Due Diligence

[Scenium11]

Dear guys,

Anyone of you is expert enough to give the list of steps of the due diligence when taking over a company.

What are obviously the key points not be missed and to be carefully looked at in order to reduce the risks of being f**cked.

Cheers

[soundman]

Due diligence = Speak to a lawyer well versed in the particular area of interest.

Someone like Sunbelt perhaps...

Soundman.

[Catpian Slackbladder]

Check out Quanticoltd.com..... they do Due diligence process, not sure what the fees are for there service though....

[Scenium11]

seems that this subject is not getting results that i expected.

Is that most of you haven't experienced taking over a company and want to share the key points of achieving a good due diligence?

[meom]

I never bought a business in my life and probably never will but find your question interesting enough so after some google-ing this came up:

Assests & Liabilities; what are the specific assets and liabilities of the business? Can the seller provide you with a list of each asset and liability that you will take over when you own the business? Can the list be certified as accurate by an accountant?

Sales History; can the seller show what the sales performance has been on a monthly basis? Can these sales records be validated by your accountant? Do the records indicate that the business is growing?

Inventory: does the purchase include any inventory? Is the value of inventory identified as a separate item in the purchase price? Do you have a complete list of all inventory items that are part of the sales price? Do you agree with the inventory value?

Accounts Receivables; Are there accounts receivables included in the price of the business. If so do you have a complete list of accounts receivables and history of collection?

Contracts; Is the business bound by any contracts that will be transferred to you when you become the new owner? Do you understand the practical and legal contents of every contract that you will inherit? Are the relevant contracts acceptable to you?

Franchises; if you’re buying a franchise make sure you understand and are satisfied with transferability conditions of the franchise. Look for any special transfer and renewal fees that you may have to pay that were not disclosed to you in the purchase price.

Personnel; are there any key personnel that you must rely upon when you take over the business? Who are they and why do you need them? How long have they been with the company and what would happen if they were to leave the company on the day you take over?

Suppliers: who are your suppliers and has the business a good relation with its suppliers? What are the payment terms and conditions of your major suppliers?

Market Share; is the market that is being served by the business growing or levelling off? What has the current owner done to increase market share? Are there any future events that might affect your market?

Proprietary items; Are proprietary items such as patents, trademarks and copyrights part of the business and will they be transferred over to you? Are you legally protected from any proprietary legal action that could result from the prior owner’s misuse of the proprietary items?

Business Location; Do all aspects of the business location satisfy your needs. Are the terms and conditions of the lease clear and acceptable to you?

Last but not least: can you afford to lose your investment without losing your sense of humor

[torrenova]

Doesn't matter who you choose to do the work for you, they will all hide under the bedclothes if the shit hits the fan.

Example:

Someone wanted to buy a bar in Pattaya. He asked a prominent agency to assist with due diligence which was largely relating to the lease. Then, after paying, he finds out that the goal posts have shifted. The rent is more, the key money is more, the building is and has been in receivership for some time and latterly the lease is worthless. What does the company do ? Do they assist ? Not without more fees. I would have gone around and extracted my justice from them.

So the golden rule is that like thais, they will put their heads in the sand and hope it all blows over. Do your own homework. Believe no figures at all. Orders can be manipulated. Accountants may be able to clarify taxation matters but they too will likely disappear if they "get it wrong". I suggest that if you cannot do it yourself, you should not go into business here.

[Sunbelt Asia]

Dear guys,

Anyone of you is expert enough to give the list of steps of the due diligence when taking over a company.

What are obviously the key points not be missed and to be carefully looked at in order to reduce the risks of being f**cked.

Cheers

When we are hired to do due diligence into a possible takeover business. This is a standard list of questions we ask. Depending on the business, we always have more additional questions we need to ask and depending on the answers, we always have more additional probing questions.

HIGH DEGREE OF DANGER

This is a basic list, this is NOT all questions that are asked to a Seller.

Questions

Theses are the questions, items, and details which we require to conduct due diligence into your company. Some items which are not applicable, please respond by in putting “N/A”.

