Overview.

Outsourced due diligence, direct investing and portfolio management. We are open to retainer based direct investing with a part of the economics and have a detailed due diligence process outlined below.

Objectives.

• Find, diligence, then directly invest in exceptional companies with strong synergies.
• Have a far more experienced investment team conduct the diligence (and negotiate the deal if wished).
• Investment team must have a strong track record of profitability to increase the success rate.

Our Unique Advantages.

• Outstanding track record of picking profitable investments with high IRRs.
• Heavy experience in due diligence to prevent disasters and overpaying.
• Largest deal flow network in existence with over 23,000 of the better deals seen yearly.

Our 8-Areas Due Diligence Processes.

1. Corporate Materials.
_ a. Articles of Incorporation/Formation & Bylaws (and all amendments).
_ b. Minutes book (with all resolutions of shareholders, directors, committees).
_ c. Organizational chart.
_ d. List of shareholders (and number/type of shares held by each).
_ e. Options, voting trusts, warrants, puts, calls, subscriptions, and convertible securities.
_ f. Certificate of Good Standing from the Secretary of State of the state where founded.

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

3. Product or Service Assets/Liabilities.
_ a. Existing products or services and products or services that are under development.
_ b. Any regulatory related correspondence regarding its products or services.
_ c. Summary of material or frequent complaints or warranty claims.
_ d. Results of all studies and data on products or services existing or under development.
_ e. Top 10 largest customers by sales and sales descriptions for last three years.
_ f. Any material ununfilled orders for the last three years.
_ g. Material supply and service agreements.
_ h. Summary of purchasing and credit policies.
_ i. Material major competitors and any correspondence related to competitiveness or threats.
_ j. Schedule and explanation for any major customers lost over the last two years.
_ k. Current marketing plans, budgets, and marketing materials.

4. Financial Assets/Liabilities.
_ a. Most recent financial statements.
_ b. Schedule of all indebtedness.
_ c. Schedule of any contingent liabilities.
_ d. Which are fixed and variable expenses.
_ e. Inventory, physical assets, and locations.
_ f. Accounts Receivable & Payable.
_ g. Company's credit report.
_ h. Description of internal control procedures.
_ i. Description of depreciation methods and changes.
_ j. Sales & purchases of major capital equipment in last 5 years.
_ k. All leases of equipment.
_ l. Real estate leases, deeds, mortgages, title policies.
_ m. Any UCC (Uniform Commercial Code) filings.
_ n. Environmental audits, hazardous substances, permits and liabilities.

5. Human Resources Assets/Liabilities.
_ a. Schedule of employees, resumes, positions, salaries, bonus plans, years of service.
_ b. Schedule of all benefits, health and welfare insurance policies, or self-funded arrangements.
_ c. Any material threatened or filed employee liabilities in last three years.
_ d. Worker's compensation claim history.
_ e. Unemployment insurance claims history.
_ f. Employment, consulting, nondisclosure, nonsolicitation, or noncompetition agreements.
_ g. Personnel handbook, employee benefits including holiday, vacation, and sick leave policies.
_ h. Summary plan descriptions of qualified and nonqualified retirement plans.

6. Material Contract Assets/Liabilities.
_ a. Schedule of all subsidiary, partnership, joint ventures and obligations, with copies of all agreements.
_ b. Loan and financing contracts, line of credit, or promissory notes.
_ c. Security, indentures, collateral pledges, and similar contracts including guaranties.
_ d. Any installment sale contracts.
_ e. Distribution, sales representative, marketing, and supply contracts.
_ f. Options and stock purchase contracts involving interests in other companies.
_ g. Nondisclosure or noncompetition agreements.
_ h. Contracts between the company and any officers, directors, five-percent shareholders, or affiliates.
_ i. Letters of intent and contracts from any actual or abandoned mergers, acquisitions, or divestitures.
_ j. Standard quote, purchase order, invoice, and warranty forms.
_ k. All other material contracts.

7. Tax Assets/Liabilities.
_ a. Any tax credits or NOL remaining.
_ b. Federal, state, local, and foreign income tax returns for the last three years.
_ c. States sales tax returns for the last three years.
_ d. Employment tax filings for three years.
_ e. Excise tax filings for three years.
_ f. Any audit and revenue agency reports.
_ g. Tax liens and settlement documents for the last three years.
_ h. List of states/countries where authorized to do business (and annual reports for the last three years).
_ i. List of states or countries where property owned or leased, had employees, or business conducted.
_ j. Employees payroll & benefits records showing taxes fully paid.

8. Legal Assets/Liabilities.
_ a. Schedule of all pending or threatened litigation.
_ b. Insurance policies possibly providing coverage litigation.
_ c. Injunctions, consent decrees, or settlements and related documents.
_ d. Insurance policies (general liability, property, product liability, E&O, key-man, D&O, worker's comp, etc).
_ e. Insurance claims history for past three years.
_ f. Schedule of all law, accounting, consulting and similar firms used in the past five years.



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