1

Corporate Matters

Are the company's organizational documents (articles/certificate of incorporation and bylaws) up to date and reflective of the current organizational structure? Are the number and type of issued shares of the company's capital stock consistent with the authorized shares in the articles of incorporation? Have all security issuances been properly approved by the board of directors and other shareholders where appropriate? Are all stock records and minute books up to date? Is the company in good standing in all jurisdictions it conducts business? Does the company have a complex capital or organizational structure that would be difficult for an investor or potential acquirer to understand? If so, is there a compelling tax or business reason for the structure?

2

Financial Matters

Are the company's financial statements correct, up to date and properly audited? Has the company properly filed all necessary federal, state and foreign tax returns? Are there any liens, encumbrances, mortgages or other charges on the personal and real property of the company?

3

Management and Operations

Are the company's business plan and financial projections accurate and up to date? Does the company have internal controls and is the company in compliance with those internal controls? Does the company have rights in all the intellectual property it is using, either by patent, trademark, license or otherwise?

4

Employee Matters

Is the company in compliance with all relevant labor and employment laws? Are all employee confidentiality, intellectual property assignment or non-competition agreements signed and current? Has the company stock option plan and each individual employee stock option grant been properly approved by the board?

5

Insurance Matters

Are all company insurance premiums, including workers compensation and directors and officers liability insurance, current and sufficient in coverage for the company's needs?

6

Litigation Matters

Is there any current or pending litigation (consider breached contracts, employment disputes, etc.) that can be resolved prior to the sale of the company?

7

Board of Directors

Is the composition of your board of directors include an appropriate number of independent directors to ensure that the deal is in the best interest of all shareholders? Do you have board committees (audit, finance, compensation) that are in place to help make certain decisions? Does your board have proper minutes and proper procedures to effectively evalute potential bids for the Company?

8

Changes in Management

If the company is lacking in board members or officers with experience selling a company or public company experience, it may be advisable to hire an executive with that experience to help guide the company through the process of an acquisition or the process of integrating with a public company. Do you need to show more sales people or additional development or research talent? Is it necessary to bring in an experience CEO or CFO?