A. GENERAL INFORMATION

• Review organization chart and other information regarding structure of the Company, including subsidiaries and other affiliates, % ownership and jurisdiction of each organization.

• Review list of officers, directors and key management/supervisory personnel with appropriate background information regarding credentials.

• Review summary of number of employees with relevant information, by functional group (Sales, Marketing, R&D, etc.) with approximate total wage/salary cost of each category.

B. ORGANIZATIONAL MATTERS

• Review all corporate charter documents: Memorandum of Association, Articles of Association (by-laws) (including all amendments to date), if applicable, of the Company and any other corporation, partnership or other entity in which the Company has an equity interest, which relates to any business of the Company (an "affiliate"). Check for any unusual clauses, preemptive rights, cumulative voting, special majority and quorum requirements.

• Review any and all tax registration certificates

• Review any authorization (Binding Signing Power ) to bind the company in any legal documents

• Review any authorization necessary to transact business in foreign jurisdictions (if applicable).

• Review all minutes of meetings of boards of directors, committees (including executive and finance), and shareholders for the past five years.

• Review all stock transfer and certificate books, ledgers and records of the Company. For each class of stock, review listing of current shareholders indicating name, number of share owned and special restrictions (if any).

• For each class of stock review listing of holders of options, warrants, rights, etc. indicating related terms (issue date, exercise date and price, vesting, etc.). Also, review copies of form of warrant, option, right agreement, etc.

• Review agreements relating to the purchase, sale or issuance of securities, including any warrants or options.

• Review all agreements under which any person has registration rights for any securities of or preemptive rights for shares of capital stock of the Company.

• Review the following, if any: all agreements for purchase and sale of shares, share option agreements, and pledges of shares.

• Review information on any treasury stock acquisition or any obligation to issue or repurchase shares.

• For each class of debt, review listing of debt holders.

• Review details regarding all voting agreements, voting trusts and proxies relating to capital stock of the Company.

• Review listing and appropriate details regarding investments in other corporations or entities.

• Review information regarding all corporate and fictitious names used by the Company and any predecessors in the past five years.

• Review names, addresses, and contacts of Company's professional advisors, including attorneys, auditors, lenders and investment bankers.

• List of all shares of stock owned by the Company, if any

• Any and all partnerships or joint ventures in which the Company is a partner.

• Any and all business entities directly or indirectly controlled or managed by the Company

• A list of all offices and factories of the Company, including all branch offices and copies of any registrations of such branch offices with any Thai governmental authority or agency.

C. LITIGATION

• Review copies of the legal representation letters sent to the Company's auditors with Company responses, for the past five years. Review a summary of all litigation or arbitration, claims and proceedings (whether pending or threatened), to include worker's compensation actions, in which the Company or any affiliate or any officer or director of the Company is a party. Include a brief description of the following:

• Parties

• Nature of proceeding

• Date commenced

• Amount of damages and/or other relief sought

• Name of firm and attorneys representing Company or affiliate

• Get a legal opinion on the assessment of likely outcome

• Review all litigation files relating to any pending or threatened legal proceedings in which the company, affiliate, officer or director is a party.

• Review all consent decrees, injunctions, judgments, other decrees or orders, settlement agreements, and other agreements to which the Company is bound, that require the payment of money by the Company or prohibit any activity by the Company.

• Review reports, files, significant correspondence and documentation relating to any investigation or proceedings by any other governmental regulatory agency in respect to the Company.

• Review a summary of any ongoing tax disputes between the Company and the government, the Revenue Department, any government or taxing authority, and any foreign jurisdiction or foreign taxing authority.

• Review information regarding in-house counsel to the Company, including legal representation, coordination with outside counsel, etc. Review addresses and contacts of all outside law firms.

• Review any charges that may be pending against the Company by any government sectors regulatory body or agency.

• Review relevant information in the event that the Company's officers, directors or employees that have been involved in criminal proceedings regulatory commission violations or significant civil court litigation.

