REVERSE MERGER SHELL / COMPANY CHECK LIST..NOT EASY MAKING MILLIONS (hehehe) ;-(((((((((((((((((((((((((((((((((
A. CORPORATE
1. A corporate chart setting forth
the Company and each of its
subsidiaries.
2. Copies of the certificates of
incorporation of the Company and
each of its subsidiaries as
currently in effect.
3. A copy of the Bylaws of the
Company and each of its
subsidiaries as currently in
effect.
4. The minute books of the Company
and each of its subsidiaries.
5. The stock books and stock transfer
ledgers of the Company and each
of its subsidiaries.
6. A list of jurisdictions (domestic and
foreign) in which the Company and
each of its subsidiaries is qualified to
do business or in which their trade
names are registered.
7. A list of jurisdictions (domestic and
foreign) in which the Company and
each of its subsidiaries files individual
and/or consolidated tax returns.
8. A list of jurisdictions (domestic and
foreign), if any, in which the Company
and each of its subsidiaries is not qualified
to do business and does not file tax
returns but in which it either performs services or
maintains an office, a stock of goods, or
an agent who is a resident of any jurisdiction
in which he solicits orders.
9. A list of directors and officers of the
Company and each of its subsidiaries with
salaries and other remuneration paid to each.
10. A list of addresses of the Company's
and each of its subsidiaries' principal and
registered offices and their registered
agents and their addresses.
B. SECURITIES
1. A statement and ledger reflecting the
issued and outstanding and treasury shares
of all the capital stock and of other securities
of the Company and each of its subsidiaries.
2. Copies of all agreements, if any, with
respect to the capital stock and other securities
of the Company and each of its subsidiaries.
3. Copies of all stock option plans or other
agreements relating to any security of the
Company to which the Company or any of its
subsidiaries is a party.
4. Copies of all agreements with underwriters
or underwriter managers, including any letters
of intent.
5. Copies of all draft or original registration
statements prepared by the Company in the past
24-month period.
C. FINANCIAL STATEMENTS (See Exhibit A)
1. The most recent audited and unaudited
financial statements, both consolidated and
consolidating, for the Company and each
of its subsidiaries.
2. The financial information set forth
in Exhibit A.
D. TAX MATTERS
1. Copies of all filings of the Company and
each of its subsidiaries with the IRS and
other taxing agencies (both domestic and
foreign) for all years not closed by the
applicable statute of limitations.
2. A list of returns of the Company
and each of its subsidiaries and the years
thereof which, within the past five years,
they have been audited by state, federal or
foreign tax authorities and copies of
determination letters related hereto.
3. Copies of agreements, consents, elections
and waivers filed or made by the Company
and each of its subsidiaries with the IRS or
other taxing authorities, including but not
limited to those relating to IRS 341 and the
relevant statutes of limitations.
E. PROPERTIES AND MATERIAL CONTRACTS
1. (a) A list of real estate owned or leased
by the Company and each of its subsidiaries,
stating whether owned or leased (whether
as lessor or lessee) and giving a brief
description of property structure, lease
provisions (including assignment, renewal
or cancellation), property use and location.
(b) Copies of all deeds covering owned
real estate.
(c) Copies of all leases covering leased
real estate.
(d) Copies of title insurance policies or
lawyers' abstract reports covering
real estate.
(e) Copies of all surveys.
2. (a) A list of all patents, trademarks,
trade names, copyrights, etc. owned, in
whole or in part, or used in the business
of the Company and each of its
subsidiaries.
(b) A list of all patents, trademarks, trade
names, copyrights and other proprietary
right licenses and/or agreements to which
the Company or any of its subsidiaries
is a party as licensor or licensee
or otherwise.
3. Copies of all insurance policies of the
Company and each of its subsidiaries.
4. Copies of any joint ventures or partnership
agreements to which the Company or any of
its subsidiaries is a party.
5. (a) A list of all long-term and short-term
indebtedness of the Company and each of
its subsidiaries, and copies of all notes, loan
agreements, indentures and other relevant
commitments or agreements relating thereto.
(b) A list of and brief description of bank
lines of credit of the Company and any
of its subsidiaries.
(c) A list of loans made by the Company or
any of its subsidiaries to others.
(d) Copies of all mortgages of the
Company and each of its subsidiaries.
