & Payable.
_ 7. Company's credit report.
_ 8. Description of internal control procedures.
_ 9. Description of depreciation methods and changes.
_ 10. Sales & purchases of major capital equipment in last 5 years.
_ 11. All leases of equipment.
_ 12. Real estate leases, deeds, mortgages, title policies.
_ 13. Any UCC (Uniform Commercial Code) filings.
_ 14. Environmental audits, hazardous substances, permits and liabilities.

E. Human Resources Assets/Liabilities.
_ 1. Schedule of employees, resumes, positions, salaries, bonus plans, years of service.
_ 2. Schedule of all benefits, health and welfare insurance policies, or self-funded arrangements.
_ 3. Any material threatened or filed employee liabilities in last three years (i.e. alleged wrongful termination, harassment, discrimination, labor disputes, requests for arbitration, grievance procedures currently pending or settled, etc).
_ 4. Worker's compensation claim history.
_ 5. Unemployment insurance claims history.
_ 6. Employment, consulting, nondisclosure, nonsolicitation, or noncompetition agreements.
_ 7. Personnel handbook, employee benefits including holiday, vacation, and sick leave policies.
_ 8. Summary plan descriptions of qualified and nonqualified retirement plans.

F. Material Contract Assets/Liabilities.
_ 1. Schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements.
_ 2. Loan and financing contracts, line of credit, or promissory notes.
_ 3. Security, indentures, collateral pledges, and similar contracts including guaranties.
_ 4. Any installment sale contracts.
_ 5. Distribution, sales representative, marketing, and supply contracts.
_ 6. Options and stock purchase contracts involving interests in other companies.
_ 7. Nondisclosure or noncompetition agreements.
_ 8. Contracts between the company and any officers, directors, five-percent shareholders, or affiliates.
_ 9. Letters of intent and contracts from any actual or abandoned mergers, acquisitions, or divestitures in last five years.
_ 10. Standard quote, purchase order, invoice, and warranty forms.
_ 11. All other material contracts.

G. Tax Assets/Liabilities.
_ 1. Any tax credits or NOL remaining.
_ 2. Federal, state, local, and foreign income tax returns for the last three years.
_ 3. States sales tax returns for the last three years.
_ 4. Employment tax filings for three years.
_ 5. Excise tax filings for three years.
_ 6. Any audit and revenue agency reports.
_ 7. Tax liens and settlement documents for the last three years.
_ 8. List of states/countries where authorized to do business (and annual reports for the last three years).
_ 9. List of states or countries where property owned or leased, or employees maintained, or business conducted.
_ 10. Employees payroll & benefits records showing taxes fully paid.

H. Legal Assets/Liabilities.
_ 1. Schedule of all pending or threatened litigation.
_ 2. Insurance policies possibly providing coverage litigation.
_ 3. Injunctions, consent decrees, or settlements and related documents.
_ 4. Insurance policies (general liability, property, product liability, errors and omissions, key-man, D&O, worker's comp, etc).
_ 5. Insurance claims history for past three years.
_ 6. Schedule of all law, accounting, consulting and similar firms used in the past five years.
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