• Review, if any, legal problems that competitors have experienced, and if such problems will eventually confront the Company.

• Review any international legal issues.

• Copies of all Powers of Attorney issued by the Company which are currently in effect.

D. REGULATIONS AND PERMITS

• Review whether there are products that need governmental review and approval. If so, determine the current stage of the approval process.

• Review copies of all governmental licenses and permits required for the Company's business as currently conducted or planned (except environmental permits as covered above.)

• Determine which governmental regulations might impact the Company's business either domestically or in foreign countries.

• Review of the travel agency licenses (i.e. IATA and etc.)

E. INTELLECTUAL PROPERTY

• Review patents held and applications made by the Company and all related material correspondence and documentation (including file wrapper).

• Review trademarks held and applications made by the Company and all related material correspondence and documentation.

• Review copyrights held and applications made by the Company and all related material correspondence and documentation.

• Review design and model rights held and applications made by the Company.

• Review trade names used by the Company.

• Review licenses for any form of intellectual property held by or granted by the Company.

• Determine any pending or threatened infringement claims by or against the Company, and copies of any such claims for the last five years.

• Determine any important know how at the Company's disposal.

• A list of all trademarks, service marks, copyrights owned or licenses to or by the Company; and copies of all contracts, agreements, licenses, and registrations relating to the foregoing

• A list of all patents owned by the Company and patent applications filed by the Company.

F. FINANCIAL AND ACCOUNTING MATTERS

• Review, audited if available, financial statements and other financial documents of the Company and any affiliates for the past three fiscal years. Including (where applicable):

• Comparative financial results by major divisions

• Detailed breakdown of sales and costs

• Detailed breakdown of general and administrative expenses

• Detailed breakdown of selling and marketing expenses

• Detailed breakdown of working capital accounts

• Detailed breakdown of fixed assets

• Depreciation and capital expenditures (with particular emphasis on capitalized software development expenses, if applicable)

• Tax returns, Revenue Department reports or correspondence

• Review the following, if applicable:

• Chart of accounts and a description of accounting practices.

• Accounting procedure manuals and location and nature of accounting records.

• Determine if any seasonal bank borrowings are required.

• Determine any foreign exchange requirements, procedures for hedging and value of transactions done in foreign currency.

• If applicable, procure the name and address of auditors of Company and any prior auditors (including date of appointments, duration, remuneration).

• If applicable, procure accountants' management control letters concerning the Company and any responses by the Company for the past five years.

• If applicable, review all audit documentation, papers and communications between the Company and its auditors, other consultants or the Revenue Department and any internal audit reports.If applicable, review all documentation relating to material write-downs or write-offs by the Company of notes or accounts receivable or inventories, other than in the ordinary course of business.

• List of all banks and financial institutions in which the Company has an account.

G. RECEIVABLES

• For accounts receivable, review:

1. Analysis of total receivables due from customers, officers, employees and others

2. Aged trial balance of receivable accounts above; compare them to aging percentages for previous years and determine any trends, seasonality, etc.

3. Terms of sale

4. Number of customers

5. Names of large customers and amount of annual sales to each by product line; determine any special arrangements with any of these customers

6. Credit policies and comment on the effectiveness of credit department and significance of credit limits

7. Turnover data

• Determine collectibility of receivables and adequacy of loss reserves.

• Determine if receivables are discounted or pledged as collateral for borrowings.

H. LIABILITIES

• Determine if any assets are pledged as collateral.

• Determine if the Company's is in compliance with loan covenants.

• List of credit customers of the Company with outstanding amount owed to the Company by each customer

• Review details about all financial liabilities, recorded or contingent, including the general terms of all notes, bonds and mortgages with particular reference to personal guarantees and accelerated maturity upon change of control.

• Determine contingent liabilities such as:

1. Contracts and agreements

2. Price re-determination or renegotiations

3. Sales subject to service and warranty guarantees

4. Product liability

5. Unfunded past service costs of pension plans or unfunded retirement benefits.

• With respect to accounts payable, review an analysis of payables by type (vendor, taxes, payroll, etc.) and determine payment practices for each.