6. Copies of any other security agreements,
including conditional sales contracts, equipment
leases, chattel mortgages, accounts receivable,
financing agreements and factoring
agreements for the Company and each of
its subsidiaries.
7. A list of guaranties or indemnity
undertakings given by the Company and
each of its subsidiaries.
8. A brief description of contractual or
customary credit terms available to the
Company and each of its subsidiaries.
9. Copies of form agreements between
the Company or any of its subsidiaries and
distributors, dealers, sales or service
agents or representatives.
10. Copies of any agreements to which the
Company or any of its subsidiaries is a party
providing for the sale by others of duty-free
items on a commission basis.
11. Copies of any agreements to which the
Company or any of its subsidiaries is a party
for the construction or modification of any
building or structure or for the incurrence
of any other capital expenditure.
12. Copies of any agreements that would
restrict the Company or any of its subsidiaries
from doing business anywhere in the world.
13. Copies of any agreements, statutes
or regulations to which the Company or
any of its subsidiaries is a party giving any
other party the right to re-negotiate or require
a reduction in prices or the repayment of
any amount previously paid.
14. (a) Copies of all agreements of the
Company or any of its subsidiaries
with unions.
(b) Copies of all employee benefit plans,
including any group life insurance plan,
major medical plan, medical
reimbursement plan, supplemental
unemployment benefit plan or welfare
plan (for hourly employees), or salary
continuation plan, and a brief description
of the policy regarding vacations,
sick leave, etc. for the Company and
each of its subsidiaries.
(c) If there are pension or profit
sharing plans for the Company or any of
its subsidiaries, copies of such plans,
actuarial reports, trust instruments, trust
balance sheets, latest annual reports filed
with the IRS and a description of any changes
in these plans being made or under
consideration.
(d) A list of any unusual labor
relationships, strikes or work stoppages
during the last three fiscal years to date
regarding the Company or any of its subsidiaries.
15. A list and brief description of any
outstanding powers of attorney of the
Company or any of its subsidiaries.
16. (a) Copies of all contracts of the
Company and of subsidiaries with
advertising or public relations agencies.
(b) Copies of all standard forms for
sales and purchaser orders for the
Company and its subsidiaries.
17. (a) Copies of all employment,
consulting or noncompetition or
independent contractor agreements
with any of the employees or
independent contractors of the
Company or any of its subsidiaries
currently in effect.
18. A list of all bank accounts of the
Company and its subsidiaries, with the
names of the authorized signatories for
the Company and its subsidiaries.
19. Copies of all other agreements to
which the Company or any of its
subsidiaries is a party, or by which any
of them or their properties or assets is
bound or affected, except for agreements
for the purchase or sale of inventory goods
entered into in the ordinary course of business,
none of which exceeds $1,000 and which in
the aggregate do not exceed $10,000 as
to either purchases or sales.
F. LITIGATION
1. A list and brief description of each
threatened or pending claim or litigation
matter against the Company or any
of its subsidiaries.
2. A list and brief description of any
pending or threatened (a) claim of litigation
involving alleged violations of laws or
regulations for the protection of the
environment, or the health or safety of
employees or others, (b) governmental or
administrative proceedings, or (c) other
material claims or litigation matters as to
which, in either case, the Company or any
of its subsidiaries is a party or such claim or
litigation affects the Company or any of
its subsidiaries.
3. A list of all outstanding judgments
against the Company or any of its
subsidiaries or affecting the Company
or any of its subsidiaries.
G. PERMITS
1. Copies of all permits, licenses,
variances, exemptions, orders and
approvals from federal, state, local
and foreign governmental or
regulatory bodies or authorities that
are required in order to permit the
Company or any of its subsidiaries
to carry on business as currently
conducted or proposed to be conducted.
H. RECEIVABLES
1. The names of customers owing in
excess of $10,000 and in arrears for
more than 30 days to the Company or
any of its subsidiaries.
I. TRANSACTIONS WITH OFFICERS, ETC.
1. A list stating the amounts and other
essential terms of any indebtedness or
other obligations of or to the Company
or any of its subsidiaries to or from any
officer, director or employee.
2. A list and description of assets or
properties used by the Company or any
of its subsidiaries in which any officer,
director, or employee has any interest.
3. A list of all transactions between the
Company or any of its subsidiaries and
any of their respective officers, directors
or employees.