• A description of the Company’s bad debts and agreements that are expected to result in a loss.

I. BUDGETS AND FORECASTS

• Determine the budgeting process, including capital budgeting, if applicable.

• For each of the next three years (calendar or fiscal years ended), determine consolidated projections and separate business unit projections, on a quarterly basis, including:

1. Income statements, balance sheets and cash flow statements

2. Underlying assumptions including product/service introductions, market size, market share, pricing, volumes, discounts, ramp-up costs, etc.

3. Underlying assumptions for all major expense and capital expenditures, particularly R&D software development.

• Determine the amortization policy for any prepaid expenses or deferred charges.

• Determine how goodwill or other intangibles arose and how they are being amortized. Determine any issues regarding the "going concern value".

• Review details regarding the important metrics which management uses to run the Company (capacity utilization, sales per person, bench time, etc.). Review comparisons of these metrics for the past three years.

• Determine how the Company's metrics compare with the industry in general, and with peers/competitors.

J. TAXES

• Review all tax returns or copies of extensions of time within which to file such reports filed by the Company with the government, the Revenue Department, any government or taxing authority, and any foreign jurisdiction or taxing authority, for at least the past three fiscal years, and any years prior there to that remain open and subject to review by the Revenue Department or any other taxing authority. If applicable, review copies of all audit, determination and other correspondence pertaining thereto.

• Review copies of all tax-sharing and other tax-related agreements.

• Review all information related to any audit of any return or report filed by or on behalf of the Company for the last three fiscal years, and any pending audits for any prior periods that could affect the tax liability, credits or other tax attributes of the Company.

• Review for franchise or similar tax liabilities of the Company, a schedule setting forth, for each country in which such payments were made, the most recent period for which a franchise tax or similar tax payment was made, and the date on which each payment is due and payable each year.

• For each applicable Country, determine:

1. If there have been any government tax audits

2. If any adjustments made by Revenue Department have been reported to the government affected

3. If the corporate or individual tax returns have been amended to reflect Revenue Department adjustments

• Review any schedules showing the percentage of Taxable Income being reported to the Revenue Department in which the Company files returns (the sum of all apportionment factors).

• For personal and real property taxes, review a schedule setting forth, for each location in which such payments were made, the most recent period for which such tax payment was made, and the date on which such payment is due and payable each year.

• Review a schedule describing any ongoing tax disputes, together with copies of revenue agents' reports, correspondence, etc., with respect to any pending local, provincial or similar tax proceedings, with regard to open years or items relating to the Company.

• Review detailed reconciliations of the Company's effective tax rate for the past three years. Review an analysis of any deferred taxes.

• Review schedules reconciling book income to taxable income for the last three years.

• Review detail of the amounts and expirations of any carry-overs of net operating or capital losses, investment tax credits, foreign tax credits and other tax credit carryovers. Determine the tax basis for the Company's assets.

K. MATERIAL AGREEMENTS AND DOCUMENTATION

• Review all documentation relating to real property owned or leased by the Company (including, without limitation thereto, purchase agreements, leases, title policies, title reports, surveys, easements, rights of way, licenses and deeds). Note: for real property, title reports and surveys are especially important.

• Review information regarding all mortgages and other security documents relating to any of the properties or assets (real or personal) of the Company.

• Review all contracts with dealers, distributors, agents and others.

• Review general sales conditions of the Company; model contracts, orders and invoices.

• Review the form of product warranties of the Company.

• Review general description of warranty claims during the last three years, and determine significant or unusual claims.

• Review all contracts and agreements relating to the Company to which any officer, director, employee or stockholder of the Company is a party or in which any officer, director, employee or stockholder of the Company has an interest including secrecy, confidentiality, nondisclosure, assignment of inventions and non-compete agreements.

• Review all equipment leases (operating or capitalized) to which the Company is a party or is bound or in which the Company has an interest.