J. FILINGS AND REPORT
1. Copies of all recent filings by the
Company or any of its subsidiaries
with governmental agencies (domestic
and foreign) including, but not
limited to, the SEC, other than those
delivered under other sections hereof.
K. MISCELLANEOUS
1. A list of memberships of the Company
or any of its subsidiaries in
trade associations.
2. A copy of the committed and planned
capital expenditure budgets, and
expense budgets, of the Company and
each of its subsidiaries for the next
three fiscal years.
3. Copies of all internal audits performed
within the last three fiscal years for
the Company and each of its subsidiaries.
EXHIBIT A
Additional Financial Documents
1. Detailed 1/3 year plan budget.
2. The most recent audit work papers.
3. External auditor recommendations,
analyses, reports for the last three years.
4. Flow charts, narratives, and other
description of each major accounting
system, particularly the cost/inventory system.
5. Accounting policy manual or equivalent.
6. Results of all physical inventories
or the last three years.
7. Monthly financial statements for the
last 12 months including comparison
to budget and prior year.
8. Trial balance as of most recent month-end.
9. Account analysis for each balance sheet
account as of most recent month-end.
10. Description of each bank account, lock
box, etc. as to purpose/use and services received.
11. Analysis of monthly cash and working
capital balances for last 24 months.
12. Analysis of short-term borrowing patterns
over last 24 months.
13. Detail aged accounts receivable trial balance
as of most recent month-end and prior year end.
14. Capsule description of each major receivable
accounts condition/collectability/activity as
well as special practices employed.
15. Analysis of bad debt expense/reserve
for last two years.
16. Monthly summary aging of accounts
receivable for last 12 months.
17. Analysis of current bad debt reserve.
18. Amounts due to/from insiders or affiliates
analysis and comment.
19. Inventory analysis.
(a) By type of raw material, type of WIP,
and type of finished goods as of recent date.
(b) Inventory of finished goods by item
then compared to sales by item for last
12 month period.
(c) Inventory of raw material then compared
to usage by item for last 12 month period.
(d) Analysis of inventory by location
including any outside processors,
consignment, etc.
20. Description of valuation method for inventory.
21. Cycle counting procedures description.
22. List of raw material contracts/P.O.s
including pricing/quantity.
23. Analysis of inventory reserves
including obsolescence, LIFO, etc. for
last two years.
24. Expected impact on LIFO inventory
at next year-end.
25. (a) Method for analyzing and recording variances.
(b) Description of any inventory stock/
consignment etc. practice.
26. Detail fixed asset records for tax and book
values and life used for each item.
Annual depreciation book/tax for next 10 years.
27. Description of how prior purchases of
business recorded.
28. Description of non-operating assets or illiquid
assets not fully utilized.
29. Aging for accounts payable monthly
for last 24 months.
30. Description of payment practices used
over last 24 months and relationship with 15
largest vendors.
31. Normal payment terms required by vendors.
32. Analyses of all non-trade liabilities except debt.
33. Description of contingent liabilities
not recorded including leases, pension
and benefit plans, EPA, product
warranty, etc.
34. Analysis of over/under funded
pension liabilities.
35. Analysis of each income tax liability
account including detail deferred tax items.
36. Analysis of tax cushion.
37. Analysis of N.O.L. or other carryovers.
38. Prior tax treatment afforded sale of business.
39. Open tax years, state and federal. Any
past R.A.R. agreements. Exposures for open years.
40. Accounting methods employed for income
tax purposes of a special nature.
41. Method of compliance with uniform
capitalization requirements.
42. Sales, franchise, property or other non-income
tax liability analysis.
43. Analysis of equity for last three years.
44. Sales analysis for last three years
(most recent year, by month).
(a) By customer (end user).
(b) By product.
(c) By distributor, by product.
(d) Backlog.
(e) Geographic sales analysis.
45. Gross profit analysis for last three years
with respect to:
(a) amount/proportion of labor,
material and overhead in cost of sales;
(b) labor cost trend;
(c) raw material cost trend;
(d) analysis of items and trends in
manufacturing overhead; and
(e) gross margin by product.
46. Analysis of data processing costs by type.
47. For last three years analysis of:
(a) selling expense by major
components; and
(b) general/administrative expense
by major component.
48. Description of pricing determination.
49. Description of insurance coverage/cost.
50. Description of employee benefits/cost.
51. Capital expenditure control methods/practices. |