• Review all agreements and contracts concerning any acquisition or disposition in the past five years by the Company of any substantial properties or assets, whether real or personal, outside the ordinary course of business. Review all documents and agreements relating to any merger, consolidation or corporate division in the past five years in which the Company was a party or the surviving corporation.

• Review all loan agreements, guarantees, indentures, promissory notes, debentures, line of credit and related documentation in connection with any loan or other indebtedness of the Company.

• Review all loan agreements, guarantees, indentures, promissory notes, debentures, line of credit and related documentation in connection with any advances or loans made by the Company to an officer, director, employee or shareholder of the Company.

• Review all license and royalty agreements to which the Company is a party or in which the Company has an interest.

• Review all agreements and contracts between the Company and any affiliate including, without limitation thereto, any royalty and license agreements.

• Review all sales, marketing and distribution agreements to which the Company is a party or by which it is bound (including documentation with any brokers and other independent sales persons or entities).

• Review all contracts and agreements with suppliers of services, raw materials, finished or semi-finished materials, or products of the Company.

• Review all standard forms of purchase orders, sales orders, supply contract, service contracts and sales contracts used by the Company.

• Review all agreements to which the Company is a party or by which it is bound, for the delivery, manufacture or supply of goods or services.

• Review any other particular agreements based on Company business.

• Review government contracts and subcontracts, if any.

• Review all evidences of inter-company debt.

• Review all insurance policies, and a claims history and any correspondence between the Company and the insurer.

• Review all certificates of insurance (casualty, property, liability, errors and omissions, officer and director, etc.).

• Determine if coverage has changed during the past three years.

• Review any other contracts, agreements or documents material to the business of the Company or any affiliate including management service and tax sharing agreements, performance guarantees, bonds and indemnification agreements, noncompete and confidentiality agreements.

• Review any contracts with independent or self-employed consultants.

• A copy of any agreements restricting or otherwise affecting transfer or other rights pertaining to the Company shares.

• Copies of all pledges, hire-purchase contracts, conditional sales contracts, mortgages, assignments, and other security agreements that the Company has entered into with respect to assets it has purchased, owns, or possesses, and assets it has sold or otherwise disposed of.

L. SALES AND MARKETING

• Determine how potential customers are identified.

• Review and determine detail regarding the average dollar sale and time requirements to close a sale. Call customer references.

• Review a list of the top 10 customers for each major business segment and determine the total sales for the past three fiscal years.

• Review a list of the top 10 suppliers.

• Review samples/copies of all product brochures, marketing materials, promotions and advertisements.

• Review the sales pipeline process and determine the current sales backlog.

• Review the Company's major type of customers for each major segment - by type of business, domestic vs. foreign or other classification you deem relevant. Determine if the profile of future customers will change.

• Review the tenure of the average customer, including whether there are continuing contracts with customers. Determine whether special terms are offered to significant customers.

• With particular emphasis on new products/services, determine future product/service trends addressing projected marketplace, features, cost, technical aspects and competition.

• For each major business segment, review market share information and trends.

• Review the sales and distribution strategy for domestic sales and for foreign sales (if applicable) by market segment and product line.

• Review distribution channels/resources (personnel, OEM's, distributors, VAR's, systems integrators, etc.) by name, address, dollar sales, percentage of total sales and commission percentage.

• For each major business segment, review a sales breakdown (dollars and percent) by distribution channel.

• Review detailed information with respect to service and support.

• Determine whether future changes in sales or distribution strategies are required.

• Review any cyclical factors or seasonal factors with respect to the sale of the Company's products and services.

• Review the Customer Support and Service organization, including:

• Functions

1. Personnel

2. Pre-sales and technical support

3. Post-sales assistance

4. Compliance resolutions

• Review information on complaints, efficiency and effectiveness of service/support function.

• Determine whether any support activities are billed to customers, on what basis, and if this is treated as cost recovery or a profit center.

• Determine any significant quality problems within the past 36 months and describe problems or returns by product line.

• With respect to competition, for each major business segment review the following information:

1. Determine each major competitor (size, products, profitability, financial strength, organization, etc.). Evaluate each of the competitor's strengths and weaknesses in each product line.

2. Review any significant price, cost effectiveness or the technical differentials among competing products to present an anticipated competitive market share.

3. Review the most frequent basis of competition (price, quality, features, etc.) to other factors such as number of suppliers, methods of distribution, etc. that shed light on the nature and strength of competition.

M. INSURANCE

• Review information with respect to self-insurance, if any.

• Review information with respect to past loss and claims experience.

• Review information concerning whether a change in control will cause additional cost for Workers Compensation Insurance, unemployment insurance or other insurance.

• Determine if there are any unusual risks, products or events that the Company has been unable to insure.

• Determine if any insurance is written on a "claims made" basis.

• Review information concerning the Company's reporting and reserving practices.

• Determine if any insurance policy aggregates have been penetrated or exhausted.

• Review who in the Company is responsible for risk management and insurance.

N. EMPLOYEE, DEFERRED COMPENSATION AND BENEFITS MATTERS

• A list of any sums due from the Company to any shareholder, director, or officer as and for wages, reimbursement of expenses, compensation for services rendered, pensions, severance pay, or employment benefits or remuneration of any nature whatsoever

• Review all collective bargaining and labor agreements to which the Company is a party or is bound. Review a list of all officers and key employees of the Company, together with the following information on, each officer or employee:

 salary; ( previous five years of employment history; and © description of present duties and responsibilities.

• Determine if there are any management perquisites or other arrangements, other than those listed in items below, to include, without limitation thereto, any bonus plans or other incentive compensation arrangements maintained by the Company.

• Review any stock option or other stock appreciation, phantom stock and other similar plan maintained by the Company.

• Review all employee benefit plans, trusts, determination letters, Revenue Department filings (including tax returns), filings and actuarial reports relating to any deferred compensation arrangement to which the Company is a party or by which the Company is bound.

• Review all documentation relating to any severance arrangement between the Company and any employee, officer, director or consultant of the Company.

• Review all documentation relating to any welfare benefit plan, health insurance, disability insurance, life insurance or other benefits given to employees, officers, directors or consultants of the Company.

• Review any employment contracts of the Company, for each category of employees, and indication of any difference for individual employees. Review all individual employment contracts.

• Review all standard agreements of the Company which employees are required to sign, including:

o Confidentiality agreements

o Invention assignment agreements

o Conflict of interest declarations

o Non competition agreements

• Review all significant correspondence with labor and social security authorities for last three years.

• Review any contracts with independent or self-employed consultants.

• Review any agreements currently in effect between the Company and any former officer, director or employee.

• Review any liability for termination payments to employees.

• Review all brochures, information, booklets, policies and procedures manuals, internal regulations, or other written material given to employees or potential employees of the Company to acquaint them with the Company's business and with services, compensation and benefits offered to employees.

• Determine if there are any labor concerns, including whether any strikes are threatened or pending, all current disputes and negotiations.

• Review all correspondence with labor unions and all memoranda regarding communication with such labor unions or union employees.

• Review the history for the last three years of any union negotiations, number of employees, turnover, absentee rates, and distribution.

• Review any current compensation plans, including incentives and deferred compensation plans, with particular attention to the ten highest compensated employees.

• Review all employment non-compete and other agreements or contracts with any employee.

• Review any current proceedings before any Labor Department.

• Review the Company's Code of Conduct Manual or other personnel manual and determine if procedures exist to monitor compliance with these policies.

• Determine if any key management positions are currently vacant.

• Review information with respect to the Company's compliance with the Foreign Corrupt Practices Act.

• Determine general working conditions, employee morale, and turnover.

• Review the Company's policies for severance, vacations, holidays, leaves of absence, sick days, personal days, and other similar programs.

• Determine the extent to which the Company Reviews post-retirement medical or other benefits, including the current liability with respect to such benefits and what it is projected to be in the future.

• Determine whether any officers or directors been involved in criminal proceedings, regulatory commission violations, or major civil litigation.

• Review information with respect to any recent key personnel losses to competitors.

• Review the Company's process for recruiting new employees.

• Review any past or contemplated closings/layoffs and associated costs.

O. PERMITS AND LICENSES

• Review all environmental permits and licenses required for the Company's' activities including licenses with respect to manufacture, labeling and sale of products.

• Review the history and current status of permits Company's compliance with and licenses.

• Review procedure for transfer of licenses or permits when the business is sold - Assets vs. Stock.

• List of all governmental licenses and permits of the Company

• A list of all applications, if any, to governmental authorities for all licenses and other authorizations necessary to the conduct of the business now conducted by the Company.

• A list of any applications submitted by the Company to any governmental authority including any such applications which were denied by the relevant governmental authority.

• Copies of all work permits of any aliens who are or were employed by the Company and/or worked for the Company.

P. RELATIONS WITH AUTHORITIES

• Description of Company's relationship with environmental authorities.

• Description of obligations of Company to file reports or studies with authorities with copies of reports.

• Description of any inquiries, inspections, examinations, investigations, etc., by environmental authorities and results; copies of documentation/correspondence; description of suspensions or withdrawals of any permits or licenses; significant correspondence for the last five years.

• Description of any surrounding/adjacent conditions which could give rise to liability for the Company.

• Description of insurance arrangements and environmental claims history.

• Copies of all financial statements of the Company filed with Ministry of Commerce.

• Copies of all tax receipts.

• Copies of all tax reports of the Company

• Description of any injuries or illnesses of personnel, accidents, during the last five years, with effect upon environmental matters.

• Description of any other relevant matters with respect to the environment.

Q. RELATIONS WITH PRIVATE SECTORS

• List of names of all service providers who have been employed by the company (legal consultants, insurance companies, accountants, health services, security services, and advertising agencies)

R. REAL ESTATE AND EQUIPMENT

• Copies of all title deeds (front and back) to land leased by the Company

• Review all real property owned by the Company (and appraisals, if available); nature of the title held, and any mortgages, liens or encumbrances on the property; title documents confirming ownership; report by person authorized to conduct title searches.

• Review any property rented or leased by the Company; nature of leasehold interest; copy of the leases; description of significant or unusual clauses.

• Check compliance with land use planning and zoning laws and any other laws affecting real estate.

• Check limitation, if any on the Company's real estate or business as a result of historic preservation or similar laws or regulations.

• Review any title insurance or title searches.

• Review all renting/leasing agreements with respect to machinery, equipment and automobiles not owned by the Company.

• Check for compliance of use of machinery and equipment with applicable laws and regulations, and in particular, safety and environmental regulations.

• Review all documents evidencing liens and security interests granted on machinery and equipment.

• Review the Company's depreciation policy.

• Review a list of surplus or idle equipment. Summarize annual maintenance expenditures.

• Determine if there are any related party transactions in connection with plant or facilities.

• Review the ownership and use history of each parcel of real property and leased property used by the Company in the last ten years.

S. MISCELLANEOUS

• Review all significant articles from financial or other publications including market research, consulting reports, industry newsletters and competitive analyses, concerning the Company or its competition.

• Review all internal or external analysis/research regarding competitive products/technologies.

• Review all customer and independent contractor complaints or demands received within the last twelve months with respect to the Company or the services thereof.

• Review all complaints of residents and business establishments near any of the facilities involved in the business of the Company received within the last twelve months.

• Copies of all contracts, Copies of all Foreign Exchange "Tor Tor 3" done by the company.

• Review all complaints to the Company received within the last twelve months regarding any employee or agent associated with the Company

• Review if any work permit have been issued under the company.

HIGH DEGREE OF DANGER

This is a basic list, this is NOT all questions that are asked to a Seller.

www.sunbeltasiagroup.com